Deepak, as CFO of Apple’s Indian operations you are client #1 for the Financial shared services. How well are your needs supported?
In terms of my specific role in relation to shared services, it’s of course primarily about leveraging scale. The focus for me, as CFO of Apple India, or for the CFO of any organisation, would be to truly figure out how to scale aspects and transactions in your business processes so that anything that is not specifically core to the business – not essential to running the operations – can be standardised and leveraged for scale.
Today, that’s the key philosophy I follow: trying to leverage my shared services to ensure that the scale at which I want to grow the business does not become a hindrance. In a more decentralised organisation every business expansion would add more complexity and I would be in a situation where I have to focus my attention on the transactions, the accounting, the payroll management, the fixed asset management, etc – rather than trying to leverage my skills and my expertise around helping the business grow.
We’ve created verticals of specialisation and are now leveraging that specialisation to suit the core business purpose.
To what extent do you feel that shared services is a partner to you? Or is the relationship more formal than that?
I look at the shared services as a vendor relationship, with me being the customer. I think it is healthy to disassociate myself and treat the shared service as a separate venture because I can state what’s required – the deliverables – and let the formal mechanisms drive the business. It’s about leaving the heavy lifting, or specialisation, to the specialists and getting the core of what you need to drive your business.
I truly appreciate the vendor-customer relationship that we share, though we’re part of the same organisation. There’s a common spirit that binds us together but we’re able to work the matrix fantastically because we’ve defined the needs or specialisations for each party.
Do you think shared services are most effectively deployed regionally/globally? Or is a country-specific SSO more appropriate for emerging markets like India?
Typically, I believe – and Apple is no exception – that shared services work best when they are able to leverage across geographies. That’s when scale truly comes into effect. I think what shared services brings is a high degree of efficiency, but efficiency can only be achieved through standardisation. If you don’t have a shared services that operates across geographies, you don’t have the opportunity to challenge every aspect and weed out the inefficiencies that could exist in a decentralised model.
If I was to have a shared services dedicated only to India I’d rather have it in-house and not call it a shared services.
What do you mean by "having it in-house"?
What I mean is, if I was to create a shared services organisation within my team for financial activities only, and another for operational management, it’s probably putting a veil behind another worker within the organisation of the country.
Leverage the efficiencies and scales a true shared services can bring means that you try and take it across geographies because then you’re truly building in scale.
To me, the core of shared services – as I understand it – is all about standardisation and leveraging scale. The more different aspects you get into a shared services and standardise them, the more efficiencies you build in, because you’re challenging yourself at every moment.
If you’re thinking about providing services across India, Russia, Turkey, the UK … each country will have its nuances. But if you challenge each of the nuances, and ask yourself how much can you standardise across these countries and geographies, you’d leave out the exceptions, which are expensive to manage.
Then when you get into those standardised processes, it becomes almost like a manufacturing activity: You run it through the machine and you keep on churning out what you need, and that’s where you build in efficiencies.
As CFO, you need to support Apple’s growth strategy. Are you able to choose between your SSO and outsourcing for selected services?
It depends whether the shared services is able to give me what my business needs. If I have a business need that my shared services is capable of, I would leverage that; but if I have a business need specific enough that my shared service cannot meet it, I’d outsource it.
We talk a lot about data analysis and automation, leveraging outsourcing partnerships and developing centres of expertise. Are there developments that you find have been particularly satisfactory for you as a client, where you are really feeling the benefit?
Today shared services is not just viewed as a transaction processing or BPO kind of operation but it’s being leveraged in multiple ways that enhance the business decision-making process. Transactions were easy to outsource, of course.
But some organisations want to keep the SSO in-house because they believe it’s core to the strategy of how they want to leverage the verticals in their organisations. From that standpoint, over the last ten years, each organisation, depending on what they want to keep as core to their philosophy, has taken decisions around the shared services.
Today organisations are actually going one level further, because they’re saying: this isn’t core to my operations so I may outsource it and I’ll probably start adding value by getting into more analytics across regions, geographies and businesses. That’s an evaluation that the shared services itself is going through.
Today, any customer like myself, when evaluating shared services, whether in-house or outsourced, may push the envelope by challenging shared services. It’s almost becoming a new format of the old model of supply chain, where you would ask: How are you going to manage the supply chain? Are you going to have multiple layers of sources? So shared services organisations need to figure out what’s their core and what aspects they could outsource.
I think it’s an evolution, which is a great thing, as you add value to the business by continuing the evolution.
What kind of reporting mechanisms do you rely on for real-time data to drive your decisions?
Again, it goes back to what’s the core you want to drive from the business – and what do you expect as a customer? So at every stage in time you evolve the reporting.
Some businesses have longer lead-times, longer cycles; others are dynamic and change every couple of months because of the industry they operate in. So depending on which end of the spectrum you’re coming from, your need for data and information systems keeps on changing and evolving.
There have been various points of time when I have engaged with shared services in a joint, collaborative effort to ensure progression.
Looking forward over the next five years, how might your requirements as a customer of the SSO change?
I think there are two main issues here: one, I would always want shared services to continue to challenge their own deliverables, their model, and their processes; shared services should never become complacent around the status quo. I continually ask the SSO to evolve, to be more customer-friendly, to get information to my employees real-time, to put information online, etc.
In the situation we’re in, over the next five years, I think shared services has to get itself into the concept of operating more like a profit centre. If you look at any manufacturing operation, every one sets itself aggressive targets to ensure that they build efficiency into their manufacturing process. Shared services should do the same, in my opinion – though some will probably be alarmed when I say this.
If I was to keep my standard cost of invoice processing at a certain level – how much cost efficiency can I build in? That’s the contribution to the business, because in tough times, the business needs to think not just about cost-cutting but also look at it from the other side of the table – as an opportunity to invest, because nobody else is investing in the market and the time may be right to get a fair share of it.
But to make these investments, you have to get efficiencies from all verticals of the business, and shared services typically becomes a key driver at that point. So shared services is able to add value to the business if it understands the needs of the business.
If you have a more efficient mechanism for an employee to get the data he needs, this saves time, which is reinvested in the job.
On the other hand, shared services can also free up funds to plough back into the business. So these are the two things I would expect the shared services to work on.
You are operating in India as a multi-national. How are the challenges or advantages different compared to a local organisation?
I think, whether you’re running a multinational or a domestic company, you’re driven by the same philosophy: A shared services has to believe in its value to the organisation. There is no one size fits all when it comes to customer-facing situations so shared services needs to make sure that what they bring to the table is business-relevant and business-ready.
And it’s been a success for Apple in India so far?
So far, so good. I’m not complaining.