Angeline Chua is barely five months into her new role as ASEAN CFO at IBM, but she already feels at home. That’s because the IBM lifer – she joined the company’s management program straight out of university in 2002 – has previously met many country CFOs and others in finance in the course of her numerous job rotations across the enterprise.
“My CFOs spend, at minimum, 20% of their time externally – whether it is to meet a client, meet another CFO in another corporation or whether it is engaging with the business on a particular proposal”
“I started as a financial analyst in ASEAN,” says the Singapore-based Chua (pictured). “I came through a two-year management program, where you get rotated through three different functions within finance.”
After that, she was assigned to Japan and China. Prior to her latest role, she was rotated to IBM’s corporate headquarters in the US, where she also completed her MBA from Columbia Business School.
Chua spoke to CFO Innovation’s Cesar Bacani about the CFO’s role in IBM, how analytics is boosting IBM’s revenues and profits, and other issues. Edited excerpts:
How would you describe the role of the CFO at IBM ASEAN?
It has changed so much. Ten years ago, the CFO’s role was record-keeping, the controls-keeping type of CFO. The CFO has now moved beyond being the steward of the company. You actually have to be strategizing with the business, and also look ahead and provide business insights for decision-making.
I remember years ago when I was talking to the country CFOs, they would tell me a lot of their time is spent internally. Every day they would be in the office.
Today, my CFOs spend, at minimum, 20% of their time externally – whether it is to meet a client, meet another CFO in another corporation or whether it is engaging with the business on a particular proposal. It’s no longer internally focused.
Why the change?
There is so much complexity today in terms of how the business makes decisions, on how they are going to spend on a particular item. It’s difficult if they don’t have the knowledge of the ins and outs of financial management.
Today we talk about selling to the C-suite. And one of them is the CFO. Sometimes you cannot expect business persons to be able to articulate everything, such as return on investment, return on assets. You need a CFO to come in and work with them, coach them on how to present to the C-suite.
You actually need a CFO to sell to a CFO. Increasingly we are seeing that trend coming up.
Are your CFOs trained to sell to other CFOs?
Yes, all my country CFOs today, they will send me [potential leads] whenever they go out on an event. They do that all the time. And of course, within the organization, they are there to help the sales team. How do you package this? How do you communicate the value that the CFO is getting out of buying this mainframe from IBM, for example?
How do you train CFOs on these new roles? Is there a discussion group, training, role-playing?
We have a communications strategy and training on how to sell to a CFO. This is a finance-led initiative. We have seen how the roles of the CFO have changed over the years and we felt it’s important that you train our CFOs to be able to do that.
This is essentially on-the-job-training?
You actually acquire some of these skills through rotating jobs. For example, when you are rotated to a pricing role, you have to figure out how you look at a pricing case. These are the key elements to look at, before you decide this is the right price point.
For me, I didn’t have the chance to do a pricing role. But during my [job rotation] as controller in Strategic Outsourcing, I had to go through pricing cases with the business. I had to look at the entire pricing case and I picked up the key elements.
Are finance team members supposed to periodically change roles?
Yes. I was having a roundtable discussion with my team, and they were asking me: “Is two years the minimum time to stay in the same role?” I said: “That’s the ballpark number. But the thing is, it’s really about when you feel you’re ready to move.”
Within finance, we move our people really fast. Some people, because of personal reasons are not mobile and cannot move overseas, for example. They stay in the same country, but they still move around different roles within the finance organization.
Our HR works with the finance organization to identify the top 20%, and this top talent do have a different and faster path. We try to rotate them through the key functions that you have to get through to be a CFO.
We think that controls are important for any finance individual. So if you have an area that you can actually go into business controls, that would be good. Planning, that’s another key area. We also look at pricing, how we price our deals externally to our clients.
We want to expose them geographically – Asia Pacific, Greater China Group. Then a corporate role, if someone can relocate to the US. Then we have the functions – business controls, planning (including forecasting), pricing, incentives and commissions, accounting.
Can they go to a non-finance role?
I recently had one of my CFOs rotate out to general management in the maintenance business. As CFO for ASEAN Business Services, he was supporting the general manager for the Global Technology Services business. He felt he had done so many roles in the services business and he wanted to try line management.
In IBM, our finance function works very closely with the business, from setting up the strategy, managing the day-to-day controls to pricing. We are a group of people who actually have end-to-end experience, from the start of how you set up the strategy to how you execute on the strategy.
If you speak to my predecessors, they will tell you that the person next to the CEO in this whole company is the CFO. Finance has a very big role in the IBM organization. Finance is looked upon as their right hand, instead of what you normally think of, the COO or CIO or CTO.
In the latest IBM Global C-Suite Study, the researchers discovered a small subset of finance teams they call “performance accelerators,” whose revenues and profits are far ahead of everyone else over the past three years. Is the finance function at IBM ASEAN a performance accelerator?
We are, because the CFO sits in the front seat deciding on strategy. Performance accelerators come with the right strategy and finance at IBM plays a big part in the whole strategy process.
The CFO not only lays out the financials, but also works with the business on where we invest and divest. We look at resource allocation into the right areas of opportunity. The strategy first needs to be right, then you align your resources accordingly, and invest them in the right places so you will get the return.
Secondly, we are working with analytics. I’m sure you hear about Big Data all the time. Today there’s just so much structured and unstructured data. How do we put all these together and provide business insights?
We are trying to proactively tell the business what is happening to their pipeline and the opportunity for them to be able to close a particular pipeline. We have developed an analytical tool called R-Cubed (R3).
In ASEAN, we ran the analytical tool into historical pipeline information, historical win rates and many other variables. What it is able to tell us is the propensity to close of the deals we have in the pipeline.
We have matrixes that tell us whether a particularly opportunity has a high chance of closure. So if I have one deal whose propensity to close is very high, then I need to make sure I put the right resources on that particular proposal or transaction to ensure it closes.
This gives me a higher chance of delivering my topline revenue performance.
We actually have analytical tools like that that give us insight before it happens. To be a performance accelerator, you need to be aligned with the Big Data phenomenon.
What other analytics tools do you use?
We have another tool called STAR, which is the revenue analytics that we run, again based on historical performance in each of the line of business, and then we project out what is the forecast revenue for us. We run it over years of history. The variance is within 5% of accuracy.
In the end, from my perspective as CFO, I always tell the business, you can tell me all you want from your forecasts, but my metrics always turn out to be accurate. So I’m right to tell you the numbers will be this by end of this quarter.
We use this data to help change performance. Where is my weakness? Where is my strength? We then use that information to push that business unit.
I think becoming a performance accelerator will be driven by the ability of a business to run analytics on the data. If I can predict things better, I will be able to influence my decision and then be able to deliver the desired result.
And you have, of course, IBM Cognos, which is the business intelligence software that the company acquired in 2008.
We have Oracle Essbase and we have IBM Cognos. We are moving away from Essbase to Cognos. We have our expense planning, expense information, headcount information, all in Cognos. So anywhere you go, whichever country you go, it’s all sitting on the Cognos platform.
I could ask for really very detailed level of spending details, which we don’t have in Essbase. And you can look at it in all different dimensions. In Essbase, you are limited to eight dimensions; in Cognos you have unlimited dimensions. It depends on how you want to define your variables.
And you can set it up yourself. You can set all the definitions you want.
What you can also do in Cognos is, you can fix your output. You can say, every month I want this similar set of what-ifs. You can define it in Cognos, so every month, when you run that report, you will run that view. You don’t need to export it into Excel every time, and then re-run it there. It’s automated.
With all these tools, can you tell why the propensity to close is high or low? Can you drill down and say, this is why?
Yes, there are many variables that we can define looking at the system inputs that we have.
The propensity is based on regression analysis that runs based on different variables. I have years of data in my STAR and R3 metrics, including the recession time [in 2008], and they are still very predictive. That’s the power of analytics.
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