Posted 23. 04. 2019
More than 200 CFOs met for the eighth time last week at CFO Congress 2019, organized by Blue Events with the support of many partners and with Deloitte as expert guarantor. In the premises of the Czech National Bank, there were talks particularly about the challenges posed to the chiefs of financial departments across business sectors by artificial intelligence, the current lack of quality employees, or Brexit.
The imminent departure of the UK from the European Union will affect several industries. In his opening presentation, David Marek, Deloitte Chief Economist & Director, outlined the degree of economic impact depending on the conditions under which Britain will leave the EU. As the 5th largest trading partner for the Czech Republic, it will especially affect the automotive industry, which is also undergoing a dynamic change due to high regulations and the boom in electromobility. Marek sees the worst-case scenario as a possible inability of the Czech market to react to the changes. The loss of the automotive industry as a whole and its downstream supply chain would cause a 26% decline in GDP. If we withstand these changes, we can expect a growing need for electricity production.
The need to respond to the development of low-emission vehicles has already been addressed by the company Čepro, represented by its CFO and Vice-Chairman of the Board of Directors, Helena Hostková. She admitted that it was already time to start planning what to do with the loose storage capacity that would arise with a decline in fuel demand. "Who knows, maybe we will store water, which will become an increasingly valuable commodity," Hostková said later in the day in a panel discussion.
Jan Kubík, Refinitive CR and SK and Vít Lauer from FRSA Advisory spoke on the risks arising from daily trading, rather than an uncertain future. They spoke about hedging strategies, the need to obtain as much data as possible, and brought up the importance of economic and accounting compliance in relation to the impact of the hedging strategy. "When it works for one year, it does not necessarily mean that it will make sense economically in the long run," added Kubík.
Understanding the IT crowd
All participants agreed that one of the biggest challenges was the dynamically evolving technologies that place strong demands on the IT level in companies. A survey conducted by Deloitte among CFOs confirms this: 56% of them are currently looking for the most advanced technical knowledge among employees. "The financial department clearly lacks more IT overlap," said Jiří Ponrt, CFO of the online store Alza.cz, in the panel discussion. Jan Bolek, Chief Financial Officer of DEK, agreed: “There is a need for a better understanding with the IT department, but for example they should understand the accounting processes. Communication with the purchasing department should also be improved.”
A perfectly functioning IT infrastructure is not a utopia, Martin Diviš on behalf of Cisco and Lukáš Klášterský from Erste Group explained in their joint presentation of the supplier and client. They warned against rash investments in the transition to new platforms, whose effective implementation, besides finance, also takes a lot of time.
This was subsequently confirmed in the panel discussion by Petr Červenka, CFO of Plastika Kroměříž from his experience. "The worst thing you can do is get a new program, take one year to set it up, and then find out that it consumes more of accountants’ time than it saves." Jiří Kuchyně, now Group CFO of Creative Dock, has similar experience from his previous employment at Hilti: "Standardized invoices could be handled much faster thanks to the new SAP plug-in, but one invoice in another form caused an error that cost the accountant twice more time." Romana Gondeková, who represented the ELTODO group in the panel discussion, even said that switching to automated operations in many cases would not pay off for them, because with lower-wage positions they avoid large investments in technology, and thus create jobs.
People vs robots
The HR aspect has also proved to be one of the hot topics for current financial directors. According to Michal Nebeský, CEO of Citibank, there will be 45% fewer people in the banking sector by 2030 because they will either be replaced by robots or simply no longer needed. "That there are no people available today is such a fleeting affair!" Nebeský predicted.
Certainly, the financial representatives of the companies were happy to hear this, given how much they had to invest in recruiting and training new employees, given the current situation on the labor market, with the risk of the new employees leaving after a few months. For example, in the case of senior management and a six-month engagement of a new employee, including his acquisition, there were costs of almost CZK 1.4 million, Milan Novák, Group CEO, GoodCall showed in his presentation. He also mentioned rising wages, not linked to rising productivity, which cannot be viewed as a positive trend.
It is impossible without trusting one another
The message of the lecture presented by coach Katarina Emma Schapiro, who has extensive experience with leaders, including financial directors, may be the answer to a smaller corporate turnover. “Every time I go see a new client, who is a CFO, I know to expect a grilling interview. I find myself under the strongest fire of questions and doubts to see if I really can help them. This shows a great need for trust. But it also should work in the company. Create a psychologically safe environment based on openness, and your team's efficiency will grow,” Schapiro recommended.
People are the first line of defense against fraud in the eyes of Alexander Nagy of Deloitte, who presented a topic that is not widely discussed. "The protectors are your employees themselves when they know what to do, and they do it well," Nagy reminded us, without compliance and internal audits.
Security as one of the pillars of success was also emphasized by Commercial Director of Bisnode Zdeněk Honek in one of two afternoon parallel sections. He stressed the importance of screening his business partners, as well as searching for information from seemingly less relevant indicators such as the number and brand of cars in the company, fluctuations in website updates, payment discipline and demand of vacancies. “Also find out how much you represent in your business partner's turnover. It will help you with your negotiating position,” he said.
Procurement officer as your best friend
In addition to the pillars of success, another parallel section dealt with procurement. According to the speakers, CFOs have certain reserves not only in communication and IT overlap. The Chief Financial Officer and the Purchasing Director should meet daily, said Petr Červenka from Plastika Kroměříž, who, at the initiative of the audience, admitted that he was considering including the Purchasing Department under finance. Subodh Kumar, a professional negotiator, went even further, according to him the procurement officer should be the main “decision maker”, from which his position in the company should be derived.
Other lecturers also talked about the disadvantages of the one-sided focus. According to CTU expert on company procurement Jan Vašek, purchasing officers should also have an overlap and build a diverse relationship with suppliers and develop them continuously in anticipation of the strategy development. The buyer 4.0 was characterized by lecturer of B2B traders Karel Otýs as a “multi-event competitor”.
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