The Progressive CFO: Planning for the Future vs Looking at the Past

The Progressive CFO: Planning for the Future vs Looking at the Past

The role of the CFO has changed dramatically in the past 20 years. Budget cycles have gotten shorter, margins of error tighter, and the need to automate the budgeting, planning and analysis processes is exponentially greater.

The business world is accelerating and CFOs must be more proactive and forward thinking to keep their companies ahead of the curve.

Planful CFO Ian Charles is in a unique position to witness these changes. His job as the head of finance and corporate development for a SaaS provider of financial performance management software gives a first-hand view of the challenges that CFOs face—not only from his own experiences; but also, those faced by Planful CFO customers. With 25 years of experience in corporate finance, Ian has spent the last four years overseeing Planful rapid growth, including a doubling of the employee base and a jump in revenues of 500 percent.

In a recent podcast interview on CFO Thought Leader, Ian shared his insights into how the role of the CFO has changed over the past few years, and what today’s CFOs must do in order to ensure their companies’ future success.

Perhaps the greatest shift in the role of a CFO, he believes, is the change of focus from the past to the present and future. Traditionally, the finance department generated reports on the historical performance of the company. But now, that historical focus has been replaced by an urgent need for strategic analysis of current and future growth prospects. As part of that new perspective, CFOs today must take a more holistic look at their companies’ overall business operations and market development.

“It’s evolving to be more operational, more in tune with the needs and requirements of the customer base,” he said. “CFOs are looking at the customer more closely, looking at metrics like the lifetime value of a customer vs the cost of acquiring that customer, and why customers chose the product and why others reject it. It’s deep diving into the question of how to reduce the reasons why customers churn and increasing the value they get from it.”

A good measure of company’s success with pleasing customers is the lifetime customer value metric which, Ian noted, is also a prime indicator of the company’s future financial health.

Another increasingly important benchmark of long-term success is that of annual recurring revenue (ARR). ARR is especially critical for SaaS companies, of course, because they depend on subscription renewals as the main source of income. But it’s a valuable measure of financial health for other companies as well.

“The most important driver of future shareholder value and future growth is the growth of annual recurring revenues,” said Ian. “Every company has a different level of churn, but at the end of the day, if there’s more water falling out of the bottom of the bucket than is being put into it, you’re not going to survive very long.”

A successful CFO will also promote a progressive and transparent culture, one that emphasizes collaboration and information sharing.

“Some finance organizations are content with looking off the back of the ship and reporting historical results, while others are very proactive in understanding the operations, the nuts and bolts of the revenue base, or why customers chose the company,” he said, adding that a culture of information and analysis is critical for finance executives today.

Transparency and visibility are also important qualities in the office of finance, according to Ian. Everyone involved in budgeting and planning should have access to the appropriate level of data.

Otherwise, “when you’ve got departments calculating projections on spreadsheets that finance either doesn’t have access to or isn’t connected to the overall company plan, you wind up with surprises.” And they’re rarely good surprises.

Regardless of how decisions get made in a company – bottom up, or top down – the people making those decisions should communicate and work with the same set of data.

At Planful, the finance department assigns financial analysts to serve as liaisons between finance and other parts of the business. These liaisons facilitate collaboration between finance and the rest of the organization, and help department managers navigate financial issues – such as understanding compensation trends or how to budget for growth. That ensures that everyone is working with the same data, processes and standards.

“Communicating is critically important. Often what’s being said isn’t what’s being heard,” he explained. “Clarifying the message and openly communicating is something that is core to my success.”

Download the episode below and listen to Ian as he explains how effective communications and measuring the customer experience are now central to CFO success.

Listen to Podcast

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How Augusta Sportswear Teamed Up With Planful for Better Business Insights

How Augusta Sportswear Teamed Up With Planful for Better Business Insights

Celebrating its 40th year in business, Augusta Sportswear today sells more than 800 styles of active wear for teams, coaches, and athletes of all ages.

Selling through a massive distribution network, such as this, leaves a lot for the Augusta Sportwear finance team to track in order to accurately measure performance. Until Planful, Excel was the only tool they had.

“We were using an old system that was very manual and prone to errors,” said Mark Brown, Augusta Sportswear Director of Financial Planning and Analysis. “We wasted a lot of time on activities that didn’t add value.”

Running Hard, but no Finish Line in Sight

In the apparel business, wasted time can have a multiplying effect. Brands that are expected to do well could miss and set an apparel line back a few months, for example. In Brown’s case, losing time also meant losing opportunities to dig deeper into the general and administrative expenses that impact Augusta Sportswear’s bottom line. Workforce data was a particular problem.

Brown said his team would spend hours reviewing and manually correcting spreadsheets because so much Selling, General & Administrative Expenses (SG&A) data had to be stitched together from different spreadsheets into a consolidated whole. Errors and formatting issues obscured insights. “We had to work hard just to get a handle on the basic cost of healthcare and benefits for the workforce,” he added.

Teaming Up With the Business

Brown’s team chose Planful for its cloud-based EPM platform. The benefits began to accrue almost immediately.

“Our entire process became smoother as we automated work we’d been doing in spreadsheets for years,” Brown said. “We’re now able to pull reporting as we need it, and that’s really freed up our team to be more interactive with the rest of the operations.”

In particular, Brown said his team is now using time to meet with department heads and address problems and seize opportunities. “We’ve been able to embed with the sales and marketing teams and actually be their finance partner.”

Augusta Sportswear and Planful Cloud EPM: A Winning Partnership

Having the flexibility of cloud-based EPM from Planful has made a difference in what Brown and his team can bring to strategic discussions with department heads and upper management. “We had some complex models we were trying to address in our cash flow. The Planful team was very creative in the implementation process and how to maximize the use of the system,” Brown says.

And today, roughly two years after first implementing the cloud EPM platform from Planful, Brown said he sees Planful as being as much a partner to his team as the finance team is to Augusta Sportwear’s operations. “For our company, this was a big expense and the Planful team understood that — they’ve been just as committed to our success as we are,” Brown concluded.

To learn more about Augusta Sportswear and their use of Planful, check out this customer success video.

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Swissport is the world’s largest provider of ground and cargo handling services in the aviation industry, moving more than 4 million tons of cargo a year in 48 countries. But as Kim Lanham, the director of FP&A for Swissport North America, found out, the U.S.-based operation had room for improvement in how it moved and managed financial data.

“I started at Swissport in February of 2015 and when I got there they said, ‘You are going to be consolidating 2,000 spreadsheets come budget season that summer,’” Lanham told me at our Planful World conference last May. “And I said, ‘Oh no, no, no, no.’”

With that, Lanham embarked on a journey to transform budgeting, consolidation and reporting processes at her new employer. After evaluating several solutions, Swissport selected Planful to modernize from labor-intensive Excel-based processes.

I spent about an hour with Kim to learn how Swissport uses Planful. Here are a few of my key takeaways.

A Two-Phase Implementation
Previously, Swissport struggled with about 2,000 spreadsheets, roughly two for each of its 1,000 cost centers. That meant a bottom-up view with no practical way to aggregate the data. “It was pivot table or bust,” Lanham said.

After choosing Planful in summer 2015, Swissport took a two-phase approach. First, it loaded ERP data into Planful for budget reporting, gaining decision-making insights not possible with spreadsheets. Next, Swissport built out budget templates and began doing forecasting, including reporting on forecasts vs. actuals.

“Now that we’re in Planful, we have that detailed level of data but we also have a higher-level perspective across the business,” Lanham said. And Swissport gained new trending analytics, important because of huge seasonality in the business: “Our executives were ecstatic they could look at trends year over year.”

Transformational Insights for Finance and Operations
Swissport now has breakthrough capabilities to make informed, data-driven financial and operational decisions. By incorporating both financial and operational data into Planful, Swissport can see how operational KPIs are driving financial results.

“It’s just opened up a world of possibilities and decision-making that was never even dreamt of. It allows us to make better business decisions because we can compare and contrast different locations, divisions, and regions, which we couldn’t do before,” Lanham said.

“It really has changed the direction of our business and how we’re able to manage our performance,” she added. “Now anything our executive team asks for we’ve got at our fingertips. It’s been fantastic.”

Ease of Use Drives Wide Adoption
Exceptional ease of use has sped adoption across a diverse 130 users, spanning finance, accounting, the centralized operations team, general managers at airports, and even cargo ramp supervisors. Some financial power users log in daily and conduct deep data dives. Operational personnel examine how revenue stacks up against operational metrics, identifying areas for improvement.

“Planful is intuitive and user friendly — it’s proven that over and over again,” Lanham said. “Anyone at any level of financial acumen can use Planful to get the job done.”

New Features and Customer Support
Lanham has been especially impressed by the Planful customer support team. For instance, the team noticed Swissport’s heavy workloads and proactively offered to modify the Planful instance to optimize performance. “We’ve been really impressed with how Planful has kept up with our needs, even before we knew we needed it,” she said.

And she’s delighted with new features rolling out regularly. “We’re excited every quarter when a new feature set is introduced,” Lanham said. “Since we went live, Planful has launched new features that just continually add value to our decision-making ability.”

To learn more about the Swissport story, check out a brief video of my discussion with Kim.

Watch Video

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