Ep. 117: John Lemmex - Digitalization in Practice

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...