Here’s how the journey of digital transformation across sectors in India is unfolding and how finance leaders are adopting it.
FE Connect
It’s the age of transformation. Digital technologies like artificial intelligence (AI), machine learning (ML) and enterprise resource planning (ERP) solutions are helping large companies with legacy systems become more agile and efficient. With access to gigabits of data, it is becoming imperative for India’s top CXOs to have customized information at their fingertips for efficient decision making. When it comes to financial decisions, investments in these technologies are making India’s top CFOs more agile, as was seen at the recent Agile Leaders Forum organised by Financialexpress.com in association with Oracle.
Gathering over 20 of India’s top financial brains in one room to understand how they are using technology to drive agility and efficiency in their organisations is never easy, but the excitement in the room was palpable. The CFOs and Finance Heads in the room were from diverse industries – from retail to manufacturing, from insurance to hospitality, from automobiles to technology, from startups to established enterprises. Each one of them had interesting digital transformation journeys to share.
Amit Roy Chowdhury, Senior Vice President and Global Head of Financial Planning, Analysis and Pricing at EXL started out by sharing a word of advice for all CFOs: “Stop using Excel sheets like an accountant! Today, you will live in a world where data is the king. The guy who has the most data will create the maximum value.” However, to provide that value, data must be in a unified structure and mined to provide predictive analytics. Sharing his journey at EXL he says, “As the organization grows, your technology costs and infrastructure increase. That’s where a global platform which can cater to multi-lingual systems comes in, making it flexible and easy to integrate.” He points out that though EXL uses different peripheral applications, they are all ultimately integrated into the basic ERP system, which is the Oracle Cloud.
“Every business leader likes a finance leader who can be a partner in the growth journey,” said Kanwar Singh, Vice-President of Finance, Oracle India, adding an example of how Oracle has become more agile. “We are typically one of the fastest to declare our results globally. With SEC filings and everything done in less than 10 working days, every quarter. You know that to declare financial results in US as a listed entity, all compliances must be in place before that.”
What transformation has brought to companies is essentially speed and scale, but in that journey the customer should not be left behind. As Kallol Kundu, Group CFO and CRO, The Oberoi Group, pointed out: “Even though I’m a CFO, my first agenda is to look at guest delight. At Oberoi, when we started our transformation project, we called it TOCE – The Oberoi Centre of Excellence. That helped us during COVID, but it was not easy. We operate in countries like Malaysia, Indonesia, Egypt, where technology implementation is difficult with different kinds of people. But today we are in advanced stages of blockchain implementations.” He explained how jobs have become more enriched, bypassing the need for mundane accounting entries or transactions, but instead spending time on customer analytics and predictive analytics to stay competitive.
Meanwhile, for younger companies the ERP journey has been different. As Mandeep Mehta, Group CFO, PB Fintech (Policybazaar & Paisabazaar) noted: “Our ERP journey is about 1.5 years old, before which we were on Tally. We are at a stage where we are still stabilizing operations.” Aggregator businesses Policybazaar and Paisabazaar deal with over 26 insurance companies and more than 8,500 companies on the credit side. “This has led to challenges in the quality of the data, as different companies have different systems. It becomes necessary to have integrity of data and that’s what we are trying to solve right now,” he added, outlining the company’s ERP journey.
On the other end of the spectrum are companies such as DCM Shriram that have had ERP systems since 1998 and yet it is revisiting its digital transformation journey at regular intervals to keep pace with technological innovations. “You should revisit and unlearn everything and start from ground zero. We did that in 2015-16 and now again in 2024,” said Amit Agarwal, Executive Director and Group CFO, DCM Shriram Ltd. The company is looking at specific use cases of AI. “One thing that we are visioning is to have a CEO and a CFO cockpit, where all data is on the digital screen and we don’t really have to go through the reports, whether they are digital or not. We can also have some predictive analysis as well. We are also looking at how we can have AI in our manufacturing, exploring the best use cases,” he added.
With the consolidation and convergence of technology the underlying challenge has been in integrating multiple data points and different products. Pointing out the challenges in implementation, layer by layer of diverse data points, from finance to sales to HR systems, Shailesh Singla Country Head – BFSI, Oracle Applications said consolidation will bring in a plethora of advantages. “Take, for example, an HR system, it speaks to more than 40-42 data integration points, with a huge network of systems and a high TCO. We tried and we implemented it internally and have learned from that. One needs to define a partner which can serve as a single layer across applications, year after year,” he said.
When starting out many companies tend to first build in-house, before looking at a partner to integrate all the systems. Take Cars24, for instance, an automobile sales startup that started with the basic accounting software Tally and then got into building its own ERP systems in its transformation journey. Ankit Maheshwari, Vice-President and Head of Finance at Cars24 summarised: “Our focus is very simple in terms of setting up the process, building a back end for business ERP, where all attributes related to business, finance and operations can be staged and then eventually integrated with a treasury management system or financial ERP. When you are integrating so many systems, multiple reconciliation comes into the picture.”
Integrating multiple systems could be a challenge especially when there are companies that have implemented ERP systems years ago and now need to modernise. Naveen Malik, CFO, Hindware Home Innovation Limited talks about the challenges of dealing with large communities when it comes to integration. “Hindware started in the 1960s, but a lot of things started coming up when we started integrating dealer systems and channel partners with influencers, which are 1,000s of dealers with more than 50,000 plumbers. We have implemented robotic process automation which has reduced about 30% of our overall efforts. For us, taking on-prem to the cloud has taken a lot of effort. Now we can get live dashboards.” said Malik talking about the company’s transformation journey.
Most companies are at different stages of their transformation journey. Tech-enabled startups appear to have moved faster. But the transformation journey is similar. Mayank Gupta, Group CFO, Cardekho, said: “Over the past 16 years, we have built almost 40 business system apps internally. The biggest challenge has been how do we pull it together? Of course, like every startup in the country, the journey starts with Tally, and post investor funding, there is a push as the company transitions and becomes bigger, and there’s a need for a robust, modern ERP system.” He said that the company ended up with one platform that provided a full suite of services from finance to HR and analytical tools. Since CarDekho is not on-prem and fully in the cloud, it allowed them to get a significant cost benefit.
The other challenge that many are grappling with is scalability. How do companies who already have implemented ERP systems scale? It is a continuous journey. As Anurag Mantri, Executive Director and Group CFO, Jindal Stainless, said that whenever Jindal Stainless acquired another company, the various ERP systems needed to be integrated, which could be done using blockchain. Citing an example, Mantri said that during the recent G20 meet, the company was asked to demonstrate a transaction using the public blockchain. “You have to secure your data, but you can use the public blockchain, especially if you are going international, and if you are acquiring a company which may be on a different platform.”
Scaling up systems means mapping out what is to be done for the next five to 10 years and ensuring legacy systems can grow as the company grows. Speaking about the transformation journey at CL Educate, that operates edtech (Career Launcher) and martech (Keystone) brands, Arjun Wadhwa, CFO, CL Educate Limited said: “AI and ML is almost ingrained in our philosophy in the way we do things. We quite literally wrote the book on it, as our publishing division teaches AI and ML.”
Wadhwa echoed the sentiment of putting the customer first and then letting everything else percolate down. “Studies show about 54% of managers spend time on administrative and control tasks, while only 30% goes into decision making. That entire 54% can be automated by AI,” he added.
Yet when it comes to scalability, companies need to decide quite early on whether they want to move to the cloud or remain on-premises as the costs could vary depending on the size and type of business. Chintan Thakkar, CFO and Executive Director, Info Edge, the parent company that runs popular portals like Naukri.com, 99acres, Shiksha and Jeevansathi.com spoke about how he segregated the various businesses to make them scalable and now are looking at hybrid models between cloud and on-premises: “I think right from the beginning, you need to look at it whether you want a proprietary solution or whether you want an open source solution. Also, if you want to be in cloud or whether you want to be on premise. Cloud has great advantages, particularly for smaller organisations and startups. Larger enterprises may want to think it through in terms of scalability quite early in the game.”
The other big concern is data security, especially when looking at cloud systems over on-premises. While different companies have security systems and regulations in place, it is important to have oversight at every level. As Dharmendra Tuteja, CFO, Dalmia Bharat said: “We keep reviewing our systems and have addressed gaps. We have clear policies in place. Besides this, of course, cyber insurance is a security measure. But prevention is the topmost priority.”
Adding to that, Sandeep Modi, CFO of Hindustan Zinc Limited, said: “We have also deployed some expert ethical hackers, as our truck management system is entirely on the Web. We have started our own management testing and vulnerability assessment.” In addition, he pointed out another security issue, that of vishing or voice impersonation, which is something that needs control.
Gourav Chaturvedi, CFO, National Engineering Industries Limited, added that with increased automation, it was important to focus on IT and OT security as well. “In IT and OT, we are creating firewalls. If IT is impacted and there is no firewall, it will impact production as well.” The key to implementing ERP and AI is to look for efficient return on investment (ROI).
Speaking about expecting a return-on-investment Mukti Hariharan, Global CFO, Lenskart said the company is still in the process of finance transformation and implementing ERP. “Once the transition is done, it will be a big leap for us. At the moment, it’s baby steps. Getting the MIS out at the beginning of the month is a delight for me,” she added.
But not every company is looking at ERP implementation with an ROI lens. Take Honda Cars for example. Sameer Jain, Vice President, Finance & Accounts, Honda Cars India Limited said the company considers it as a hygiene factor. “When it comes to automation, we look at safety on the line. And on the finance side, we have fintech tools for our suppliers but it’s not a capital-intensive project, so we aren’t looking at any ROI as such,” he added.
Still with cloud implementations, security remains a concern especially around data security. The debate of on-premises vs cloud is an ongoing one, but the main point is to move to a more robust system according to Rahul Jain, CFO, SRF Limited. While doing that one has to keep an eye on regulations too. “I think all of us have to work together to ensure that the right data is there not just to stakeholders, but also shareholders, while keeping an eye on regulatory activism,” he added.
With new technologies like Generative AI now taking centrestage in many companies, adoption is still a challenge some feel. As Saibal Sengupta, CFO, Orient Electric pointed out ROI does not come unless the adoption challenges are addressed. “From vendors to manufacturing, to sales to services to after sales and to the last mile connectivity with the consumers, there has to be adoption. The biggest challenge comes from the outside partners, the distributors and the vendors,” Sengupta said.
Adding to the challenges with adoption, regulatory challenges with continuous AI generated notices from government departments is also proving to be an issue. According to Yashpal Jain, CFO, Sandhar Technologies Ltd, a company that makes products for the auto industry, tracking ROI is not about how much is coming into the bank account, but more on how much is being saved in terms of wastage and easing regulatory pressures. “On one side, you have to convince the management that the money being spent will benefit us from a regulatory standpoint, while on the other the government is also fast adopting technology which we have to adapt to,” Jain said.
The challenges are industry dependent. For instance, the real-estate industry faces multiple challenges in GST reconciliation and with consolidation of land records, and technology can help in both these areas. As Manoj Dua, President & CFO, F&A, Omaxe Ltd said: “As far as AI and ML is concerned, we have recently implemented GST reconciliation as we have hundreds of GST numbers to deal with. Another challenge we face is with land records because specifically we keep buying land in bits and pieces and then consolidate them and go for RERA approvals.”
Most CFOs find the integration of finance with IT helps in better strategy planning, irrespective of the sector. But the challenges are common. For instance, as Anurag Agarwal, Head of Finance & Legal department,Axtria, a company that deals in data analytics in the life sciences sector for the US region said: “Although we moved quite early, we still thing adoption was the biggest challenge for us.” When looking at finances it is easy to lose sight of the customer at times. “We know what is our goal, but we may forget who is our client? I think that’s the biggest challenge I see, one is adoption, and second, the readiness of the talent or the team,” he added.
A consensus across all the finance leaders at the summit was that while adopting ERP and AI, one should not look at security from an ROI point of view, because if there is a breach, that’s when real cost impact happens. Often investments in ERP and data projects are looked at as IT projects, and therefore, expenses that may not be critical. As Mayank Kumar, CFO, Shahi Exports said: “We need to bring a mindset change in the company. This should be looked at as a companywide project, not just as an IT project or finance project, because many times a lot of new IT projects are driven by finance itself. Another thing, across companies I have seen there is a resistance to change. People are comfortable using legacy systems.”
Summing up, the sentiment among the finance professionals of some of India’s leading companies across sectors is that technology needs to be adopted if progress is to happen. Whether it is for customised dashboards for quick MIS visibility for the top management, to efficiently using data to plan strategies or quickly identify cost areas, technology adoption is happening across sectors, despite some resistance to change. Another consensus was the need for re-skilling in some areas and to look at ERP system implementation as companywide projects and not just in silos. To scale into the future, companies are already in various stages of adopting technologies such as ERP, AI and ML in some form or the other within the finance function and other sectors, be it custom solutions or plug-in packages.