This is proving easier in the company’s consumer-health segment, which sells over-the-counter medicine and other related products, than in its agribusiness, which is exposed to changes in commodity prices and climates, Mr. Nickel said. said.
CFO Journal spoke to him about Bayer’s data lake, a warehousing repository containing vast amounts of raw financial and other data. He also spoke about the anticipation of Black Swan events and why it is important to stick to the forecasts produced by algorithms.
This is the sixth part of a series that focuses on how chief financial officers and other executives digitize their finance functions. Earlier installments focused on Alphabet Inc.’s push by Google to automate as many financial tasks as possible, how Unum Group got rid of spreadsheets, and Microsoft Corp.’s use of artificial intelligence.
Edited excerpts follow from a conversation with Mr. Nickel.
WSJ: What are the main changes you’ve made in finance since you started four years ago?
Mr. Nikal: We started building a powerful data lake [in 2018], It basically involves the assumption that we all want a data lake for commercial and financial operations. It is extremely wide and multifaceted. In some areas, you can even go down to the attainment level.
one more [change] Which we call Finance 360. We are basically using intelligent management and reporting software. I can see a lot of sales, I can see profitability, but I can also see the whole balance sheet. I can see head count development, I can see spending categories. When I discuss with board members, I do not bring any paper. We live in the system now and I’ll show a few things.
WSJ: How are you forecasting?
Mr Nickel: When it comes to midrange forecasting, a lot of people [at other companies] Use a static forecast, but it is then translated into PowerPoint. We have changed it. We only have some PowerPoint [slides]and then we basically run the forecast [with] a simulation model. We have created a dedicated organization called “Report to Report” which is really focusing on efficiency and automation in our reporting process.
WSJ: How effective is this process in the case of Black Swan events, such as the COVID-19 pandemic or the Russian invasion of Ukraine?
MR NICKEL: When Covid-19 hit or when the situation in Ukraine hit, you suddenly became very interested in more granular data. You basically want to know your accounts receivable very well. So I can view it by country, customer what are accounts receivable and what is due date. This is useful.
WSJ: Can you automate parts of your forecast?
MR NICKEL: We’ve started to do some intelligence on dynamic forecasting, but in the pandemic we used it less because historical data usually doesn’t help you. We use it more for estimating short-term topics like receivables, payables, liquidity etc.
We have projects in our consumer business where we have seasonal, weather patterns, where you know your inventory levels. It lends itself much better to predicting automation. At Pharma, we have invested in customer-facing applications that lead to sales suggestions [representatives] Which doctors to go next?
This is more difficult in cyclical businesses with significant macro impacts in the crop business, such as currency and supply-demand disruptions. The more cyclical the business, the more difficult it is.
WSJ: Would you still do manual forecasting?
Mr. Nikal: When you automate forecasting, you have to be prepared to use automated results because if you automate a forecast and do a human manual forecasting in parallel, you’ve actually done more work. And it hasn’t made things any easier. This is a standard organizational hurdle that everyone needs to overcome. We are not at the point where we say we will do fully automated forecasting for a division.
WSJ: Is that affecting the type of skills people have?
Mr. Nickel: People’s needs change and what people do in departments. In our control department, the largest organization is now called Financial Modeling and Analytics. And these are no longer your traditional bookkeepers. They are very tech-savvy people. It is also very important that everyone understands how the finance strategy ties into the overall objective of the company, what our ambitions are and how we get there. [To be sure], we need traditional accounting skills. We need traditional treasury skills.
WSJ: What else are you working on?
Mr. Nickel: The re-implementation of our enterprise resource management system. We have a very old and complicated system [with] About 140 examples. I think it will be upon us for the next five years as well as potentially seven years. This is probably the biggest program we have done in the last 20 years. It’s a staggering rollout where you go and apply, learn, apply, learn and go, country by country.
WSJ: How many people do you employ in finance?
Mr. Nickel: When you look at all the accounting, records to report, global finance, tax [functions]Of course, in all countries, including shared service centers, you’re talking upwards of 2,000. And when you look at the controls, we have about 1,000. So in total, we have about 3,000 people in finance. This is a fairly reasonable number.
WSJ: Has the number of heads in finance decreased as a result of the changes you described?
Mr. Nickel: As a company, we have gone through a massive transformation program. In 2018, we announced a program to remove €2.6 billion in costs [equivalent to $2.75 billion], And in 2020 we topped it with another €1.5 billion. We took out about 25% of the cost in four years. This is also being done by elimination, by structural changes. But digitization played an important role in this.
This story has been published without modification in text from a wire agency feed