The new power triangle

11th April 2016

As a senior finance professional you are likely to be well aware of the importance of your ‘partnership’ with the chief executive – and FSN has previously considered some of the benefits and demands of cultivating this and other relationships with senior colleagues (here). However, when the focus is on growing a business, some of the collaborations between those in finance and their colleagues in other parts of the organisation are more important than others. During 2016, many CFOs appear to be focussing their efforts to deliver growth on particular channels and their relationship building efforts on the executives most closely associated. FSN writer, Lesley Meall reports.

 

 

 

When the CFO Alliance recently conducted its ‘6th Annual CFO Sentiment Study’ among CFOs in North America, it found them planning to leverage three main channels during 2016: organic growth, increasing customer spend and expansion into new markets – and focussing on the importance of cross-departmental cooperation. Around 50% of financial executives identified marketing efforts or expanding relationships with existing customers as the top strategic factor driving company profitability during the year ahead and meeting customer expectations was most frequently identified as the CFO’s top operational challenge.

Digital technologies are reshaping how we communicate and collaborate inside organisations and across (increasingly long and complex) supply chains. The ways we do business and can grow a business are both evolving and this requires finance chiefs to be more outward-looking. “We are in the age of the customer, with more attention given to developing and maintaining strong and ongoing customer relationships,” says Raphael Bres, GM of financial management applications at FinancialForce.com. “As part of this, the CFO must get closer to the customer relationship as it becomes key to revenue forecasting in recurring revenue models.”

 

Measuring value

Crossing the cultural divide that separates finance and departments such as sales and marketing can require a new mindset. “CFOs need to look in the mirror and change the inherent bias in just looking at marketing and sales as overhead, and as a means to budget to drive the bottom line,” suggests Ernie Humphrey from the CFO Alliance. “Just because CFOs in general have not focused on measuring the value of marketing and sales activity does not mean it should not be done.” Cost savings may have a short term impact to the bottom line, but thinking strategically can enable finance to have a more sustainable, positive impact on sales and marketing success.

Measuring the success of marketing activity is challenging – particularly when you are faced with the vast amounts of data now available. McKinsey & Company suggests that being clear on the questions you are trying to answer is vital if data analytics tools are to provide meaningful answers and uncover relationships between spending and results. As a recent FSN article outlined (here), there may be much to be gained from adding a data scientist or somebody with data science skills to the team, to use algorithms and data science techniques (that can avoid human bias and overcome our limited capacity for complexity) to support more data-driven decision making.

The focus on the customer is also changing the way finance works with sales. “Forward-thinking finance chiefs are taking an active role in the front office, notably with customer relationships,” reports Bres. Previously, finance chiefs may have spent most of their time with sales teams working on revenue forecasts, but that forecast is becoming much more dependent on customer service. As a result, says Bres: “We are seeing CFOs working alongside the customer service organisation and offering support to ensure customer issues are resolved in a timely fashion, to maintain the forecast and to keep customer attrition levels to a minimum”.

 

Software solutions

Not just any software will do, it seems, when it comes to better supporting the sales and marketing function. At the German technology company Bizerba, getting the right software in place meant ditching spreadsheets for a unified (prevero) platform that could support activities such as forecasting and analysis across departments – and support international sales planning in multiple currencies and languages. “Compared to Excel we can now work significantly faster,” says Cornelia Schweizer, area manager, global sales coordinaton at Bizerba. “prevero allows for flexible structuring, as well as effortless grouping of products, customers and countries.“

 

At the Gap Partnership (a consultancy and training company specialising in corporate negotiation), when finance wanted to be a better partner to other parts of the business, such as sales and marketing, it decided to collaborate in ways that could improve efficiency and effectiveness. But this required stronger integration between the salesforce.com customer relationship management system and the finance system it was using. So it replaced an aging accounting system with FinancialForce. “My team and the operating teams are working more closely on the back of these systems,” says Gap CFO Nigel Wolfin.

“Being able to drill down through FinancialForce into specific transaction detail has been very helpful,” he explains, and improved transparency. “When we are talking to operating colleagues and they have a query on an invoice, we can actually show them that invoice, so that they can improve the communication with their clients too.” There have also been benefits for finance. “The whole integration piece has allowed us to be more efficient,” says Wolfin. The cultural split that separates finance from departments such as sales and marketing may not have disappeared, but with the help of appropriate software and systems, it certainly seems to be shrinking.

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