FP&A Innovation SummitBoston, MASept 2015

Leading from the CFO Office in the Digital Era

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Agenda

•Disruption innovation within our lifetime

•Disruptive changes in the CFO role

•New opportunities enabled by digital

•Digital technology impact at L’Oreal

•Next steps

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Disruption Innovation within a Lifetime

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“You can't connect the dots looking forward; you can only connect them looking backwards” SJ

66 years

19031969

1946

Today

1973 Today

1993 2008

50 years

30 years

First Flight

Moon Landing

First Computer (27 ton)

First Mobile Phone

Palm size(2 lbs)

7.2 billion worldwide

Internet born1 trillion pages indexed

15 years

Toda

y

Explosion of data, analytics, digital connectivity and cyber attacks

• The number of pages indexed by Google is 30 trillion (2014)

• Data universe is doubling every two years

• Storage devices go from $5k for 10MB in 1980s to <$100 for 1 TB (10,000 bigger!)

• Cyber attacks flourished to 300 million a year (with a global cost ~$400 billion)

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Disruptive Changes in the CFO RoleFrom back-office accountant to front line executive

Levers for CFOs

Social media - On line community channels for interaction & content-sharing

1

2

5

4

CFO Role (1980 – 2000s) 2010 - 2020

30% more revenue via

social

50% retail traffic via mobile

6% productivity gains from data decisions

Cloud is CAPEX

free

4X better DR via cloud

Larg

e &

mo

no

lithic

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Lean

&

ou

tsou

rc e

Fin

ancial

con

trol

Valu

e ad

din

g

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Mobile technology - On line services available to users on-the-go

Big data analytics - Large/ complex data sets that cannot be processed by traditional data processing applications

Cloud – Resource sharing to optimize performance (pay-per-use model)

Cyber security - Information and system protection from cyber attacks

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Reduced R&I

cost via crowdsourcing and

listening

Lower cost of operations

New product

usage

Free adverti

sing and

brand buildin

g

CFO Moves Closer to the Customer

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On line community channels dedicated to interaction, content-sharing and collaboration What it is?

SOCIAL/ MOBILE ANALYTICS CLOUD/ SECURITY RISK

Using social media and mobile technology

NY

XCosmetics

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One product model only

High price (+$100k)

No charging infrastructure

No dealership network

Significant purchase risk

Faster growth than market

Highest customer loyalty

Best rated car

Sensor

Customer

Analytics

CFO Managing Running the Business

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On line community channels dedicated to interaction, content-sharing and collaboration What it is?

SOCIAL/ MOBILE ANALYTICS CLOUD/ SECURITY RISK

Using predictive analytics

TESLA

CFO’s Survival Dilemma

Predictive Analytics

Happiness costDirect relationship

Connected sensors Anticipate issues

Customer behaviorNew product featuresBrand protection

Answer?

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Tesla vs. NY Times Case in Point

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On line community channels dedicated to interaction, content-sharing and collaboration What it is?

SOCIAL/ MOBILE ANALYTICS CLOUD/ SECURITY RISK

In God we trust; all others must bring data

John Broader “… the car felt short of its projected range and had to be taken back to the Milford charging station on a flatbed truck.”

Elon Musk @elonmusk NYTimes article about Tesla range in cold is fake. Vehicle logs tell true story that he didn’t actually charge to max & took a longer detour.

The Power of Analytics

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CFO Driving Profitable Growth

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On line community channels dedicated to interaction, content-sharing and collaboration What it is?

SOCIAL/ MOBILE ANALYTICS CLOUD/ SECURITY RISK

Cloud Computing

Cyb

er

Secu

rity

Shift IT budget from CAPEX to OPEX

Increase business agility and M&A integration

Lower cost of ownership

Improve mobility and collaboration

Security, control and compliance

The good and bad…

Same story, different day…

Million dollars in losses

Costly lawsuits

Quarter losses linger for a while

Brand reputation damage

Departure of CEO

ü

û

ü

ü

ü

Using cloud computing with strong cyber security

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SOCIAL MEDIA

ANALYTICS MOBILE TECHNOLOGY

L’Oreal Project Made Possible by Digital

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Virtually try on makeup using augmented reality

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• Needs• Trends• Gaps• Competitors

Customer

• Data• Tools• Processes• Security

Technology• Capabilities• Sourcing• Collaborations• Innovation IP

People

• Scope• Success metrics• Dashboard• Opportunity cost

ROI

Roadmap to Success

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16m downloads

A step-by-step collaboration between CFO and the business

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Big Data Analytics Illustration

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A driver for decision making and future investment

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Next Steps for CFOs

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Innovation = disruption; you can either bend to the change or be broken by it

Leverage the technology changes to disrupt organizational economics1

2

4

3

Look for innovation outside the company

Focus the company on data and analytics

Champion data security management

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Reflection on the CFO Role

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A silent man in life's affairs,

A thinker from a boy,

A peasant in his daily cares,

A poet in his joy.

The Peasant Poet Poem, by John Clare

CFO as poet and peasant

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Questions ?

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