 From around the globe, it's theCUBE with digital coverage of IBM Think 2021, brought to you by IBM. Oh, welcome here to theCUBE as we continue our series of IBM Think on John Walls. Your host here on theCUBE for our discussion with Scott Layton, who is the senior partner in global finance transformation practice at IBM. Scott, thanks for joining us here on theCUBE. Good to see you today. Oh, great to see you, John. Thanks for having me. You bet, absolutely, looking forward to it. First off, I want you just to put yourself in the CFO shoes these days. We're talking about this digital transformation and all that's occurring, particularly in finance. And what are the, I guess, issues or the challenges you think that are kind of keeping them up at night and then we're going to transition over to how you at IBM are trying to solve those problems for them. But first, let's let the CFO roll. Sure, sure, great question. And if you had asked this two years ago, we'd have a different answer in some ways, right? COVID has put a tremendous amount of pressure on businesses and CFOs in particular, especially when it comes to managing cash, managing logistics, supply chain has been pushed pretty hard through its limits. I think cash has always been king, but even more so now in their preservation of cash. I think as well, we're now seeing in the last year or two, this push towards digitization, like you said, there was a long time in a lot of CFOs minds, a lot of reluctance around how fast they can move towards digitization, how quickly they could get people working remotely or using technology better and move away from paper invoices and things like that. And what we're finding is when people didn't have a choice, it happened relatively effortlessly. And so we've now seen a much broader appetite towards digitization, leveraging tools, again, in pursuit of managing cash and creating efficiencies, reducing costs. So it's the same benefits they've always looked at, maybe a little bit more focus on cost and cash, but now the tools that they're able to use to make that happen are much more prevalent and they're much more open to their use. Yeah, so you're talking about making a decision voluntarily and then maybe external forces pushing you into driving decisions. So is that kind of where we are right now where there's really no option? You got to go, you have to make this kind of move. And so you've got to answer to those external pressures. And so this is not a voluntary mission. It's a must have in today's finance world. Yeah, I think so. And look, it's always been something that CFOs wanted to move towards. Like no CFO will tell you that they love manual processes and they want stuff on paper, but there was always this ability to defer the decision and punt it a bit. And what's happened with the pandemic and changing the ways of working, it's forced that decision to happen. Again, I don't think it's created a decision that wouldn't have happened eventually, but it's certainly accelerated it and caused them to take it quicker. All right, so you've conducted and you just released study, the CFO study where you've looked at and categorized, I think interestingly enough, three kind of stacks of CFOs, one's the star side, right? The other two are lagging a bit. Tell us a little bit about that, about the study and those categories, and then we'll break down a little bit into why that one group is the star side of this equation, kind of what they're doing and then what you're suggesting the other two do to catch up. Sure, yeah, so what we do is when we go and we do these surveys, we ask hundreds of CFOs how they think about their business, where they put their priorities in the business and compare that to the performance of their business. And what we find is that when you look at these, these different categorizations of CFOs and organizations, you have one that clearly stands above the rest in terms of performance. And what we find is there's a direct correlation between things like the usage of AI, things like agile methodologies, lots of different kind of almost cutting edge techniques in business, but also in technology that they're using to differentiate their businesses and they're again directly correlated with their performance in the market. So in terms of, I guess, the lesson learned or how another CFO could learn from this group that's ahead of the game, what do you think is maybe some of the key takeaways that if I was on the outside looking in or observing someone who you think is doing better than I am or maybe has a little more vision than what you're suggesting I have, what should I be looking at if I'm, if I realize I am in a deficit and there are people who are doing things perhaps in a more advanced state than I am? Maybe a couple of things. So one, we talked a little bit about digitization already, right? Leveraging technology more and more. And when we talk about technology, you can think about technology in a couple of different ways. You can think about this concept of a next-gen ERP or you can think about this technology as more of like what's called an exponential technology. And our position would be that as a CFO or as a business, you want to get as much of an off-the-shelf ERP as you can and then build your exponential technology around it. So your AI, your machine learning, your automation, set that on top of and around your ERP because it's inside the exponential technology that you're going to create differentiation. So that's one thing that we're seeing is this adoption of next-gen ERPs and exponential tech. I think the other thing that we're seeing is a fundamental rethinking of the way that we're doing working. It's agile, but it's so much more than that. We have a lot of discussions today with CFOs about agile and we make this distinction that says, listen, you can be a CFO on a finance organization that practices agile or you can be an agile organization and there's a very big gap between them. And what we're seeing is our best CFOs are adopting this new agile org methodology. And they're saying, we're redefining the ways that we're doing work. We're removing duplication. We're removing finance to finance to finance discussions which is a tremendous waste, right? We're really trying to align our finance team, even though they're an internal team, we're trying to align them with value of the customer. So that's maybe the second one. And then I'd say, the third one is really focused on preservation of cash and using analytics to drive a better understanding of cash and how cash flows through the business. So whether it's improving your inventory turn, whether it's improving your payment term, terms, any number of different ways to manage your cash and preserve it. And again, using technology to do that. So again, ERP, exponential tech, agile and then leveraging tech to really drive value in the business. Is there, can you raise kind of an interesting point about that definition difference or definitional difference in agility? Is there a difference in perception and reality then? I mean, do some people think that, because they're employing certain philosophies or concepts in one respect that were good across the board and that maybe they're not, I mean, is there a gap there? Yeah. There absolutely is. You'd be surprised at the conversation, we have you. Well, they say, well, we're, oh yeah, we're doing stand-ups. We're doing retrospectives. We're doing mood marvels. That's, those are agile practices. What we're talking about is are you eliminating huge amounts of part of your work because it's no longer needed and it's no longer driving value. Are you tracking how agile, what kind of agile maturity your organization has and how you're driving towards a leaner, more efficient organization? There's, that's a very big difference. And yeah, we have daily meetings with our team versus this concept of being able to create an organization that is itself agile and is itself lean and aligned with the business. A lot of folks think by doing the former, they're accomplishing the latter. And the true measure is in productivity. When you do this step change to an agile organization, big, big numbers, starting 40, 50% in a matter of quarters, not years. It really can be significant because again, because of the way you're fundamentally rethinking the way that work gets done. Well, that'll get your attention in a hurry, won't it? You're talking about those kinds of gains in those kinds of time frames. That's significant. Yeah, we know when you look at it, we're seeing the same kind of gains with agile in let's say a year and a half that we saw with labor arbitrage in five or 10 years. It's really changing the way it works. And again, you have to have an open culture to accept like that you're not going to do things that you're maybe not going to support the business in the way you have for the last three decades. But once you have come to accept that, the productivity gains and the value that you're able to create. And again, we don't think about productivity in terms of reducing headcount. We think about it reinvesting. So what can finance now do that's a higher value add? How can they make their seat at the table bigger to better support decisions, to better drive the business? It's concept of driving the top line versus controlling the bottom line. It's very important. And obviously AI has got a big role in that, right? I mean, so let's talk about the function of AI in terms of finance and what you see or what you're talking to your clients about in terms of how artificial intelligence can be better incorporated into their systems and processes. Yeah, yeah, sure. Look, with AI, you've got a lot of different ways that you can apply it, of course, but where we see it really helping is traditionally when you look at the lower end of finance processes, you were able to apply automation relatively well. But what you're finding is you move up that complexity stack. You now start needing AI to give you a better opportunity to automate. It really allows you to help create the decision support. So we're seeing it in things like being able to read contracts and use AI to suggest accounting treatment. We're seeing it in being able to suggest best action. So when a problem is encountered in a business, any kind of business, right? It could be finance, it could be the core processes. It says, how have we dealt with this in the past? Was that successful or not? And using machine learning and AI, it's suggesting, maybe you should take this action and here's why. So artificial intelligence or augmented intelligence, we prefer the latter, right? It's this technology that's designed to assist in decision-making and provides you with more data and analysis than you could physically do on your own to make a better decision. You know, when you're talking about these really grand strategic transformations that are occurring and people have big decisions to make, but they're taking on big problems. So if you would just talk about some of those problems in terms of new platforms, new technologies, these real life conundrums sometimes people run into and how they are dealing with that, and how you're helping them deal with these big-time challenges, especially like on the platform level. Sure, yeah, there's so many where to start. You know, you look at things around financial forecasting and it used to be, when you would do financial forecasting as an example, you'd have your financial analyst and they're looking at three years of history and they're trying to figure out, all right, where's your revenue to land for the quarter of the month of the year, whatever it is, whatever period it is. And what we're finding very, very quickly is three years is irrelevant. You have to be looking at what happened last week, what happened the week before that, especially as the economy is changing so rapidly. And AI can help with that. AI can help you because what it's doing is when you now have to change your focus from years to weeks, you've got to start looking at different data sources to give you insight into what that means. Strange things, right? Like if you're in retail, you've got to start looking at weather. You've got to start looking at sentiment. We look at where, previous months where lockdowns were happening to help you understand whether you should be doing more business online or whether you're going to have more in-store retail as an example. So all of these different external data sources that finance people may not have traditionally been using, we're now having to incorporate because we don't have that corpus of three years of business information, it's reliable. So financial planning is a good one. What else is we think about how to leverage AI audit and controls are near and dear to my heart? I used to be an audit director and do investigations and things like that. And one of the things that we always struggled with was how do we leverage experience of the auditors or the investigators that have gone before us? So we've implemented natural language processing and natural language search. So you can say, tell me about the most significant risks that we found in China in the last two years. And the AI and the machine learning is going through our database of documents and using understanding what you asked and giving a meaningful answer. It's not a Google search, right? It's giving you a meaningful answer, understands what significant is and understands the tone of the language and how it's being presented. Just a few examples around that. Yeah, I mean, to me context is everything, right? And that's where we're making this huge shift in terms of having a much greater awareness and a sensitivity to the real context of a data point that you're looking for. So you make a great point. So before we close out, I always like to hear about a practical application. So if you could, I don't know how comfortable you are with naming names or not naming names, but can you give us an idea of maybe how you've worked with a CFO or CFOs in terms of identifying areas where they can improve or they can implement some of your advice, some of your solutions and where it's worked, where they've had great success and has inspired perhaps more success within their organizations. Yeah, sure, sure. I think my, and I won't name names, but I'll give you an idea because we do this a lot of different CFOs, but it's just, I like to think of it as sizing the appetite and then serving what they want to eat. So when we meet with a CFO, we have a discussion with them about where their pain points are and talk about advisory. And then instead of serving them this banquet meal, let's start with the dishes they really like and it's really important to them. So we create this bite-sized proposal and we use that to, because we get the days of $100, $200, $300 million transformations, why would anybody do that anymore? Don't tell my bosses that, but I like to start with a smaller bit, right? Let's prove the value and then let's create a self-funded transformation where the value that you're creating, whether it's in working capital, whether it's in day sales outstanding or in actual productivity, you create that value with a small pilot, proof of concept, MVP, whatever you want to call it. And then you use that in a portion of those savings to then fund the next phase. And you can build to a very large transformation project very quickly. But again, for the CFO, it's critical to demonstrate value at every step of the way. So we like to do what we call POCs, MVPs. We do this through a garage. We may come together, do some co-creation. We might leverage one of our partnerships like Salonis to bring this fact-based approach to the table to help them understand where their problems are. We co-create the solution with them. And it's typically finance, IT, developers, all in the room building something unique. And we're not talking months. We're talking in the morning, we talk about what the problem is, the developers build it in the afternoon and we show the CFO the next morning what we're thinking and what it actually looks like. And it's this concept of the days of a paper deliverable are done because of the way that we've, the society as a whole has democratized technology and made it so accessible. You can listen to the requirements in the morning and build it in the afternoon, iterate the next couple of weeks. So that by the end of a four to six week period, you've got this incredible minimum viable product that is actually creating value for the business and then you scale it out. That's the way I like to transform with CFOs. You listen, you learn, you help them build, create, solve their problems and self-fund transformation. That's for the cherry on top. That's dessert right there. You satisfy the appetite. So... All the way through, right? Scott, thanks for the insights. I appreciate it. I love the analogy too. It's really clear. I appreciate that. Thanks for the time today. Thanks John, appreciate it. Have a good day. Yeah, you bet the same to you. Scott Layton joining us here on IBM Think, talking about the appetite and trying to satisfy the CFO needs today, providing a little more than the appetizer but a very significant main course. You're watching theCUBE and IBM Think.