Like many finance leaders across Asia, Ken Steel is expected to be much more than a bean-counter and purse-keeper these days. “We’re now called a business enabler,” says the Head of Finance, Asia, at Thomson Reuters Financial & Risk business, which provides real-time financial, risk and other business information to market traders, investment managers and others in finance and banking.
That means supporting the business in any way that finance can, including providing analytics, business intelligence and business partnering, without losing sight of the need for control and checks and balances. “It is still up to us to say: This might be where you want to go but this is how much it will cost you and we’re not going there this year.”
Steel is in the middle of reinventing the finance function in Asia, which involves centralizing the finance team in Hong Kong and Japan and filling up finance business partner roles in the business’s four sub-regions. He spoke to CFO Innovation’s Cesar Bacani. Excerpts:
How is the finance function changing in Thomson Reuters’ F&R business?
We’re now called a business enabler. It’s a new way of thinking about it. We enable the business. We enable growth in the sales rate. We enable people to understand how we drive retention, because most of our business is subscription-related.
And then, of course, traditionally, we’re the purse keepers as well, so we’re looking at things like return on investment and business choices to try and help business decision-makers make those decisions in the right way.
This is not something that can be done overnight. Where are you in this journey?
Actually I’m right in the middle of a new model now. Let me just describe briefly what we’re moving to.
We’re organized across a number of sub-regions and we used to operate in small finance teams in each of those sub-regions. Those small teams did a bit of everything themselves, which was not very efficient because you end up duplicating things. You end up also giving in to the business for all those small tweaks on the ground.
We have now taken all of those small finance teams and created a more pan-Asia team of senior analysts.
What those people do is now based on the business needs. So we might look at sales reporting and forecasting for the region as opposed to each of the four teams doing it themselves . . . That pan-Asia team is also looking at a range of assurance activities. They’re making sure, particularly on the sales and revenue side, that the numbers are what they should be.
And then they’re doing a number of reporting activities . . . and a number of analytics across the region. So any of the analytics around how accurate is your forecasting and why do we see cancelations in the business? What’s really happening, what’s behind the cancellations?
We can do all of those from a pan-Asia centralized team based in Hong Kong and Japan. It’s a virtual team. This is how I see the model evolving for finance teams. I don’t want to say every finance team would work like this, but I think it particularly suits Asia because of the disparate geographies we have.
Will you still have finance people physically in the business units?
What I’m now doing is having independent finance business partners for each of the four sub-regions. What I’m telling those individuals is: Your remit in terms of operating rhythm is very much around things like forecasting and budgeting.
Anything which comes at back of the house is for you to drive. But everything else, all of that reporting and analytics, we in the pan-Asia team will give that to you. And I think what that enables them to do is add value.
In my opinion, and I think this is where finance appears to be moving, we can add an awful lot of value by being close to our customers – and I don’t mean just internal customers, I mean external customers as well. We can add value by understanding the business. Obviously we have finance backgrounds, but you can have your own slant to any particular piece of analytics or reporting that you see.
Can the business partners also do the analytics?
They can, but what we’re trying to move towards is the business partners would add very specific analytics around the business knowledge they already have. I’m not expecting them to be so hands-on and digging through things, necessarily.
The business partners can call on the pan-Asia team to do the analytics?
If what they are asking for doesn’t exist, then we will create that into the team and across all of Asia. That’s the beauty of the model that we’re now adopting. If something is relevant over here in this sub-region, we can analyze whether that’s useful across everything, and then we can roll it out very quickly and efficiently.
It just enables us to those best practices across the entire region and raises the profile of finance and what finance can deliver. If one thing works in Southeast Asia, it’s not to say it wouldn’t be applicable in Australia. If we’re doing those comparisons, we can make that decision.
But if you’re tied down in the day-to-day, you don’t even get to stand back and think about it.
So who does the day-to-day part of finance?
I tell my team: Anything you can do to automate the operating rhythm, do it. Anything which you cannot, let’s make a decision on whether it makes sense to have that delivered through a Shared Service or whether it makes sense to have that delivered through people on the ground.
That’s a decision that you always have to make, especially in Asia, which is quite a disparate region. High-cost areas like Japan, Hong Kong, Singapore, Australia – you need a reason to have finance people there. They need to add value to justify the high cost.
I assume payables and receivables and other transactional processes are being done remotely now?
Yes, most of that is done from a Shared Service location.
What about the automation part?
There are a number of things that we’re trying to automate and do, and they’re all around that standard operating rhythm. So if we think about something simple like how we report our sales numbers, you could argue that you can add a lot of value by sitting next to your salesperson and knowing the deals.
But if you’re producing a sales report every day or every week or once a month, that’s actually fairly factual as long as the system that’s throwing out the numbers is fairly factual. So we’ve taken steps over the last couple of months to try and automate sales reporting as much as possible. Then what we do is we have that delivered to my team, so they can then add value to it.
Where we are now on the journey is possibly slightly different to where we might have been in the past, where the things being automated were more of reconciliations or whatever else such as general ledger and monthly closing. We’re at that second stage.
The people part is interesting because accountants are not necessarily trained to become business partners and analytics practitioners.
One of the really interesting things about advertising for these roles is how many people have applied. So I describe these roles as “a finance business partner to help enable and drive the business forward” and we have just been inundated.
I have too many CVs to be able to read every single one at the level of detail that I would normally want to.
But they do need to have an accounting background?
Absolutely not. If you have the analytical skills, feel free to apply. One of the things I’m trying to do here is build a team. What you find nowadays is that there’s an awful lot of people, whether they’re from corporate finance background or M&A background or a finance background or whatever else, they have those analytical skills.
If you take away some of the operating rhythm, the day-to-day finance tasks from them, what you are asking from these people is: Can you analyze around a business? You don’t necessarily need to be qualified in financial and accounting at university or anywhere else. There is a wide range of backgrounds which suits that type of role.
Engineering, just people who analyze things . . .
Exactly. But I don’t think we could run a team if we didn’t have people with good financial backgrounds. You can’t run a team if you don’t have people who understand that there has got to be controls, and checks and balances. But if we have the right mix of people, then we can move everything forward.
I’m not saying this is the case, but if I recruited somebody who has a predominantly M&A background, that person is going to bring something different to the table for that sub-region which they run. Because of the model we’re employing, as long as we’re communicating, we can adopt that for other sub-regions as well.
The 16 people you currently have on the finance team, can they become business partners?
Absolutely. It depends on their skill set and the experience they have, but absolutely.
But maybe they are not interested in becoming a financial business partner?
Some are and some aren’t. We have a mixture of skill sets; it’s very much dependent on matching them up.
The other thing is, this has got to be right for people’s career development as well. Sometimes a stand-alone role is not what people want. They want a bit more managerial experience if they have started up on that track. I think it’s about finding the right mix and fit of people for a team.
But you would still have the traditional finance team members. You have a financial controller, you have a treasurer, finance managers?
In our structure we don’t. I have that centralized team who’s looking at assurance, reporting and analytics, and then the business partners that are adding value to businesses on the ground.
So who does the treasury function then?
Treasury management, tax, all of those functions, are done more globally . . . They’re in individual teams and not all are necessarily co-located or shared. So our tax team is based across a number of locations in Asia. They’re not part of my finance team; they’re not part of the piece I run.
Their actual reporting line goes up to the corporation piece. They’re performing tax and treasury across all of those business units. When we come down to the Financial & Risk level, which is the main Thomson Reuters business in Asia, really we’re talking about making sure that the numbers we’re reporting makes sense and are actually assured properly.
So you’re right there at the frontline, whereas in the past finance was more at the back.
When you think about the role of a modern-day CFO, our necks are on the line for the results. In the past, finance has been seen as a support function. But more and more, you see CFOs who step into the CEO’s shoes. It happens all the time.
I remember when our ex-CFO, Bob Daleo, was in London when I was a lowly finance person. He did a brown-bag lunch session with us, as they say in the US, and people asked him what value finance can add and what value the CFO has sitting next to the CEO.
He said: We’re not finance people who are pretending we can run a business. We’re business people who happen to be experts at the finance. That stuck with me. It was always the philosophy I thought of since I first started my career. But it wasn’t something I ever heard articulated that well before.
Sometimes, it’s up to us to say: this might be where you want to go but this is how much it will cost you, and we’re not going there this year. So the checks and balances the CFO role is really crucial to that CEO, because you’ve got to gain the respect if you’re really going to be a business partner.
How do you as CFO gain that respect?
I’ve been really lucky. I’ve worked with some great business partners across the years. I’m really lucky right now in that my business partner just really believes finance stands shoulder-to-shoulder with him.
I think the ones who are more difficult, you absolutely need to prove that you can add value . . . Everybody’s different, everybody needs to be influenced differently and won over differently. But I think if you start to prove yourself, you see a snowball effect happening.
Let’s say that we want to insert finance earlier on in the decision-making process, around what kind of commercial package we’re going to offer a client, for example. Now that’s something that sales people naturally want to hold on to; they want to do it themselves.
If you can get to a position where you can insert yourself into that process, what happens is the next time is that they say: oh, actually, if we hadn’t done that before, we probably wouldn’t have got as good a result.
I think over time, if you’ve got the right vision and you’re consistent in those beliefs that you can add value, people see that. And they see your integrity. They see your genuineness. And they see you’ve got the skill at running a business.
Everybody’s different, as I said, but if they need a sounding board, you can be that sounding board. If they need facts, you can give them facts. Go wherever you feel you can add value. I think over time it snowballs if you show them you can do it.