Paul Morrison

Hello and welcome to Retail and Consumer Pulse by WNS.

My name is Paul Morrison. And in this series we dig into the trends that are driving retail and consumer goods. And today, we're going to look at the five forces that are reshaping the CFOs world . And to guide us through this landscape with his expert insights, I'm delighted to be joined by Tom.

Tom Klein is WNS's exec VP for finance and accounting.

Tom, thanks for joining us today. Perhaps, you could say a few words to introduce yourself.

Tom Klein

Yeah, let me do that.
So, I'm EVP of our financial services.

Essentially, I'm responsible for the finance and accounting services business for WNS globally, growth, profit, customer SAT, where we're going with technology, how do we help transform.

I've been in the industry probably thirty years doing this, Paul. And essentially kind of my charter and mission is really to enable clients transformation using all of the tools and capabilities that WNS has.

Paul Morrison

That keeps you busy, I know. But in this podcast, we like to call out one or two surprising facts about our guests.

And we're spoiled by your CV, your resume, Tom, because we have not one, but two facts to choose from. So, you are a fly fisherman and also a coffee farmer. Tell us more.

Tom Klein

I do have a coffee farm in Costa Rica. My wife and I have had that for about 10 years. We grow via Sarchi, a very high-end Arabica, and I'm not quite guide quality on fly fishing, but it is a very deep passion of mine. I love being in the river.

Paul Morrison

That's fantastic. So, we'll turn to our main course for today, the forces reshaping the CFOs world.

It's a big topic. And just to set the scene from my perspective, I guess it's never been easy perhaps to be a chief financial officer. It actually seems to be getting harder though.

So, some stats out there. Deloitte says that about 65 to 70% of CFOs report spending much more time today managing risk and volatility than they did in a few years ago.

EY says that 82% of CFOs say their responsibilities have expanded significantly in the last two years.

When I speak to finance leaders in retail and consumer goods, many seem to be in a firefighting mode, tackling operational tactical demands rather than building and investing in their role as a strategic leader. So, there's something going on there, and we'll turn in a minute to our paper. But how would you, from your perspective, Tom, how and why do you think it's so difficult to be a CFO today?

Tom Klein

Look, you highlighted a couple of good data points, Paul. Probably this year and next year are really unprecedented times for CFOs and chief accounting officers and controllers and those in finance leadership.

And as I think about it, there's probably two things that are going on.

First, there's a lot of macro events and activity, whether you have tariffs, whether you look at the wars, whether you look at the supply chain changes and disintermediation, inflation. It is very difficult to predict where growth will come from. How do you supply products and services to your clients when all of that turmoil's going on?

And that's on top of your day job, which is, I've got a fiduciary responsibility, I've got regs, I've got compliance, I've got to support the business.

So that is adding a lot of complexity and stress.

I think the second one, and you teed it up a little bit, was this whole area of transformation, and that is now the responsibility of most CFOs. They own that big transformation.

How are you going to lead us and guide us?
Many organizations, the CFOs, the IT team reports to them, the Global Business Services team reports to them. HR, you know, so they have a lot of these functions that are part of their charter, but now they're being tasked with how do you take us into the future, not just reduce our cost, make sure we're compliant, and we're keeping the ship steady.

It really gets to how do you transform us to be a competitive and growing force in the next three to five years and add AI. And what that has done to transformation is it adds another dimension, which we can talk about later. So, unprecedented times for sure.

Paul Morrison

That's interesting. So, there's a massive role creep or role stretch that's going on, and CFOs are trying to navigate their way through that.

So, let's turn to our recently published point of view, the five forces that are reshaping the CFOs world. And listeners can find this online. We'll include a link in the show notes as well.

It's based on a lot of research with our clients and in the market. We have hundreds of clients in finance and accounting and many dozens in the retail and consumer goods sector.

So, it's based on a lot of real interactions and real insights with finance leaders. And we've called out. Tom, your team has called out 5 levers or forces to really focus on. I'll just listen now and then we'll dig through each of them.

Firstly, we have smart automation. The coming together of multiple tools and technologies to automate finance.
#2 We have the evolving hybrid model. So, moving away from single vendor monopolies towards a competitive mix of shared services and suppliers.
#3 We have the great finance crossover. How service providers, software companies, intermediaries are mashing up their offerings in new and different ways?
#4 We have the rise of predictive, how it's increasingly possible to look into the future with planning, forecasting and strategy.
And then, the big 1 #5, how do you make the most of artificial intelligence in finance today?

So, there's a lot in there.
And we're going to scratch the surface, and we’ll go a little bit deep on some of them, but we have a lot to cover here.

But together, I guess it's a toolkit. These are some of the playbooks and the strategies and capabilities that are changing what's possible for CFOs.

So, it's really powerful stuff.

Let me kick us off with lever #1 smart automation.
And I guess my starting point for this is automation is nothing new in the retail and CPG finance space, but the scale and deployment is.

And so we're talking really about smart automation and coming together of maturing multiple tools, building on ERP, building on SaaS investments, RPA, low code / no code, orchestration, process mining, there's lots in there.

And then the sense that the strongest performance in finance are getting better performance, they're getting better ROI from this. So Tom, it's a really big topic. What's your sort of key takeaway or way of thinking about smart automation?

Tom Klein

Yeah, it is really the heart of what's going on. And, I think we have over 150 clients, and then we did the survey of about an equal number of CFOs for kind of the input to this document.

When we think of smart automation, it's really kind of at the heart of everything. But people need to understand that this is really moving to an autonomous finance world, which means, yes, we started with some simple RPA and some automation. And then there was, hey, we went a little more sophisticated in terms of hyper automation, and then some AI.

But we're all moving in a direction where transactional processing will be automated, much of the financial and accounting decision-making will be automated. And that puts a completely different complexion on where are you today and where are you going in the future.

And what's enabling a lot of this, Paul, is low code / no code, these automated interfaces that can link various systems together.

So, we have clients that, and I'm not exaggerating, 50 plus ERPs. And how do you do that? How do you transform a process that may not be common across all of those? The enabling tools and infrastructure are definitely doing that and enabling seamless integration without a lot of IT bandwidth to implement these transformations.

But the real value and the thing that I would probably want to highlight from all of this smart automation is return on management bandwidth because while it's great to drive cost out and that's what we're focused on in the ROI from that. When you free up management from focusing on daily transactions and the accuracy and the books balancing, and you start to say, all right, now, what can I do with my time?

And what do these tools generate in the way of insights and data that it enables management to focus on much more strategic things, right? How to enable growth, how to how to figure out where in products and services should be sold, how to find new ways to optimize your supply chain and much more strategic things.

So, the focus is for everybody around smart automation. It's a path to autonomous. But the real value that everybody needs to sink in on is I can free management time to focus on the more strategic, impactful things in our business.

Paul Morrison

Yeah, absolutely.

It's a strong vision, and definitely one that I've seen with my clients in the space and definitely moving that automation target beyond productivity to, you know, really impacting business and focusing on those sort of higher value tasks.
So, that's a great start.

I'll move us on, if I may, to our second key focus area and topic, which is around the hybrid model revolution.
And I touched briefly on the fact that there's a sense that the most sophisticated finance leaders in this space are moving away from single vendor provision towards finding a competitive mix of shared services and suppliers and multiple suppliers as well potentially.

If you look at some of the big names in this, these industries like the P&G or Unilever, they've been early adopters over many decades for some of these techniques. But I think many CFOs and their finance organizations struggle to find that balance between collaboration and competition.
So, how do you tee that that up? It's a tricky balance.

Tom Klein

Yeah, we're in a whole new world right now, whether you want to call it a hybrid or something.
And we would say, break up the single vendor monopoly. For too long, companies get into these five year contracts with a provider and services with the promise of all this transformation and goodness.

And they're locked in. When they don't see it, they have no leverage. They have no ways to bring others in.

So, we would say, from the start, have a multi-provider environment, pick best of breed, figure out how you're going to bring them together through a tripartite or a multipartite governance model where everybody has clear roles and responsibilities, and where you might even breed a little competition between the two.

So, we know companies, and I won't name a large CPG company, but they've outsourced their order-to-cash to one provider, and their procure-to-pay to another, and their FP&A to yet another. And they're all competing to show that they can be the most competitive in the marketplace and that they can provide the best service quality.

So, as the industry moves now towards global capability centers and companies look to do carve outs and say, look, maybe we don't want to get into the outsource model 100%, but can we do a build, operate and transfer?

Can we do a build, operate, transfer and transform? Having multiple providers, each bringing their best strengths really can provide the optimum equation for clients. So, for us, we'll roll up our sleeves and collaborate with anybody for the best outcome for the client. And honestly, the clients are driving this movement to kind of a hybrid approach.

Paul Morrison

Do you see that sort of sophistication? That bigger kit box – is that just for the biggest organizations or do you see it in the mid-market as well? What's your sense on that?

Tom Klein

Yeah, it's a good question, Paul.
I don't think we've seen it hit the mid-market in a big way, but what we are seeing is that, and even down the smaller firms that are maybe 500 million and in that range, they all tend to follow what the big guys have done.

I don't want to have to deal with multiple providers. I want one provider to do my, IT, my HR, my F&A, my procurement, my customer experience. And that's great, but that leads to a lot of buyer's remorse.

So, what we're seeing with some of them, the mid-market firms, is they're saying, look, this provider is excellent in this space. Another one is over here. I can get them to coordinate. And when they do that, they realize their expertise really lies in the governance and the management, and how do you orchestrate these firms working together?

Because even in transformation, there is a data component. There's a systems component. There's a process component. There's an organization change management. There are a lot of components.
So, expecting one firm to be the all in all and do it all equally great in every area, it's not realistic.

Paul Morrison

That makes a lot of sense. And certainly a sub process like order-to-cash. I think with many in the space, and it's sort of detailed subtleties, I think many CPG players feel less that requires a certain type of provider that's different to the rest of the transactional processing. So, there's complexity there.

That's interesting.
Let's muddy the waters then with lever 3 and add an extra level of complexity in what we call the great finance crossover.

I think the observation here that the team has made is that when you look at the mix of players that it takes to make finance really work well, you've got service providers, you've got software companies, and you've got advisors.

It seems that the barriers are sort of blurring between them. You have concepts like services and software coined by HFS. You've got, something's happening and it seems like CFOs now have to run this mash up of shared services engine, a bit of they're doing a bit of technology startup, there's a bit of strategy lab. What's your take on what's going on here, Tom?

Tom Klein

It's a free pro right now. There is a bit of market chaos going on.
I mean, we've seen the big four in the last couple of years jump into the business process management space. We've seen regional accounting firms get into management consulting and business process outsourcing.

We've seen the technology firms, and we've now seen it with Cap Gemini buying WNS where they want deeper stronger business process expertise. So, the IT firms are also saying I need to get that business domain expertise.

So they're in that space. And now you see the consultants also saying, look, we can do transformation on demand or consulting by subscription.

So, but it's all really being driven by our clients because the technology is such that these are no longer a year and two year-long transformation projects. Things can be done, in some cases, in a matter of weeks or a matter of months to implement very sophisticated capabilities and technology modules. And so they're like, well, I need to make these changes faster, and I have folks that know my business.

They may be consultants in the IT. They may be my business process partner. And so they're all seeing it. And us as providers are looking at the increase in technology and AI in transformation, the importance of change management and organization management.

And so we're all looking to bring these other dimensions into our solutions toolkit to help clients. I think as we all go forward, we're going into a world that's going to be autonomous and a world that's going to be big transformation with very quick cycles. And so, we're all trying to figure out how to bring all of that to the clients in a way that it's consumable, easy to implement and price competitive.

Paul Morrison

Yeah, it's really interesting. It's a big exciting time to be in the business to see how things are panning out. I guess, at WNS, we are part of this trend.

So, we have our TRAC ONE-F offering. It's end-to-end solution across finance. It's integrated with AI, integrates with the RPA, and it's a platform for next level finance. So, we're in this as well.

Tom Klein

We are, I mean you touched on TRAC ONE-F. We started this mission a couple of years ago, Paul. You know, my team and I have practises and all of the engagement systems today, right? So, on top of an SAP or an Oracle, you've got BlackLine, Trintech, HighRadius, Amagia, Basware. There's a number of wonderful systems that have delivered great value for clients, but they're filling gaps on the ERPs.

But none of them were built on an AI base native. None of them were designed to augment every F&A function on top of the ERP. So, we said if we're going to do something that's truly transformative, it is going to be integrated and unified, yet modular and takes the advantage of AI.

We launched TRAC ONE-F, and it's been received very well. And so, especially for the mid-market firms, they need that integration. They don't want to buy three or four or five different systems to plop on top of their ERP. So, it's a great fit.

Now, we can talk about technology, and I could brag about TRAC ONE, but I would say even in this hybrid world that we're talking about, even in this kind of crossover, we have to focus on the process domain. We have to be process-led, not tech-led.

And there's a lot behind that, but I would caution everybody that's listening to this podcast and says, hey, TRAC ONE isn't a panacea. The next wonderful AI widget isn't the next panacea.

You need to understand your business and the processes that run them first.

Paul Morrison

Well said.
We could fill the whole podcast on that topic. We'll move on to #4 and look at CFOs as futurists.

So, the rise of predictive decision-making here. And I think the key thought here is that it's increasingly possible with some of those technologies that we've been talking about to look into the future with things like planning, forecasting and strategy. We see some of our clients getting much more accurate forecasting results.

We're getting the cash flow forecast, for example, much more accurate, much easier to look early and upfront and further out with accuracy. So, real tangible changes. At the same time though, you have for example, BCG has noted that only about a quarter of FP&A teams have achieved fully automated role in forecasts, or Gartner talking about a third of finance leaders fully trust their AI base forecasts.

The rest aren't quite sure yet. So, we're not quite there on prediction. What's your feeling on this, Tom?

Tom Klein

So look, we make this statement. We think CFOs are the futurists for their organization. And there's a subplot there, Paul, that really gets under data and AI. And so, when you think about an environment or a world where transactional processing, closing the books, submitting all of your financial disclosures and statements being automated, and you really think about what is the CFO going to bring to the organization?

And they've got all of the data, the financial data, the business data, the company, the customer data, and they're in a unique position to leverage that to make predictions about the future. So, we've all looked at descriptive analytics and predictive analytics. Now, we're at a point where AI, especially agentic AI and AGI, which is emerging, can really do the decision-making and they can start to solve problems and you can ask very interesting questions.

When we look at that, the CFO and their FP&A teams are going to be the ones that start to really become the business strategist and the architects of how do you leverage data, and how do you leverage AI to chart a different path for your business.

We see a lot of CFOs marching down that path, and even the data Everest at a recent survey where, 70% of the CFOs are looking to invest in FP&A as a priority over other areas. So, I think that the surveys, the dollars, the technology are all leading to how do we enable the CFOs in this new transformation role. They have to be the lead of the business in business strategy for their organizations.

Paul Morrison

Yeah, absolutely.
It's really exciting to see the tools coming into maturity now in areas like planning. I guess, as a sort of basic observation I have in this space, it's almost like you can talk to the data in a way that wasn't possible.

You can ask questions. You can produce thousands of scenarios in real time.
So, the level of interaction insight and insight that can be created, this moment compared to a few years ago is completely different. So, it's a whole new set of possibilities. Exciting times!

That leads us on to our sort of 5th point as an introduction around AI more broadly. And you can't have a conversation about anything at the moment without talking about AI.

But I guess the sort of frame of the research is that for finance, AI adoption has been moving into the mainstream for a few months now or even longer. Most finance leaders have invested somewhat or even a lot into their core systems or SaaS or AI native tools, and productivity and other benefits are starting to come through.

So, Hackett asked finance leaders what stage they were at, and only 4% of finance had to say that their companies were maturing and scaling the use of AI services.

There's a gap there. What's your advice, Tom, on trying to make the most of AI in finance?

Tom Klein

Yeah, there is a lot of hype around AI, justifiably so.
I think, we would say go back to the future, meaning start with the basics and be brilliant at the basics.
Remember when we did lean 6 Sigma, and we would map out every step, every process on the wall with flow charts and diagrams. And we would try to identify where there were inefficiencies and bottlenecks. Where is the dating coming? What systems are supporting? Which are the steps in that process?

When you look at AI, you almost have to restart that because now you have a technology and a capability that can just leapfrog what you've been doing already. And so to your point, I presented at the Hackett conference a couple of months back. They were very bold around only 4% of their clients are in production and scaling AI. 22% are in proof of concepts. MIT had a had a study out, I guess, maybe 6 or 8 weeks ago, kind of, saying the same thing, right?

And so we would say, look, there's four things you need to really do to implement AI successfully.
One is domain is king, meaning go back to the future, get out the whiteboards and the Six Sigma lean way of doing things.

But your process expertise and your people that know your processes, and why they are the way they are, and how to optimize those, pair them with a domain person in AI.

This is how can we think about doing this differently. So, we would say domain is king. Start there. I think, we also have to acknowledge that there's been a tremendous investment by organizations in IT and infrastructure.

So we would say, kind of recycle, repair and then, refit or replace or repurpose. And, the reason for that is SAP, Oracle, BlackLine, you pick the finance systems you're using today. They're all going through their own enhancements and building AI in and building more capability and building industry specific modules.

So, before you say it doesn't have it today, and it never will, look at what you have today. How can you sweat those assets? How can you optimize what you have in place? And then, are there opportunities to augment those?

You might do it with a TRAC ONE. You might do it with another tool that says let's augment what we have. And if any of that's worked, then the last thing is, let's toss it and replace it. Then, we'll drop in some AI agents and magic. I think over time, all of these platforms and tools will be AI-based, but we would say, take a logical approach.

The third element, everybody talks about data, and it is key. We'd say garbage in, garbage out. Real simple, everybody gets it. You have to have data management frameworks. You have to have a single source to the truth on your data.
You have to know where the data is coming from, how the algorithms are using that data. So, the whole data management factory has got to be the third leg of it.

And then, I think, you have to look at, this is another one of these “get back to basic” things. Look at your target operating model, and what do you mean, where people are doing what work and who is doing what.

Because in a world where you have human and digital agents doing the work and you have language translation capabilities that almost eliminate that it needs to be in country with certain language, you can rethink how you want to organize your operating model. And then, how do I reorganize my process maps and flows?

And then, where's the data come from, and what do I have with my systems today? There's almost a logical path that says if I can do these four things, I probably get off to a better start. And a lot of organizations are down the path, and we're advising them on that too.

And we would say, almost start with the target operating model. And one advertisement I would make, Paul, is, we've been investing in a platform we call Atom agile target operating model. It’s built on business optics, and essentially, it's your transformation platform and command center.

So, we can take the client's existing process data, volume, metrics, costs, organization structure, a lot of other, and we can prioritize a transformation road map, looking at what they have in place today, process systems, everything.

And that becomes a starting point for making good business case ROI-based decisions. Again, whether it's our tool or somebody else's, we'd say start with the operating model. Design that first, get to the processes data, and go from there.

Paul Morrison

Sounds good
So, there's a balance between creating new possibilities with the technology and stepping back with the clear head and mapping it out, working through the detail in a good old-fashioned way.

That sounds good. Just one last question.

You talked about hype, the flags agentic AI there as a top pick. It seems to be in many ways, that's the latest evolution of how AI can be given a goal to take something like dealing with an exception in a process flow and finding a resolution. It seems to be exciting.

There are a number of many solutions out there, but I think probably is the most hyped of all around this term. What's your advice on it?

The word agentic, when CFOs hear it, should they just move on, or should they listen hard?

Tom Klein

I think they should listen very hard because when you cross from AI doing, automation in a different way, in an intelligent way, not just automating tasks, and you move into generative AI where you can generate content and information and responses.

Agentic takes you into – I can solve your problems. I can start to make decisions for you based on the data, based on what I'm learning. And when you think about agentic, we're going to very quickly be into AGI. We're at a point where it now has more or better intelligence than the humans.

So, they can make decisions faster. They can grab more data. They can see what works.

So, I would say absolutely do this. My caution, and again, I get back to there's a lot of hype and what always gives us opportunities to have conversations is let's be real about how to really execute effectively.

I would say it's about the governance.

So, what do you mean the governance? Well, when you get into a relationship and you're looking to have a partner transform or operate your processes, you put a structure in place. Okay, our teams will work in these fashions. So, we have these ways of working. Here's the reporting. Here's how we do escalations.

Okay, that's great, but it doesn't drive innovation. It doesn't drive the transformation.

And, I can tell you, over the last 45 days, Paul, I've gone through our top 20 accounts within WNS, and I looked at where is transformation being successful, and where is it not?

And to every one of those that isn't successful or is, it's about governance. And do they have a transformation office, an innovation office? How integrated is it?

Do the clients have the governance structure with their GPOs or global process owners? Do they have the mandate to drive the transformation on their side?

Because we can come up with great ideas. But if you don't have the governance mechanisms in place on how you're driving innovation daily, and how you bring that in the clients environment, it's not going to work.

Paul Morrison

Yeah, absolutely.

Now that that that really resonates. I mean, in these five levers, you've taken us through a lot of change, a lot of new ways of working, extended capabilities.

And yeah, there's got to be some way of making it work, making it hit the ground running without upsetting safe and steady operations.

So, that's got to be got to be front and center.

So, I think it's a good point to take a breather and end our session here, Tom. Time is against us. So, I'll have to just pause there.

Let's catch up again in a few months and see what else is coming the CFOs way. But really appreciate your time today, Tom, for a great conversation.

Tom Klein

Paul, I'd love to sit down with you again, and maybe we peel the onion back on a key topic or two because this environment is changing so quickly.

And thank you everybody being patient for some of the long winded responses. But there's a lot of passion behind what we do.

Paul Morrison

Absolutely. And you can tell me your next fishing story as well when we meet.
So thank you, Tom. Thanks to our listeners for joining us today on the pods.

If you enjoyed the show, please do like and subscribe, and stay tuned for our next episode.

So, thank you and goodbye.