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Reengineering Accounting

As Seen in CFO Studio Magazine 2015 Q3 Issue and CFO Studio On-Camera Interview

-INTERVIEW BY ANDREW ZEZAS-

Luke McKinnon has spent much of his career in the engineering industry, and since 2009 he has served as executive vice president and CFO of New York City–based consulting firm the Louis Berger Group, which provides architecture, construction management, and economic development services. Though his focus is on finances (previous roles include chief financial officer at AECOM and operations controller at URS, which are both in the same business areas as the Louis Berger Group), he approaches his work like an engineer, building or developing an accounting department to support the operational departments. Mr. McKinnon will be leading the CFO Studio Middle Market CFO Executive Dinner on “Preparing for Private Equity” on Sept. 10, but in the meantime, he sat down with Andrew Zezas, publisher of CFO Studio magazine and host of CFO Studio On-Camera, to discuss how aligning people, processes, and technology can yield broad benefits.

(ANDREW ZEZAS) You were brought in [to the Louis Berger Group] to kind of shake things up. How have you improved the accounting department of the company?

MCKINNON: When I got there, we were touching an invoice 15 times when it would come into Accounts Payable. Vendors would send me bills for every transaction. So we looked at technology where we could have our vendors submit electronically to us, in one bill at the end of the month. We went from approximately 5,000 invoices a month and nine people in the department, to 3,000 invoices a month and three people in the department. Vendors were no longer saying, “Did you get my invoice?” because they could see that they submitted it to us electronically, and it was going through the process.

Tell me about how these improvements benefited operations.

MCKINNON: I’ve got project managers that are sitting all around the world, so if they’ve got an employee that submits an expense report, before, it used to be in Excel format. We went to electronic software. Now, an employee can submit, and it goes to the project manager immediately. It was taking six to eight weeks to get an employee paid, [and now] if he submits his expense report on a Monday, the employee could have payment by Friday. You get an employee who no longer has to worry, “How am I going to pay my credit card?” The other benefit is, now, when those charges go onto a project billed to our client, the accuracy is not six months old, it’s from within the last week or two. They know it’s a timely bill.

In your whole career, you’ve been a guy who’s either been building accounting departments or rebuilding accounting departments. What’s the attraction to you there?

MCKINNON: I like the challenge. Whether it was fixing the AP department or a monthly close, or our timesheet process: You’re making sure it works for everybody, making it more efficient, making it more accurate. I find it exciting, I really do.

Bang The Drum Softly

As Seen in CFO Studio Magazine Q4 2015 Issue

A NEW PARTNERSHIP BETWEEN A MUSIC COMPANY AND A SOFTWARE STARTUP WILL HELP KIDS ON THE AUTISM SPECTRUM BE MORE SOCIAL

BY JULIE BARKER

Glenn Turell works in an entrepreneurial environment. As CFO at Elias Arts Holdings LLC, his role includes looking at potential partnerships, mergers, and acquisitions for a company whose motto is “A more powerful way to use music.”

Turell enjoys the TV show Shark Tank, and when he attended the CFO Innovation Conference & Awards last May at MetLife Stadium, he eagerly took a seat in the audience for the “Piranha Tank” session, where angel investors would judge the viability of four business ideas being pitched.

After that session, he sought out the presenter of one particular pitch for funding, Mihai Dinulescu, and a partnership developed.

Elias, with offices in New York and Los Angeles, composes and arranges custom music for a wide variety of audio uses, including commercials, TV shows, and films, and also houses a world-class library of already prepared music and sounds available for commercial licensing. The company also creates sound identities, such as the “We Are Farmers” audio logo, or the tinkling tones that accompany Columbia Pictures’ logo at the start of that studio’s films. “I’ve always been interested in the effects of music on the brain,” says Turell. Once he and Dinulescu began talking, both of them became intrigued by the possibilities of an alliance between Elias and Sonzia, a company in its embryonic growth stage that Dinulescu and his partners incorporated in December 2014. Their initial work is helping children on the autism spectrum.

Assistive Technology

Sonzia’s core technology is low-cost, large-scale touch screens that enable children with certain sensory disabilities to access and use the digital world. “We’re a software company that happens to make hardware because no one was making it in a way that was accessible and durable,” says Dinulescu. “But we’re really a software company, and we’re trying to provide a safe environment for people to develop and learn.”

The company, which is based in Boston, is creating immersive rooms with floor-to-ceiling projections to help teach young children with autism to, for instance, dine out in a restaurant or cross the street safely.

Someone with autism may become overwhelmed or distressed by loud or sharp noises. Sonzia has therefore seen the need for sensory-friendly versions of the sounds it uses in its interfaces. “If you’re trying to teach someone to cross the street, it’s important to have sounds that signify danger, but you don’t want to make the activity terrifying,” says Dinulescu.

The creative team at Elias is now developing sounds for Sonzia that would be less disconcerting to the children. They are bringing out audio tones’ softer side—which is in fact “A more powerful way to use music.”

The companies have what Turell calls “a nice back-and-forth.” Sonzia has been working with experts at Purdue University, asking, “How could the screeching car sound be modified to be more sensory friendly?” The team at Elias then creates the sound, and it goes through a couple of iterations before, says Dinulescu, “we end up getting something that you would recognize as a car screeching but it wouldn’t be disturbing.” A balloon popping would sound more like a bubble popping.

When Dinulescu met Turell, he realized that in partnership, the two companies could expand the uses of these sounds. Sonzia will work on an SDK (software development kit) that will allow other companies to use Sonzia’s library of sounds, with accompanying visuals, to develop their own applications for people with sensory disabilities. Elias will work with Sonzia to develop the library of music and functional sounds, while also providing the library infrastructure and administration. That company is now building the separate sensory-friendly library that, for instance, video-game producers might tap into so as to expand into the demographic of gamers with autism.

Stimulating Work

Turell came back to his New York office, after his encounter with Dinulescu at the CFO Innovation Conference, excited about the many possibilities of working together. “I always thought that for a company of our stature, it would be great to participate in this field” — that is, the space where music intersects with helping people who have certain diseases. “Music has already been proven to have a positive impact on healing, but there is much more that can be done to expand the utilization of audio within the health field,” he adds. He liked the idea of using music for a higher purpose.

Others in his company, from the chairman to the creative staff and the producers, Turell says, were enthusiastic about the idea. Not only is it stimulating to be working on something different, but “all of a sudden we can do something that’s going to have a much different benefit and can directly help many, many people.”

In the first weeks after their partnership got under way, Sonzia provided a list of “experiential stimuli” they needed for their interfaces: a balloon popping, an electric razor running, cars, and sirens, among them, as well as some music and ambient sounds, like rainfall.

Sounds can be visualized on a sound file, where they exhibit sharp pulses that Elias’ team, with some training from the clinical experts, softened. In this way, the sounds would be less distressing for an autistic person to hear.

The partnership agreement has the two companies sharing development costs and revenues. At this point, the agreement is open-ended. The companies are focused on autism for the initial period, but there are various disabilities for which a sensory-friendly library could be useful. “We’re working together in continuing to build this,” says Turell. “The library will have applications not only for autism, but also for other disabilities such as Parkinson’s and possibly Down Syndrome, among others.”

The partners hope someday to see large companies recognize the need to reach people with sensory disabilities. Not only is this a growing population (the Centers for Disease Control cites studies showing that one in 68 U.S. children has an autism-spectrum disorder and that the prevalence of the disease grew 119 percent from 2000 to 2010), it is underserved in terms of available leisure activities.

Turell and Dinulescu hope that by identifying and modifying sounds that are distressing to the autism population, they will make it possible for autistic children to interact rather than retract from society and certain types of media. There may someday be major motion pictures dubbed for autistic viewers, and video games that use sensory-friendly sounds.

Says Turell: “We’re going to continue to build this partnership and explore many other opportunities to help people in the future.”

You Can’t Be Blind To Important Information

As Seen in CFO Studio Magazine Q4 2015 Issue

A CHANGING BUSINESS MODEL DRIVES CHANGING DATA NEEDS

BY MARTIN DAKS

Gary Piscatelli, Senior Vice President and CFO of Hunter Douglas North America, tackles his job using a holistic approach, which is exactly how the company, the worldwide market leader in window coverings, established its prominence. The Netherlands-based company —with its North American headquarters in Pearl River, NY— stands out from competitors with its commitment to creating innovative product designs that fuse form with function to meet the evolving needs of the marketplace.

Piscatelli oversees the organization’s finance, technology, and human resources groups. Among other projects, he is helping Hunter Douglas to improve its data-gathering, reporting, and analytical systems in a way that enhances the company’s business operations. That means establishing more standardized information and systems without detracting from the magic that has driven so much success.

Looking at Information Anew

“Historically, operations were run in a somewhat decentralized manner,” he says, “but we are now moving toward greater centralization when it makes sense. We need a common language to ensure that metrics and measurements align, so when we talk across departments and functions, everyone is using the same definitions.”

Piscatelli joined the company a year and a half ago, following stints with Gillette Co., Nestle, and Timex Group, where he was involved in a comprehensive array of operations. Today, Piscatelli draws deeply on his previous experiences.

“The CFO is seen as a custodian of the company’s assets,” he says. “That reaches across many functions, and combined with the responsibility for business operations, means you’re basically connected to almost every part of the company. So you look for commonalities, ways that you can standardize and simplify functions and operations, not for the sake of standardization, but to help accelerate a company’s ability to achieve.”

Recently, Hunter Douglas converted the fabrication segment of its business from one that relied on a combination of independent and company-owned services, to one that is now entirely owned and operated by the company, bringing complete control of the manufacturing, assembling, and wholesale distribution aspects of the business under one umbrella. The increased vertical integration has helped to drive a change in the way the company looks at its data.

“When you’re tying together so many operations, it changes the way you gather and utilize your data,” says Piscatelli. “Ensuring that your data is accurate, and that you’re able to get at it, becomes a high-priority imperative. And it’s not a simple one. Among other challenges, it means gaining consensus on common standards, common hierarchy of information, and common goals.”

He sees the strategy to build a robust data architecture as both a logical and emotional journey. Building a comprehensive interconnected data set that links all the dimensions of a business at a level that drives understanding and decision-making without being overly complex is not simple. Getting it done with companywide consensus can be even more challenging. As challenging a task as this may be, capturing the right data is a critical enabler of strong business partnering.

Piscatelli sees partnering as an essential role of finance, but the function needs to first ensure it’s got the basics covered. To begin with, he says, “a company needs a solid foundation made up of accurate accounting and a strong system of internal controls. Once those are in place, a CFO and his or her team can drive financial improvement through cost containment, top-line growth, and delivering more bottom-line value.”

Sharing Data Drives Efficiency

“If you want to create value, you have to ensure that everyone has access to the information they need to do their job right,” he says. “Regardless of whether you’re talking about production—which involves keeping tabs on everything from inventory to manufacturing—or product, or branding activities, or cost centers, or customer information, you need to be able to get real-time information so you know where the company is right now, and use that as a planning guide to determine where you want to aim in the future.”

Piscatelli is well qualified to address and integrate these myriad concepts — his background includes responsibility for purchasing, financing, information technology, and other functions. He also understands the human angle.

At Gillette, prior to leading finance for the Personal Care Business, he served as Director of Corporate Finance, where he led a global SAP implementation that included revamping data architecture, accounting, reporting, and analytics. Afterward, he was Senior Vice President and CFO at Timex Group, where, among other things, he drove changes in reporting and analytics that he believed helped enable the transformation of the financial function from accountants to involved business partners.

A lot of the information may be on a sales invoice, but it’s useless unless a data system can capture it and present it in a meaningful manner. “The key is to structure a system that can capture data from disparate sources and integrate it all in a way that makes sense,” says Piscatelli.

As part of the effort, Piscatelli is talking to employees at all levels and functions across the company, and will continue to, asking key questions that will better enable systems that will aid Hunter Douglas to deliver more value. That’s where the human element comes into view.

“People are more likely to be candid with you if they know their statements are being taken seriously,” he says. “We let our co-workers know that they are an integral part of the Hunter Douglas operations, and that their input and activity will be vital to the company’s success.”

In addition to updating its internal data-gathering and reporting models, the company has recently had a changing of the guard in the C-suite. At the beginning of July, longtime Hunter Douglas North America CEO, Marvin B. Hopkins, retired. Ron Kass was named as the new President and CEO. Kass joined the company in 2005, previously serving as President of both the Hunter Douglas Design Products Group and the Independent Fabricator Group of companies, and as Executive Vice President of Marketing, where he oversaw brand marketing, advertising, and communications for Hunter Douglas.

“Our underlying strategy has not changed,” says Piscatelli. “Hunter Douglas has a long legacy of bringing to market well-designed, high-quality, and otherwise superior custom window treatments that are both profitable for the company and sought after by consumers. We are well positioned to continue this trend moving forward to maintain our leadership position.”