Shalini Shukla, DigitalCFO Asia | 5 April 2022
Phillip Tan
CFO, IMC Industrial Group
In his capacity as a finance leader, Philip Tan, CFO of IMC Industrial Group has strived to achieve alignment of financial, business and operations planning for the past two decades. Closely partnering with the business, Philip has been working to increase understanding of the financial implications of operational decisions. CFO Digital spoke to him to uncover more gems of wisdom.
- Having been a CFO for diverse companies for more than 20 years, what is your top takeaway?
In my time as a finance leader, I have learnt, evolved, and developed across different industries and mentors. Most importantly, my career has centred around the following principles:
- Be adaptive
- Evolve with the times
- Respond quickly
Be adaptive
Over the past two decades, working with a myriad of companies – from private and conglomerates to family business and private equity – has given me insights into diverse organisational structures. Different stakeholders have different requirements as well. I had to adapt to see issues from stakeholders’ perspectives so that I could deliver value to the business I was working with.
Evolve with the times
As finance transitioned from a traditional to a digital function, I also had to evolve as a finance leader. Where finance used to be about reporting numbers, it is more about what the numbers mean today. “What is the story behind the numbers?” Investigating that and ensuring the function is in sync with the overall direction of the business – that is the role of finance now.
Respond quickly
An ex-chairman once told me that my role is to hold back the CEO – I was to play the balancing act, ensuring the organisation can sustain and complement business needs. Indeed, over the past two decades, I’ve found myself responding much more quickly to corporate issues by becoming a true business partner, leveraging all departments to see issues from finance perspective.
While finance has always looked at returns – divesting and recycling investments/cash, amongst others, investments decisions made must be mindful of payback timeline. To be agile and not only respond to but pre-empt economic downturns, I have found myself increasingly taking note of risks involved in all transactions.
As an accountancy student, my lecturer told me: “The optimism of a businessman will be countered with the pessimism of an accountant. While that has been true over the course of my career, I have seen my role being better regarded and included throughout the business.
- How has the finance function changed over the past two decades?
Most importantly, mindsets and expectations have changed. Where finance used to be traditional bin counters, the function is now trying to present numbers and anticipate next steps for the business. We are asking ourselves: “How are we able to forecast numbers such that we can influence future decisions?”
Several challenges are afoot though – availability of data, siloed processes and people matters, amongst others. Ultimately, I find that if people are willing to collaborate, we can get the job done even if there are a couple of roadblocks along the way.
Finance has been transitioning from a traditional to a more digital function. This will no doubt be daunting to many but such value-focused business partnering will revolutionise the entire financial, allowing the finance function to deliver stronger and deliberate insights, align diverse business objectives, and construct data-driven decisions.
- What are the top 3 challenges finance leaders face when transitioning from traditional to digital finance function?
Poor interdepartmental communication
There is some tussle of information between finance and business operations teams. Perhaps there is an element of insecurity if one team knows more than the other. From a KPI perspective, finance having more information could lead to the team pushing levers when it comes to budgeting. I can say I know this team can achieve their KPIs with less resources, so I cut that during budget season.
While technology is an enabler of data, people must be aligned. We must ensure there is a corporate culture of sharing data and an understanding that data is not used to pit teams against one another but rather, to make business processes more efficient and to achieve business outcomes. To that end, the level of collaboration will impact level of automation to get concise fast data.
Inefficient risk management processes
Getting and analysing as much relevant data together as possible data is not just about performance. It is also about managing cash flow risk, covenants, forward numbers, and any event triggers. The digital finance team must be very mindful of not only financial risks, but also non-financial ones.
Today’s finance leaders must look at the big picture. They have to be open to assessing risk management solutions that span the entire organisation instead of just the finance function.
Unrealistic forecasts
While teams may want to hold back some information from finance, the function will not be able to see too much farther ahead, forecasting inaccurately as a result. This may result in budgets being unrealistic. For instance, numbers could be inflated or artificially suppressed, resulting in financial losses for the business.
Lack of data and insights leading to unrealistic forecasts means the company is set up for failure – it is very risky! We must be agile in planning and creating out-of-cycle forecasts, and ensuring our colleagues are able to measure the financial impact of their decisions.
- You have such extensive financial strategic and operational experience from diverse industries. You must have managed to find some alignment of financial, business and operations planning. What are some things finance leaders need to keep in mind when adopting a cross-functional xP&A strategy?
Operational data form the lowest common denominator! They are not high-level drivers that are hypothetical.
While finance leaders cannot use historical data for start-ups, they cannot use gut feel to forecast numbers and align the different parts of the business. We must continuously revise our outlook and plan for any downside to the business. Two factors are critical:
- Engagement and alignment – Let’s agree on outcome because there is an end goal that everyone wants to work towards.
- Technology – More insights with less manpower is only possible through automation. This also helps to remove duplication and unite seemingly siloed information to form a single narrative.
In collaboration with Jedox, Phillip moderated DigitalCFO’s first physical event in 2022 back in March, where he where he led discussions on the Progress & Challenges on the Path to xP&A and how business partnering will drive value for organisations. Held at Andaz Singapore with Safe Distancing Measures in place, discussions between finance leaders showed that they are already planning on how to pivot into recovery and advancement.
Overall, Philip stressed that the finance function must be value-adding. Finance leaders must be able to see things from the perspective of users. Is analysis being generated for confirmation of current hypotheses or is it new information that is being sought to forecast future actions? He believes the finance leaders must focus resources on developing what the organisation will do next – outcomes, forecast, the ability to grow and integrate elsewhere. “That’s what I’m trying to do,” he said. “Implement a different system.”
