Dirk joined the Lidl Group as Global Finance and Accounting Director in 2008 and was subsequently appointed as Board Executive for Finance, Accounting and Tax for the German operation before joining the UK Board of Directors in 2014. In his role as CFO, Dirk was responsible for the Financial and Administrative operation of Lidl in Great Britain. He’s held other retail CFO roles before and serves on the Board of Kingston University, London, as the Chairman of the Audit and Risk Committee.
Prior to joining Lidl, Dirk has worked for KPMG out of Frankfurt, Shanghai and Singapore as a Qualified Chartered Accountant for almost ten years. We caught up with him below to talk about COVID-19, big data and machine learning’s impact on the CFO function and his goals in his new role.
What has been keeping you busy over the past 12 months? How have you helped Lidl GB navigate the COVID-19 crisis?
COVID-19 played a major role last year. Keeping colleagues and customers safe whilst ensuring we could fulfil our vital role in feeding the nation came with many challenges. Optimising cash flows and raising funds from Investors and our shareholders was the basis for ensuring the business could not only afford the expensive COVID-19 measures but also continue with our ambitious expansion programme. We increased salaries and paid extra bonuses to our front-line colleagues who have risked their health and lives for our customers. We paid back more than £100 million in business rates relief to help the local communities with their funding and we financially supported our suppliers in need.
We must, however, not forget Brexit with its ongoing uncertainties about the new regulations and their application, which has tied many resources.
Despite all this, my focus was on delivering for our customers, enhancing the in-store experience at the check-out and delivering and continuously improving our app-based loyalty programme, Lidl Plus.
As we slowly begin to return to normality, what’s your advice to CFOs navigating the post-COVID-19 world? How are you preparing for this?
It is important to recognise that we will see a new normal rather than normality. COVID-19 has changed the way people consume, spend their time and how people work. How we approach it, embracing the new normal, tackling its challenges but also seizing its opportunities, will define future success more than just trying to get back to normal.
It will be important to carefully observe and efficiently engage with customers and colleagues to understand their needs and then support the board to adapt the organisation to those behavioural changes as swiftly as possible.
A full review of all our processes has helped to identify even more efficiencies. I am proud to say that my organisation is stronger and more robust than ever before.
What are some of the main lessons the pandemic has taught you?
Most organisations have not had a global pandemic on their risk register. In an ever-changing more globalised world, companies will be challenged by events they have not been able to foresee nor have their management teams been able to train for. The food retail sector was able to operate throughout the pandemic, thanks to our heroic frontline colleagues. However, many businesses would not have survived without the support of the government and the support of their communities. Organisations should take away two main lessons:
Do the right things even if nobody is watching. If your organisation is unable to prove that it contributes positively to society and conducts its business in an ethical and sustainable way, society might not be willing to support you during the next crisis. It is important to communicate with government bodies and the communities you serve and to acknowledge the important role these stakeholders play for your organisation.
Second, as one can’t prepare for everything, the way we responded to the pandemic was based on the experience and the training of our senior leadership team in crisis management. The generic response methodology has worked very well, and it is the duty of the CFO to ensure that the processes and the people are fit for a robust response to any crisis an organisation could go through. Our investment in crisis management training has paid dividends.
How will the proliferation of big data and machine learning impact the role of the CFO in the coming years?
A great CFO should be able to cut through today’s noise of data and provide relevant and timely insights for colleagues and enable them to excel at their jobs. Finance teams have always helped top management to focus on making fast and good decisions based on clear and true information. With more data than ever being available and coming from different sources, from both inside and outside the organisation, the CFO and their teams will have to work harder to remain the single source of truth and the go-to business partner.
Machine learning and big data might make it appear to be easier for the end-user to create their own reports, but it will need data experts to understand the quality and reliability of such information. The CFO will have to ensure that big data is used for the right use cases and in the best quality.
What are your key goals for the next 12 months?
Now that I’ve stepped down from the Executive Board of Lidl Great Britain and have joined the board of our international head office, taking on the global responsibility for accounting and financial reporting for the Schwarz Group, I am excited to be working alongside an international team of outstanding experts for Europe’s biggest retailer which also operates substantial food production and significant recycling activities across Europe, the US and Asia. I will continue to play my part to support the GB business, by chairing the Audit Committee of Lidl GB. This will allow me to remain closely connected to Lidl GB, an outstandingly ambitious organisation that is so close to my heart.
Finance Monthly’s May CFO Insight section looks at the work of Dr Stephan Hardt – the Financial Director of one of Deutsche Telekom's subsidiaries and one of the largest IT service companies in Europe – T-Systems. Here Stephan, who’s been the company’s director of finance since 2012, talks about the finance function at the company, his own role, challenges that ICT providers are faced with and the future of T-Systems and its parent company.
What have been your major achievements since becoming T-Systems’ Director of Finance in 2012? How have your role impacted the company’s performance in the past 4 years?
After my first 100 days, the Finance team began focusing on two major topics: Making sure that the company is profitable and that this profitability is sustainable. Secondly, the Finance team itself required a transformation process to become a high-performing business team, as well as the provisioning of proper finance tools.
The turnaround was achieved by various measures, e.g. restructuring the company to increase its productivity and increasing the transparency on customer projects. Furthermore, we started with a rigor cost management approach, which included the operative business units and the cross-function units like Finance, Human Resources and internal IT. In addition to those measures, the Finance team developed and implemented two tools which were essential for the productivity increase of the business units: A forecast and an order-to-cash tool. Both tools enabled the business units to have access to accurate data to manage their business properly.
Early in 2013, the Finance management team developed and established a performance improvement programme for the Finance team: the HIP (HIgh Performing) team. The main intention of this programme was a mind change throughout the entire team. It was all about collaboration inside and outside of Finance and transforming the team to business partners for the operative business units.
Overall the turnaround for T-Systems has been achieved and the Finance team has been transformed into a lean and efficient cross-function unit which acts as a business partner for the business.
The finance function at T-Systems has spent the last three years investing in a forecasting tool – could you tell us a bit about it?
In 2013 the Finance team implemented a forecast tool that was redesigned accordingly to meet the business requirements of the UK senior management team. The forecast tool is designed in a way that it can be used as a planning tool, as well as a forecasting tool. Its design is based on a data cube which allows business owners to review their business units from various perspectives: It provides a view on the level of the business unit and its cost centres and projects as well as its services/products and finally its customers. In addition, the tool provides a country specific breakdown for international customers. Since the forecast tool was implemented, we recognised a strong reinforcement of the entrepreneurial ownership of the business. Due to the fact that the business owners are responsible for populating the planning and forecast data into the forecast too, the quality of the data has increased significantly. The managers are thinking and acting more and more as entrepreneurs. Finance has moved away from the classic role and common understanding of populating data into reporting tools - it is now acting as a business partner, providing management consultancy to the business by reviewing data. To strengthen and foster the knowledge and financial understanding of the business, the Finance team has built up a Finance Academy which offers the management appropriate training sessions to develop their entrepreneurial ownership.
Currently, the Finance team is working on extending the forecast tool to a rolling 18-month view. This is a further step towards a more anticipating management style. The business owners have to think in mid-term views, instead of being focused strictly on the year-end. We need to move away from being reactive to a more pro-active thinking and acting.
Given the dynamic nature of the sector, what would you say are the biggest challenges that ICT providers are facing in 2017? How are you and T-Systems working towards overcoming them?
ICT providers will be facing various challenges over the next years; not only in 2017. On the one hand, the ICT market is a highly competitive market. The number of competitors has increased significantly the last 5 to 7 years. The picture of the typical classic competitor has changed as well: Who would have thought 10 years ago that companies like Amazon, Microsoft or Google will become new competitors in the ICT market? Furthermore, you see a huge number of start-up companies with a highly specialised service or product portfolio bringing new advanced solutions around cyber security and artificial intelligence to the ICT market.
Secondly, the so-called classic business of an ICT provider is going to change. The number of classic outsourcing deals is diminishing. Companies have started to in-source their former IT departments, rather than outsourcing them. To overcome those challenges, T-Systems has started to invest in new technologies like SAP HANA Cloud, Software-as-a-Service (SaaS), Infrastructure-as-a-service (IaaS), Internet of Things (IoT) and Managed Security Services.
The Finance team itself underwent a reshaping programme which focused on topics like lean and efficient finance processes, near-shoring certain finance and controlling tasks, modern and advanced reporting system and new qualification requirements for the Finance team. Another aspect is moving the Finance team into the new era of digitisation: Using artificial intelligence for the treatment of supplier invoices (accounts payables) and a state-of-the-art dashboard for the (senior) management available on multiple devices like notebooks, tablets or smart phones.
What differentiates T-Systems from its competitors?
In comparison to other ICT providers T-Systems’ big advantage is its capability to provide global ICT services out of one hand: As the IT business unit of Deutsche Telekom Group T-Systems can offer telecommunication services as well as IT services around the globe.
T-Systems’ legacy is based on a strong salient DNA which is made of Telecommunication, Transportation & Logistic and Automotive.
During the last few years, Deutsche Telekom and T-Systems have established global strategic partnerships with numerous leading companies, either in the Telecommunication sector or in the IT sector. One of those strategic partnerships enables T-Systems to provide mobile services or network services around the globe: ngena – the Next Generation Enterprise Network Alliance formed by leading international telecommunication companies offer global network services on shared partner networks; and Freemove – an alliance of top mobile telecommunication providers delivering high-quality international mobile services to multinational customers by synchronising the know-how and capabilities of its members.
Additionally, Deutsche Telekom is paving the way for the next communications standard by building up the next-generation communications standard - 5G.
T-Systems is one of the leading Cloud providers by using new IT factories which meet the highest security standard. That’s why Deutsche Telekom and T-Systems are seen as the most trusted company when it comes to the handling of personal information in comparison to other big IT and TC companies. With its Telecommunication and IT services, T-Systems is also supporting the development of sustainable profitable growth not only for large enterprises, but also for the typical German Mittelstand (mid-market), which represents internationally operating small and medium enterprises.
Last but not least, according to recent research, T-Systems has top marks in multiple categories like SAP HANA Cloud, Software-as-a-Service (SaaS), Infrastructure-as-a-service (IaaS), Internet of Things (IoT) and Managed Security Services.
What lies on the horizon for you and T-Systems in the near future?
For Deutsche Telekom and T-Systems, it’s important to have a strong footprint in the UK. Therefore, one of T-Systems highest priorities is to improve its brand awareness in the British market. Deutsche Telekom has already a good position in the UK, as being the biggest shareholder of BT. Having said that, T-Systems has established several Sales Push Programmes to continuously enlarge its market position in the UK by providing excellent, leading services with Zero Outage. As a Finance Director, it’s part of my responsibility to ensure that the operative business units get the best financial support to enable them to achieve this overarching business target. Therefore, I have taken the personal sponsorship for two Sales Push Programmes: Pushing the Automotive Business and the Data Migration Business in the UK.
Finance Monthly’s May CFO Insight section looks at the work of Dr Stephan Hardt – the Financial Director of one of Deutsche Telekom's subsidiaries and one of the largest IT service companies in Europe – T-Systems. Here Stephan, who’s been the company’s director of finance since 2012, talks about the finance function at the company, his own role, challenges that ICT providers are faced with and the future of T-Systems and its parent company.
What have been your major achievements since becoming T-Systems’ Director of Finance in 2012? How have your role impacted the company’s performance in the past 4 years?
After my first 100 days, the Finance team began focusing on two major topics: Making sure that the company is profitable and that this profitability is sustainable. Secondly, the Finance team itself required a transformation process to become a high-performing business team, as well as the provisioning of proper finance tools.
The turnaround was achieved by various measures, e.g. restructuring the company to increase its productivity and increasing the transparency on customer projects. Furthermore, we started with a rigor cost management approach, which included the operative business units and the cross-function units like Finance, Human Resources and internal IT. In addition to those measures, the Finance team developed and implemented two tools which were essential for the productivity increase of the business units: A forecast and an order-to-cash tool. Both tools enabled the business units to have access to accurate data to manage their business properly.
Early in 2013, the Finance management team developed and established a performance improvement programme for the Finance team: the HIP (HIgh Performing) team. The main intention of this programme was a mind change throughout the entire team. It was all about collaboration inside and outside of Finance and transforming the team to business partners for the operative business units.
Overall the turnaround for T-Systems has been achieved and the Finance team has been transformed into a lean and efficient cross-function unit which acts as a business partner for the business.
The finance function at T-Systems has spent the last three years investing in a forecasting tool – could you tell us a bit about it?
In 2013 the Finance team implemented a forecast tool that was redesigned accordingly to meet the business requirements of the UK senior management team. The forecast tool is designed in a way that it can be used as a planning tool, as well as a forecasting tool. Its design is based on a data cube which allows business owners to review their business units from various perspectives: It provides a view on the level of the business unit and its cost centres and projects as well as its services/products and finally its customers. In addition, the tool provides a country specific breakdown for international customers. Since the forecast tool was implemented, we recognised a strong reinforcement of the entrepreneurial ownership of the business. Due to the fact that the business owners are responsible for populating the planning and forecast data into the forecast too, the quality of the data has increased significantly. The managers are thinking and acting more and more as entrepreneurs. Finance has moved away from the classic role and common understanding of populating data into reporting tools - it is now acting as a business partner, providing management consultancy to the business by reviewing data. To strengthen and foster the knowledge and financial understanding of the business, the Finance team has built up a Finance Academy which offers the management appropriate training sessions to develop their entrepreneurial ownership.
Currently, the Finance team is working on extending the forecast tool to a rolling 18-month view. This is a further step towards a more anticipating management style. The business owners have to think in mid-term views, instead of being focused strictly on the year-end. We need to move away from being reactive to a more pro-active thinking and acting.
Given the dynamic nature of the sector, what would you say are the biggest challenges that ICT providers are facing in 2017? How are you and T-Systems working towards overcoming them?
ICT providers will be facing various challenges throughout the next years; not only in 2017. On the one hand, the ICT market is a highly competitive market. The number of competitors has increased significantly the last 5 to 7 years. The picture of the typical classic competitor has changed as well: Who would have thought 10 years ago that companies like Amazon, Microsoft or Google will become new competitors in the ICT market? Furthermore, you see a huge number of start-up companies with a highly specialised service or product portfolio bringing new advanced solutions around cyber security and artificial intelligence to the ICT market.
Secondly, the so-called classic business of an ICT provider is going to change. The number of classic outsourcing deals is diminishing. Companies have started to in-source their former IT departments, rather than outsourcing them. To overcome those challenges, T-Systems has started to invest in new technologies like SAP HANA Cloud, Software-as-a-Service (SaaS), Infrastructure-as-a-service (IaaS), Internet of Things (IoT) and Managed Security Services.
The Finance team itself underwent a reshaping programme which focused on topics like lean and efficient finance processes, near-shoring certain finance and controlling tasks, modern and advanced reporting system and new qualification requirements for the Finance team. Another aspect is moving the Finance team into the new era of digitisation: Using artificial intelligence for the treatment of supplier invoices (accounts payables) and a state-of-the-art dashboard for the (senior) management available on multiple devices like notebooks, tablets or smart phones.
What differentiates T-Systems from its competitors?
In comparison to other ICT providers T-Systems’ big advantage is its capability to provide global ICT services out of one hand: As the IT business unit of Deutsche Telekom Group T-Systems can offer telecommunication services as well as IT services around the globe.
T-Systems’ legacy is based on a strong salient DNA which is made of Telecommunication, Transportation & Logistic and Automotive.
During the last few years, Deutsche Telekom and T-Systems have established global strategic partnerships with numerous leading companies, either in the Telecommunication sector or in the IT sector. One of those strategic partnerships enables T-Systems to provide mobile services or network services around the globe: ngena – the Next Generation Enterprise Network Alliance formed by leading international telecommunication companies offer global network services on shared partner networks; and Freemove – an alliance of top mobile telecommunication providers delivering high-quality international mobile services to multinational customers by synchronising the know-how and capabilities of its members.
Additionally, Deutsche Telekom is paving the way for the next communications standard by building up the next-generation communications standard - 5G.
T-Systems is one of the leading Cloud providers by using new IT factories which meet the highest security standard. That’s why Deutsche Telekom and T-Systems are seen as the most trusted company when it comes to the handling of personal information in comparison to other big IT and TC companies. With its Telecommunication and IT services, T-Systems is also supporting the development of sustainable profitable growth not only for large enterprises, but also for the typical German Mittelstand (mid-market), which represents internationally operating small and medium enterprises.
Last but not least, according to recent research, T-Systems has top marks in multiple categories like SAP HANA Cloud, Software-as-a-Service (SaaS), Infrastructure-as-a-service (IaaS), Internet of Things (IoT) and Managed Security Services.
What lies on the horizon for you and T-Systems in the near future?
For Deutsche Telekom and T-Systems, it’s important to have a strong footprint in the UK. Therefore, one of T-Systems highest priorities is to improve its brand awareness in the British market. Deutsche Telekom has already a good position in the UK, as being the biggest shareholder of BT. Having said that, T-Systems has established several Sales Push Programmes to continuously enlarge its market position in the UK by providing excellent, leading services with Zero Outage. As a Finance Director, it’s part of my responsibility to ensure that the operative business units get the best financial support to enable them to achieve this overarching business target. Therefore, I have taken the personal sponsorship for two Sales Push Programmes: Pushing the Automotive Business and the Data Migration Business in the UK.
Paul Puxty originally trained as a Chartered Accountant with PriceWaterhouseCoopers, working in their audit function. After 12 years with PwC, gaining varied work experiences, including a two-year spell in Melbourne, Australia, he was looking for his first role in “industry”, which resulted in joining Neopost as Financial Controller in 2001. After 5 years in that role, in 2006 he was promoted to the role of Finance Director for Neopost UK. Here Paul tells us more about the ins and outs of his role, his day-to-day responsibilities and Neopost.
How would you describe your role at Neopost, especially in relation to ensuring business growth?
Within Neopost, as well as my responsibilities for the traditional finance function, I am also responsible for a large credit control team (at any one time we can have upwards of 40,000 live customers), our UK leasing operations and IT. In addition, I am also responsible for the cash collection of around £0.5 billion in respect of postage collected from customers and paid over to Royal Mail.
My specific responsibilities in relation to ensuring business growth are (i) ensuring that we have the appropriate systems and processes in place to cope with a growing customer base and increasingly new and varied revenue streams, for example Software as a Service (SAAS) revenues, (ii) ensuring that the UK leasing operation continues to provide appropriate finance solutions to allow our customers to finance the purchase of Neopost products, and (iii) to support the business in identifying new revenue opportunities, whether through acquisition, partnership or new products.
How is Neopost adapting its products to the changing landscape of mail and communications?
The methods used by businesses to communicate with employees, customers and partners have evolved rapidly in the last few decades. Where once physical mail and fax reigned supreme, digital channels are now often chosen for their cost effectiveness and speed. Companies must utilise multiple channels in order to send and receive correspondence via the method that best suits the message being sent and the preferences of the recipient. Accurately managing personalised communications such as invoices, payments and marketing promotions are critical interactions with customers that will impact cost, efficiency and customer satisfaction.
As such, Neopost’s software portfolio complements our expertise in mail, which remains an important channel for many companies and customers. Our Output Management Software (OMS) solutions empower organisations to simply manage and enrich communications across every customer touchpoint – mail, email, SDS and website. Our electronic document management software digitally captures data from all types of physical and electronic documents to allow easy distribution, online processing and archiving.
Does your role include cost saving throughout the business?
One of the main responsibilities of any Finance Director is controlling costs. Businesses want to keep innovating and providing a better service for customers, but achieving that involves ensuring resources are being invested in the most effective ways. You have to analyse your outgoings, making sure capital isn’t being spent on redundant overheads that will create value if used elsewhere. Neopost has around 1.8m outbound communications with our customers each year (excluding our website), so I have a keen interest in all the communications that the company distributes.
How are you adapting to the challenge of digitisation in the finance department and Neopost generally?
Digital technology has had a massive impact on our finance department and wider business too. We have transitioned to e-invoicing to reduce the costs and time involved in billing our customers. After only 6 months 70% of customers had transitioned to email, so the savings on postage were substantial. In addition, processing time from invoice creation to delivery to recipient has been reduced by up to 5 days. Hardcopies of critical documents, such as invoices, quotes and contracts, have almost become redundant, with electronic versions providing instant retrieval and accessibility, savings on storage space, as well as a more comprehensive audit trail.
Our e-invoicing solutions empower accounts receivable teams to automate the preparation, creation and sending of digital invoices, drastically shortening payment times. It’s a similar story when it comes to payment processing where electronic document management (EDM) solutions manage document workflow, ensuring digital items are reaching their intended targets and not sitting unread in inboxes. The man hours spent on cheque validation have been reduced by 20% and the processing time per cheque from opening to validation was cut by 50%.
How much of your time is taken up with Compliance issues? How do you manage these problems?
Compliance is often viewed as a burden, and accounting is arguably more stringently regulated than any of the other functions. We need to ensure that our processes comply with HMRC requirements, regarding auditability and archiving, and that the right document goes to the right person. As such, ensuring that all of the necessary requirements are being met from the start is vital, which means rigorous and reliable processes are essential to ensure that tasks are completed in a compliant way.
The word ‘audit’ will always generate a certain element of dread, but companies that include compliance from the beginning and imbed it into their everyday accounting activities will decrease the need for the mad rush to get everything in order.
To find out how your business can benefit from e-invoicing, download Neopost’s white paper by visiting www.neopost.co.uk/einvoicingwp.
The next Thought Leader that we spoke to is Tony McMurray - the Finance Director at Ingram Micro UK, a subsidiary of the world’s largest distributor of IT. In his role, he is accountable for all aspects of finance ranging from M&A, Working Capital Management, Strategic Planning, FP&A reporting and a regional lead in the transition to Ingram Micro’s shared service centre in Sofia.
You have been working for Ingram Micro since 1995 – what were the goals that you arrived with? 22 years later, would you say that you’ve managed to accomplish them?
When I arrived at Ingram Micro as a young Finance Professional, I never had a clear goal in mind, aside from wanting to learn everything and anything about my new employer. Over time I gained the confidence to aspire towards the FD role through working in the UK and abroad, as well as a period outside of finance working in commercial. This breadth of experience certainly provided me with the skills to face all the challenges that face the FD of a large US corporation.
What further goals are you currently working towards with Ingram Micro? What do you hope to accomplish in the future?
My finance function in the UK continues to expand through acquisitions (the latest being Comms-care in May 2016) as does my scope of accountability (I now oversee the IS function in our HQ). My goal is to further strengthen the role of the UK finance organisation as the best Finance Business Partner we can be for our front office functions. Beyond that, I look forward to broadening my scope of responsibility as Ingram makes more acquisitions and/or my breadth of experience at Ingram Micro is utilised further.
What education or prior experience helped you succeed at your current role?
My A levels and degree centred around Music and Sports Science (I was a national long jump champion as a teenager). I did not formally study a finance or business subject until I was 21 years old. I was an attentive student at school and university and my eye for detail in both Biomechanics and music composition did help me later in life as a finance professional.
As a 2nd year student at University I applied to more than 70 accountancy firms, as I wished to continue my education after my degree. It was during a ‘vacation traineeship’ resulting from these applications that I decided I wanted to work in the area of finance. Ultimately, the greatest contribution to me developing as a modern finance professional was my broad, all-round education, for which I am very grateful.
Who is your role model and why?
Many of my role models are found within the sporting world. As a big fan of Athletics one my sporting hero’s was the Decathlete Daley Thompson. Whilst he was often seen as too cocky and brash, I admired his ability to be different and deliver when it mattered. A view which some may say reflects me in some way.
What are the day-to-day challenges that you are faced with?
In a fast moving industry such as IT, the day-to-day challenge is always the unexpected. Ranging from the downfall of an SME customer, the latest request from Corporate or the assessment of the deal that has to ship that very day.
What would be your top three tips for fledging Finance Directors?
- Be honest - the greatest asset of a strong FD is their credibility.
- Do not be frightened to ask questions, even if the questions are being directed at more senior experienced people than yourself.
- Trust your own instinct - if something does not feel right, then go with that instinct.
Tell us something about yourself that not many people would know?
I am an ambassador for The Alzheimer’s Society and regularly give talks on my fundraising adventures to schools, business and other organisations. In April 2015 my most spectacular challenge to date found me up on Mount Everest during the 7.8 magnitude earthquake that hit Nepal. The days after the quake were some of the most harrowing of my life and strengthened my will to support others where I can and do the very best that I can in my day to day life.
