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The Role Finance Plays In Business Planning – Andy Halford, Vodafone CFO

The Role Finance Plays in Business Planning
Andy Halford – CFO, Vodafone

The biggest transition that this business has gone through over the last few years has been  the technology advances that have enabled us to move from offering, largely, two products—voice and text messaging—to a much, much broader range of services that are either internet-based, music-based, or video-based.

If I go back to the start of 2000 or thereabouts, we were having to bid for the spectrum to enable a lot of the new products and we had to do a lot of work within the finance areas to try to envision the sorts of products, the sorts of take-up, the sort of pricing that we could get for those products when eventually they came to market. The role that finance played in getting the business to think about the product set, think about the revenue streams, think about the technology and the service/support dependencies that would
come with that was critical in helping the business to move forwards.

We have now got a business that is turning over several billion pounds a year of revenue from products that just did not exist a few years ago. We are now getting over 20% of our total revenues from products that were not around at that point in time and, frankly, the whole of the business, the ability to now offer things like internet on the phone, to be able to get music downloads, to be able to access application stores are all things which just were not in the market at that point in time. They were nice theories. Now time has moved on and they are things which we are starting to take for granted. So it has been a huge period of change.

I think in this particular case that there are a number of lessons for me. One is the role that we can play to put structure into planning that encourages the business to think more broadly about the environment it is in, and more particularly, the environment that it could be getting into in the future. So the whole planning process, if done in an educated way, is a very powerful driver of broadening the thinking within the business.

The second is that there is a limit to the amount of analysis that one can do and at the end of the day, intuition does play a reasonable part as well as analysis. For instance, one could look at lots of individual products and try to work out what the take-up will be but at the end of the day not every customer is going to buy every single product and one has to have an intuitive override as to what, collectively, is the art of the possible.

So I think the ability to help the business with it’s thinking by the way we structure things, but also understanding that, at the end of the day, analysis is not the only answer to all these questions, were two very big lessons for me that came out of this.