Genpact CFO Ed Fitzpatrick and Chief Strategy Officer Katie Stein discuss how they collaborate to help the business adjust to changing customer demand caused by the pandemic, including greater expectations for financial planning and forecasting capabilities.
When COVID-19’s multiple business impacts began disrupting Genpact’s business transformation markets, its business lines had to pivot to meet customer demands for help with virtualization, online commerce, and improved financial planning and analysis (FP&A) capabilities, among other issues. In this conversation with Simon Tarsh, managing director, Deloitte Consulting LLP, and Outsourcing Advisory Services leader, Genpact CFO Ed Fitzpatrick and Chief Strategy Officer and Global Business Enterprise Services leader Katie Stein discuss how their collaboration, supported by capital investment decision-making, helped the business adapt to shifting market trends. Fitzpatrick also describes how he leverages Genpact’s analytics and data management tools in a shared services model to improve his finance organization’s planning and business partnering capabilities.
Tarsh: How has the pandemic affected your market and what has that meant for your strategy?
Stein: The cash crunch many companies have experienced since the early days of the crisis has had a couple of major impacts. First, it significantly raised customer demand for help with managing liquidity, cash, and risk. Customer focus has turned to gaining better visibility into the future, and how to improve planning and forecasting to support growth strategies in an uncertain business environment.
At the same time, the crisis slowed down some large transformational deals. Pre-pandemic, there was a lot of customer interest in new ERP implementations and full-scale digital transformations. Now, with resources constrained by the crisis, our client conversations are more about services that layer on top of existing ERP and on outsourcing different pieces of finance that they don’t view as core to running their business. These shifts have meant significantly changing how we go to market. Ed, myself, and other senior leaders on our investment council put in a lot of time understanding the new trends in our market and thinking about how to reposition our business investments accordingly.
Fitzpatrick: Much of what’s changed is who we market to. As cash flow issues became more urgent, responsibility for these issues moved up the chain of command. For example, last year, we put together cash management service offerings in anticipation of a coming recession. Pre-pandemic, we would have been talking to the owner of accounts receivables to help optimize those processes. Now we’re talking to CFOs who are putting together playbooks that look across receivables, payments outstanding, and related accounting processes to determine how to better manage their customer relationships and liquidity needs.
What trends are clients facing now, and how are you repositioning Genpact’s business offerings in response?
Stein: One key trend we are seeing is the accelerated shift to online sales, even in B-2-B markets. Companies are now looking to re-gear their supply chains and middle- and back offices for ecommerce. We’ve deepened our capabilities with the recent acquisition of Something Digital. Virtualization is another new trend, so we’re helping clients set up sustainable virtual work environments. We’ve expanded into virtually managing high-touch issues like employee engagement, mental health, and how to communicate company culture when people are working remotely. A third trend is greater urgency on cloud migration. Pre-pandemic, some customers viewed shifting finance, supply chain, and other functions to the cloud as a 10-year journey. That’s been compressed to two years.
A fourth important trend is that companies are increasingly moving areas once considered back- or mid-office, such as FP&A, to the forefront. CFOs are looking to not only reduce costs but upgrade finance’s ability to plan through the uncertainties generated by the pandemic and be a true partner to the business. We’ve long believed that AI and predictive analytics are key to achieving those aims. So, we are investing more in those areas and in customer experience, directing more capital to build on investments we’ve already made, such as increasing our engagement with business partners and adding more talent through acquisitions, as we did with last year’s Rightpoint acquisition. At the same time, we freed up capital by redirecting investments away from certain tools and technologies, as well as business relationships that were not delivering the results we were expecting.
How does finance work with global business and strategy to adapt to market trends?
Fitzpatrick: I think a big challenge for any company is how to quickly reprioritize capital spending plans according to current conditions. Katie and I both have major roles in the capital allocation process, and we work collaboratively to make those decisions and make them fast. For example, we developed an agile approach to capital allocation decisions that mirrors the way agile software development encourages innovation through perpetual disruption. We evaluate investments according to both long-cycle goals of a year or more and six-week short-cycle goals. If the investment isn’t meeting those short-cycle goals, we immediately ask why the investment thesis isn’t playing out and what to do about it, including whether to end the investment. We’re not afraid to take some big swings, and if we miss, we want to quickly make that determination. That process prevents us from getting overly attached to investments and helps us focus on investing in areas that can grow the business now and in the long-term.
To make that process work, there has to be a high degree of trust and collaboration between Katie and me, as well as with other leaders on the investment council. We bring different perspectives to these decisions; finance strategy is top of mind for me, while Katie is the owner of strategy across all the service lines. I trust that Katie thinks about P&L as much as I do, and similarly, I think she trusts me to support investment in long-term growth even as I try to balance that with a focus on the bottom line.
How are predictive analytics and customer experience transforming Genpact’s FP&A capabilities?
Stein: Just a few years ago, the market for FP&A services was mainly focused on report rationalization and data aggregation, with some ad hoc analytics. Now, it’s much more about forecasting and planning with real-time data to quickly provide insights for strategic decisions. For example, in the last year, we’ve set up data collection and analytics centers of excellence for clients. They function as a shared service hub supporting finance, freeing the FP&A teams in the retained organization to advise the business on how those analytics-based insights can guide strategic decisions.
For Genpact’s own strategy group, we now have a senior finance executive supporting our M&A and R&D work. Having him in the cockpit with us every day ensures we have decision-making clarity from the financial perspective on potential acquisitions. We depend on him to shine a light into the dark corners so we can determine whether we have the risk appetite to pull the trigger.
Fitzpatrick: Within our finance organization, we use our analytics and data management tools to help transform how we work with the business. I now have just a handful of folks in the United States, with most of my team in shared service centers. During the pandemic, we’ve been able to update our forecasts weekly instead of monthly, incorporating new and rapidly changing data so we don’t have to do a full re-plan.
Our financial data platform also makes the financial view of vital metrics like customer growth and profitability readily available and easily accessible to our operating and global teams. For the finance team, this means that instead of spending most of our time compiling spreadsheets and delivering reports, we can collaborate more with the business lines and other functions, discussing what the data means for them and how they can use it to drive growth.
—by Andy Marks, Deloitte Services LP, senior writer, Deloitte Insights for CFOs
Editor’s note: This article is part of an ongoing series of interviews with CEOs, CFOs, and other executives. The participation of Ed Fitzpatrick and Katie Stein in this article is solely for educational purposes based on their knowledge of the subject, and the views expressed by them are solely their own. This article should not be deemed or construed to be for the purpose of soliciting business for Genpact.