Ep. 117: John Lemmex - Digitalization in Practice

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Contact John Lemmex: https://www.linkedin.com/in/johnlemmex/

Covestro: https://www.covestro.com

FULL EPISODE TRANSCRIPT:
Adam: (00:05)
And we are back with episode 117 of Count Me In, IMA's podcast about all things affecting the accounting and finance world. Once again, this is your host, Adam Larson, and today's featured guest is John Lemmex. John is Vice President, Chief Financial Officer at Covestro LLC. In that role, he is responsible for all aspects of financial management and controlling. So in this episode, he joined my co-host Mitch Roshong, to talk about digital transformation, John shares many personal experiences and great perspective on how finance leaders can play an integral role in transformation projects. So let's head over to the conversation and listen to what he has to say now.
Mitch: (00:51)
So John, from what you've seen, how do digital transformation projects typically get started?
John: (00:56)
Typically in our company, they get started in different parts of the business. It could be, you know, something happening within marketing or R&D or even finance. So it tends to be kind of individual and what our company has done is kind of putting together a digitalization group that's global, and they have kind of the skills and the ability to bring it all together. They are operating a data lake, and they have that kind of expertise, so when people put projects forward, sometimes they'll run as pilot so then you look at and see if they're scalable globally. And then we implement them, look at them and then move on from there. So anybody can kind of bring forward a digitalization project.
Mitch: (01:44)
Now let's focus mainly on our listeners here and we're talking about accounting and finance. So how important is digitalization for finance? Why should these finance leaders really get started on these projects as soon as possible if they haven't done so already?
John: (01:59)
Yeah, to me, with the digitalization projects it always comes with efficiency and cost savings and, you know, and there's a business case behind them. So generally, I found most of these cases, we've been able to find a business case, been able to save money, gain efficiencies, reduce complexity, and it helps drive the business forward and make finance more efficient. So it's been, you know, waiting doesn't help drive the business forward so you need to drive these projects to gain those efficiencies.
Mitch: (02:34)
Let's talk about that a little bit more, how does the finance team, or the finance leader go about building this business case, who is really the target or, the individuals who are most responsible for pushing this project forward? Who should the finance leader really focus on within these projects?
John: (02:57)
Well, I think that the finance leader for us is kind of internal, I'm kind of thinking of a project that we did. It was something internal in the finance area that was causing us pain. We stepped back, we took a look at it and the answer came using digitalization, using machine learning and robotics was the answer to try to solve the problem. And so then, the business case was put together, and again, it resulted in efficiency through FTE reductions, but it also ended up on a higher accuracy and more accuracy in the financial statements. Or one side, it was cost efficiency, the other side there was accuracy and when that case was put together, we piloted it and moved it forward.
Mitch: (03:51)
Now you talked about machine learning, obviously there's robotics, a lot that goes into these different projects and for some in finance, that might not be necessarily their first language per se. It might be something that's a little bit outside their comfort zone or they need to upskill in that area in order to drive the project forward. So how do you really engage all these stakeholders and really keep the momentum going for these digital transformation projects?
John: (04:15)
Yeah, the one thing that we've done to try to get people engaged is actually offer kind of a, you know, online training, in the machine learning in robotics, to get people to start to increase their skill levels so that they may not be become experts in it, or be able to run a project, but they understand what maybe the IT or the data people are going to be asking those kinds of questions and they learn through that, how to drive these projects forward or at least understand what goes into them and there's been quite an uptake rate in our people and trying to do that online learning and develop their skills.
Mitch: (05:01)
Are there any other obstacles that you've seen, anything else that may prohibit a digital transformation project from progressing how you anticipated?
John: (05:11)
I think sometimes we get into resource questions, you know, how much resources do we have, and if a project is simply kind of re-engineering a process and using the software, it's much easier maybe to get those projects forward when they maybe require, and I'm thinking of supply chain digital project, those require maybe capital investment using barcode readers, scanners, infrastructure upgrades, and then it becomes more difficult to find those resources and drive them forward. So less capital investment seems easier to drive the projects forward, more capital investment a little more difficult, but again, too is how many projects do you have going? I think sometimes, you get into project overload and there's just, you have to prioritize and get your biggest bang for your buck.
Mitch: (06:05)
That was actually going to be kind of my next question and obviously there are many areas of the business where you could look for digital improvements, and I'm sure, like you just said many different projects going on all at once. Have you ever come across a case where a project just didn't pan out, you know, the digital transformation just never happened, for one reason or another, can you speak to that a little bit and what the company did in order to respond?
John: (06:33)
We have one project that in our end to end supply chain, where we feel like we could really upgrade our ability to track materials, move materials and we try to compare ourselves say to an Amazon, we're very far behind. I kind of think of them as the leader when it comes to digitization and supply chain. We had a project we wanted to move it forward, but it stumbled on cap ex and some of it was a business downturn, other parts was then entering the pandemic, but I wouldn't say the projects are dead, but more shelved until the business environment changes. I think if there's a good business case, and then you get into a resource issue, it may not move as quickly as you might want it and get those returns, but you know, you shelve it and continue to push on at a later date.
Mitch: (07:32)
That's a good point. And, you know, prioritizing, like you said earlier, with so many different things going on and so many functions of the organization being involved in these projects, while it may enhance the efficiency, let's say in finance, obviously you're going to rely on IT and other departments. So, how important is the communication across the organization, with these different projects going on and really, what is that communication path? How do you typically, speak with and listen to other departments while these projects are going on?
John: (08:09)
Absolutely, the communication is key in all these projects and how to prioritize. And we have a, we call it a digital governance board. So all projects have to go through this digital governance board and be priorit...