“A good CFO is an effective controller, but also has an entrepreneurial flair,” says Krishnan Raghunathan, global Chief Capability Officer at business process outsourcing giant, WNS. Krishnan is one of the speakers at CFO South Africa’s Get Smart in 2016 event on 23 February 2016, flying out of India especially for the occasion. In preparation for the event, we spoke to him about his interesting job title, his professional achievements, his take on the position of CFO, and the role finance leaders should play in Business Process Outsourcing (BPO), which incidentally is being accepted as Business Process Management (BPM) the world over.
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What is your responsibility as Chief Capability Officer?
"WNS is predominantly a knowledge business, wherein knowledge of different industries enables us to build the right capabilities or solutions for our clients. My designation, in fact, gives away the surprise element in the role
My team and I focus on building new capabilities in finance and accounting services, process excellence and transformation, operating model re-engineering, supply chain and procurement, and so on. Besides traditional areas like project management, business development and sales, my team also focuses on creating new and innovative commercial solutions."
What have you achieved since joining WNS in August 2013?
"We have expanded on our process maturity model to a much more granular benchmark. The process maturity model helps our clients assess and benchmark their current state of process to create a road map for achieving better process performance. We used to use scales of one to four, but what we have now is a much more scientific model. We realised that an industry-agnostic approach doesn't really work for these benchmarks and what a $100 million company can afford is not the same as what a $1 billion company can afford. What is the best for me is not necessarily the best for you. In a similar vein, a benchmark for credit terms is not the same in the US, Japan or China. To change this was a rather complex exercise that eventually resulted in 150+ granular metric benchmarks, separated by industry and the size and scale of companies."
"An example of the benefit of these detailed benchmarks is the work we did for a French consumer packaged goods company. With the typical high-level bench marking it looked like they were already performing at best-in-class metrics. But when we established they were actually a trading, retail and a manufacturing firm, we split those parts and did the benchmarks once again. We found more than EURO100 million of opportunity in the bank."
What is the WNS finance and accounting strategy for South Africa?
"South Africa was a strategic market for WNS earlier than for most of our competitors. Unlike some more opportunistic entries, we have invested quite heavily, and that is visible from our presence as we are the largest BPO service provider in the country, and are growing rather fast in the region. Some of our most seasoned experts have relocated to South Africa and I have a dedicated team of 15 to 20 experts working out of India and Romania, with additional people in Poland, all focusing on South Africa."
"Our preferred strategy is to deliver finance and accounting solutions for our South African clients from South Africa. We work within the client's requirements, with the ability to deliver most of the work out of South Africa."
Which role do CFOs play during business process management? Which role should they play?
"We have seen examples of CFOs leaving the BPO of their contracted process to an extended team - sometimes procurement organisation - resulting in a disjointed relationship. We have found through our experience that the role a CFO should play is that of a partner, and the BPM provider should be an extension of his or her particular organisation. One of our key values at WNS is 'Client First' and therefore we heavily invest in dedicated finance and accounting delivery teams for each of our clients, with every team member trained in the client's values and culture. Employees are rewarded and take significant pride in achieving client objectives. Essentially, we operate as a virtual extension of the CFO's team and therefore, when CFOs work with WNS as a partner, the business impact our teams are able to generate increases significantly and the overall outcomes of the relationship become more rewarding."
What makes a good CFO?
"Many times I have seen CFOs being accountants and very effective controllers. The balance is that they also need the entrepreneurial side of the CEO. They need to balance that with stewardship and the interests of investors, all the while understanding the market and the business model."
How can CFOs get the most value out of a partnership with WNS?
"The key word is partnership. CFOs are experts in their business and we are experts in how to run the finance office, owing to our experience with many Fortune 500 organisations across industries, which allows us to create best practices. We both bring expertise to the table and jointly we can optimise value."
"Extracting value is not a zero sum game where you fight for your pound of flesh. In a partnership model the value can be multiplied many times over for both the parties to benefit significantly. For example, we worked with a company that had a team of seven accountants each costing about $25 000 dollars. Even if you made the price zero or let them all go, you can save a maximum of $175 000 dollars. We re-engineered the reconciliation process that those accountants were involved in and freed up more than $20 million. Our value lies in constantly challenging the status quo."
Why should CFOs consider WNS?
"The global economic environment is changing rapidly. With automation, new and disruptive products coming to the fore, globalisation, data and information, as well as fraud exposures, every element of business is increasingly complex. Tougher decisions need to be made. It is increasingly becoming a specialist economy in which businesses shift and increase their focus on the organisation's core value proposition and allow specialist providers to support the other areas."
"In addition to this, customers also benefit from contractual protection to predefined business cases, sharing of risks and gains in driving process excellence and projects to improve business levers. Given these aspects, F&A outsourcing globally, and especially in South Africa, is poised for growth. The value proposition for F&A outsourcing no longer lies in labour arbitrage but rather in its ability to free up management bandwidth while providing access to best-in-class processes. Therefore, early adopters will stand to gain not only from the attention and investments of service providers, but will also be staying ahead of the industry for a longer period of time."
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