Khozema Shipchandler, Vice President and Chief Financial Officer at GE Digital, talked about his company’s journey to incorporate data analytics and machine learning.
In the first keynote presentation of the day at the 2016 Chief Financial Officer Leadership Forum held on November 2 in New York, Shipchandler stated he was going to describe his company’s aspirational journey to transform the finance function, which includes predictive analytics and machine learning. “Fundamentally, digital content will have to be built in an industrial context. The IT function is seeing a renaissance in that the CIO and the office of the CIO are becoming more important. Industrials trust each other, and the tight relationships among industrial companies are ripe for blossoming further,” he explained.
“Finance is fundamentally about operations—the right metrics, driving better accountability, and capital allocation as it relates to strategy—and ensuring the business runs in a certain way." In Shipchandler’s company, the key focus areas of the CFO are metrics, accountability, operational excellence, and assuring commercial success. “There’s a convergence of software and product knowledge plus a series of applications that we need to be much smarter about as financial professionals,” he stated.
“If one group isn’t performing in the way that we define success as an enterprise, that’s available to everybody. Federating this responsibility...makes what we used to do much more powerful.”
“In my company, with every single person down the chain of command, success is defined in exactly the same way using the exact same metrics, and this is made available to everybody,” explained Shipchandler. “If one group isn’t performing in the way that we define success as an enterprise, that’s available to everybody. Federating this responsibility, providing maximum transparency, and driving data analytics and machine learning makes what we used to do much more powerful.”
“In our case, we had to go after data scientists. You have to have folks who are unbelievably fluent in this kind of activity—data geniuses. For this, you need executive sponsorship, because it’s expensive, but worth doing.”
Shipchandler then described the challenge of changing the culture to create this transformation, keeping learning sustainable, and bringing the organization along in climbing the curve as the sophistication increases. “Different people and skill sets are needed. In our case, we had to go after data scientists. You have to have folks who are unbelievably fluent in this kind of activity—data geniuses. For this, you need executive sponsorship, because it’s expensive, but worth doing," he said. "In terms of content, GE Digital utilizes ongoing cycle trainings for the vast majority of users who wouldn’t otherwise know how to use these tools, tool trainings, and university partnerships to help get this up and running.”
In order to bring this process up to scale at GE Digital, some level of shared services and the streamlining of certain aspects were required. “For example," said Shipchandler, "ERPs have gone from over 600 to less than 30. Within the next year, these will be down to two or three."
“We’ve developed a digital command center. This is enabled for desktop or iPhone. What this means is you can’t come to work in the morning without seeing the way success is defined for the enterprise.”
Shipchandler said GE Digital has historically been one of the most analog businesses. “Moving the company into greater digitalization involved using a set of more contemporary tools, starting with ERPs and growing up, using a more contemporary set of data and growing up, and then integrating these in a more compelling way. We’ve developed a digital command center. This is enabled for desktop or iPhone. What this means is you can’t come to work in the morning without seeing the way success is defined for the enterprise. If you want, you can drill all the way down and see your exact contribution to the way the whole effort comes together.”
From his experience at GE Digital, Shipchandler came up with the following guidelines for the contemporary CFO:
• Run the business better by creating a culture of performance and accountability driven by metrics and transparency.
• Redefine finance to be more strategic. This means establishing the finance organization of the future by embedding digital DNA as well as redefining metrics and using leading operational and financial indicators.
• Create a different kind of business—one that’s agile, constantly innovating, pushing new technology horizons and new performance standards.
• Use IT to create a true “digital” business, characterized by greater automation and transparency using truth to drive performance and cultivate teamwork.
• Help to gain commercial team wins by setting aggressive targets, driving disciplined cadence, developing new business models, and ensuring customers are aware of outcomes.
ABOUT KHOZEMA SHIPCHANDLER:
Khozema is the CFO for GE Digital, responsible for overall operational excellence, financial planning, business development, and information technology. He was born in Fort Wayne, Indiana, attended Indiana University, and graduated with a Bachelor of Arts degree in Biology and English with a minor in Economics. He is also halfway through an Executive MBA at the University of Chicago.
In 1996, Khozema joined GE Money’s Management Development Program and, in 1997, he joined GE Plastics Financial Management Program. He then joined GE’s Corporate Audit Staff in 2000, where he spent five years as an Executive Audit Manager and oversaw Aviation, Transportation, and Consumer and Industrial. In 2005, he joined GE Aviation as Manager of Financial Planning and Analysis. In 2006, he was promoted to CFO, Military Systems, and, in 2007, Khozema was promoted to CFO of Aviation Systems. In 2009, he was promoted to CFO of Aviation Services. Then in 2011, he was promoted to the position of CFO, GE, in the Middle East, North Africa, and Turkey. In 2012, he was appointed as a Company officer. In January 2014, he was named Vice President of the Corporate Audit Staff. He most recently was promoted to Vice President and CFO of GE Digital in October 2015.
Khozema is married to Alefiya and they have two children, ages 10 and seven. Khozema enjoys spending time with his family, golfing, playing tennis, reading, and traveling.