FEAiT Conference short review by Dmytro Bey

CFO : “What happens if we invest in developing our people and then they leave us?”
CEO: ‘What happens if we don’t, and they stay?

Last week, while the rest of my teammates were resting at the sun and rafting on the Dniester during company party, Innocode sent me to Odessa for the FEAiT Conference (Finance, Economy, Analytics of Software Business). Though my rafting skills are far from perfect, but I had enough sun and most importantly – knowledge!

Here’s my short review of the discussed questions I want to share with all of you who has missed it.

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Odessa is easily recognizable – ladies are ultimately dressed in their best gowns (Conference? No, never heard of that thing).

The guys from the “GagarInn” greeted us warmly: on hearing the word “conference” concierge immediately points you to the elevator, which takes you directly to the third floor – preconference venue with the fresh coffee spot and paparazzi near at hand making shots. Smiles all around and the atmosphere of total hospitality.

Now, I’ll go through the agenda:

Nazar Zhovtanetsky CFO, N-IX.

Accents of management accounting in IT.

In general, two important documents:
- P&L report (answers the question – do we earn?);
- Balance (do we have money?).

Key indicators in the P&L:
- Production finances (development hours – logs. The accounting in the context of each project);
- Administrative finances (accounting in the context of departments);
- Business development finances (investments) and marketing (these costs can not be directly linked with the current financial results. In theory, you can attribute “the bench” here – investments in the fast start of the new projects and development of internal competencies).

Lyubomyr Ostapiv. CFO, Stanfy.

Works mainly with the owners of small IT- companies.

The modern CFO is expected to perform 3 roles:
- Mandatory (book-keeping);
- Voluntary (agent of changes – the creation of processes) ;
- The level of the Champions (key business partner – a strategic level , as a partner in the legal . Company ) .

Important functions of CFO: keep order, manage taxes, give consultations.

Taras Kytsmey (coowner, SoftServe).

KPIs Process Evaluation:
- Search for multiple KPI and for simple solutions;
- There are 2 sides of using KPI (business and salaries), which are interdependent;
- Everyone should have a personal and corporate KPIs (individual and depending on the company as a whole);

- There are different kinds of KPIs: operational (e.g. in-time project accomplishment, quality of work done), evolutional (e.g. continuous improvement) and transformational (leave on such a market …).

Olena Smirnova, Vice President, Investment banking at Dragon Capital:

Ukraine, the short overview:
- Devaluation of the dollar in 2014 – 57%;
- Reserves were $20 bn, dropped to $7.5 bn (a lot due to gas, buying currency, foreign loans);
- February 2015: 32 UAH for a dollar caused reserves falling to $5.6 bn;
- Then came the first tranche from the IMF ($5 bn), reserves rose to $10 bn;
- GDP fell by 7% in 2014;
- The fall by 15% is expected in 2015 (but that can be a lie);
- Everything, oriented at the domestic market is potentially at a fall (the devaluation of Ukrainian public companies – to minus 83%).

Expectations:
- The return of dollar investments in Ukraine (industrial production);
- Increase in reserves to 13 in 2015 and to 15 in 2016. In short – there’s some sort of improvements expected but a very slow one;
- Hryvnia rate against the dollar should remain at a level of 23 UAH per USD.

IT Sector: export makes it up to $2 bn (the same as it is for corn, gents!).

World:
- The euro is likely to grow against the dollar in 2016;
- So far US economy growth is estimated at 3-3.5% per year;
- Slowing of the growth in China.

Irina Kravchuk, EPAM (“What prevents from receiving and holding funds abroad”).

- During 3 years there has been only 500 of total number of licenses allocated by NBU;
- How to spend the currency in Ukraine: in dollars – every day, at the equivalent of 700 USD (15,000 UAH), In UAH (currency conversion) – up to 300 K UAH per day.

There was a question about the allocation of currency for business trips. According to the law, it is enough to provide an estimate and issue an order for business trip, but some banks require additional documents – which is not legally justified, but banks often use these mechanisms to delay the payments.

Andrey Kashperuk, Head of Retail Sales at UkrSibbank.

A bit of advertising, but still some useful info:

- Outflow from banks in 2014: $57 bn;
- Only 133 out of 186 total banks left at the market;
- When selecting banks make sure you pay attention to the ownership and liabilities structure (whether banks are able to give deposits), and the liquidity buffer;
- Gave advice on which banks would be better to chose based on the overall rating of reliability and ownership : Credit Agricol, Citigroup, Reiffeisen, BNP Paribas, Ingo, OTP.

Olga Hakkinen, CFO – Provectus, talking “On interactions of financial department with other departments.”

- Production -department – more communication needed;
- Customer – more patience.

Interesting to Ukraine market tools they are using: Zoho Books (for the invoice), Zoho Reports (vacation, sick), Cake HR Extensify (for expense reports).

Kate Goldberg, СОО, Intersog.

Had some good points on interaction of Finances and Sales. In general, the report was interesting for her phrase: “If the company has no problems, it does not change”.

Olga Podgornaya, the Chief Financial Controller “Miratech”, on “Control over expenses in the IT company.”

The audience burst out laughing on her questions how to save money on pencils, paper and headphones :)).

NB: the overall feeling that finance specialists in IT are not bored, they just yet haven’t make it to IT level.

NB2: a lot of questions were raised for the 3rd party services concerning accounting automatisation, KPI, development and support service. Perhaps the reason is that find ready-made solutions to simplify operations.

Viktor Levandovsky InternetDevels.

The charismatic guy who lives by the principle: no matter whether you are a rabbit or a lion, when the sun rises, you’d better be running..

Every spring, once feeling the stability, he cuts the spendings to stimulate himself. Kind of a thirst for adrenaline.

Oleksiy Gerashchenko, UKMA, on “Why traditional financial management is outdated and how to become a financier of the 21st century .”

It is interesting for the overall development, to hear a comparison of facts not previously compared.
It’s more fair to compare the development of Ukraine not with Europe, as we normally do, but with the countries of Africa.
Global economy trends are changing.

Some of the comparisons:

Krivorozhstal $5 bn, at the time of privatization – 52 thousand employees.
WhatsApp: company established Jan Koum, born in Kyiv. Sold for 19 bn dollars. At the time of sale – 57 employees

Harvest of wheat in Ukraine 20 bn tons , sold at the market price = $ 220 per ton , in total – $4.4 bn.;

Worldwide box-office gross set by “Avatar” – about $2.8 bn.

Intangible Assets are playing a more important role. Therefore, CFO, among other things, has to conduct assessment of:
- Reputation;
- Relationships with customers ;
- Personnel qualifications;
- Brand Awareness ;
- Quality of business processes.

Trend in transformation of professions :
- From pure finance manager – to finance architect ;
- From the accuracy of estimates – to the range of estimates ;
- From the knowlege – to the ability to change;
- From the current results – to the future prospects;
- Focusing only on financial indicators – starting to consider the wider range of different indicators.

Do not rely on trends, they are changing faster than ever before :
- IT outsourcing can change into IT insourcing ;
- High salaries in IT may become a headache of many companies one day;
- New spheres/branches etc. can be formed at the intersections traditional and IT spheres.

And a few life jokes heard on the conference:

A man flying a hot air balloon makes an emergency landing in a field. He calls out to a passerby, “can you tell me where I am?” The passerby responds, “you are in a balloon in the middle of a field.” To this the man says “you must be an accountant. The information you gave me is totally accurate but utterly useless.” The passerby then retorts, “and you must be a CEO. You’re steering a craft over which you have no control and you want me to tell you where you are going.”

In general, very useful topics and overview for general development as a PM.