As a new CFO takes the helm at TCS, Cesar Bacani, editor-in-chief of CFO Innovation Asia, looks back at how the finance function has transformed and considers the wisdom that outgoing chiefs can pass on to younger colleagues.
Before I interviewed S Mahalingam, until recently the CFO of global IT services and business process outsourcing giant Tata Consultancy Services (TCS), I thought he had been in finance for 42 years. He set me straight. Although a chartered accountant, Maha, as he is known, had been in almost all functions except finance in 33 of his 42 years with the Tata Group.
‘I used to write [software] programmes, develop systems, do marketing,’ he said ‘I opened the international offices in the UK and the US. Basically, I have done almost all of the functions – I looked after project delivery management, I looked after HR and training.’
It was a career path that he feels made him a much better CFO when he finally headed finance. ‘I would rate that as the biggest part of it,’ said Maha.
‘Had I been a backroom person [in traditional finance], I think I would not have been able to counsel anyone. I would have reacted to decisions, rather than being a part of [decision-making].’
Not that he had no qualms about switching over to finance; things had changed so much since he qualified. ‘I don’t think anyone was called a chief financial officer,’ he recalled, ‘The finance manager and CFO as a distinct role really came in the 1980s and 1990s.’
‘I was a little worried as to whether I would have the capability to do the accounting,’ he added. And then I realised that the function has moved on far beyond that’ — something that’s not news for more and more of his peers today.
Standards and processes have become more structured and there are things like automation, straight-through processing, outsourcing and shared service centres — all of which Maha harnessed to free finance to focus more on value-added work. For, as the CFO found out, finance’s remit has expanded in all directions.
`You have to really work with the chief executive, to give the relevant drivers for running the business and making sure that you are not only helping in the planning process but also in measuring [performance],’ he said.
Not that the core of finance has been neglected at TCS.
‘Accounting is an expertise function,’ Maha explained, ‘My challenge in the last 10 years has been to create this expertise, in the same way that a specialist structure was also created around global taxation’ (TCS has 58 offices around the world).
I interviewed Maha after he was honoured as CFO Innovation Asia’s CFO of the Year in 2012. He retired on his 65th birthday in February but years before he had already started grooming a successor in Rajesh Gopinathan. An engineer with an MBA degree, Gopinathan was on the business side when Maha brought him over to finance.
`He is not a chartered accountant,’ said the new CFO’s mentor.
The way things are going, though, it seems that even a non-accountant can take the financial reins — provided that he or she is backed by the expertise of accountants, tax experts, treasurers and other specialists.
This article first appeared in Accounting and Business, China edition, April 2013