How to Better Engage Finance as a Business Partner

CFOs and Finance departments have certainly made progress in shifting their focus from simple “bean counting” and back-office support to being a strategic partner to the CFO and the executive team. But there’s still room for the CFO and Finance to become better business partners to the various lines of business they support.

This is a topic that Planful’ CEO Dave Kellogg has been focusing on in his talks at the recent Future of Finance Tour events. I had a chance to sit down with Dave and get his perspectives on this topic.  Here’s what he had to say.

John: Dave, how well do you think the CFO is doing as a partner to the business?

Dave: From what I’ve seen, the CFO and Finance have made great strides in becoming more strategic and having a seat at the table in driving the strategic direction of companies. The CFO has become a key partner for the CEO, acting as a sounding board and objective voice of reason in strategic decision-making. But I think there’s room for improvement in terms of the CFO’s interaction and support for the various lines of business in a company – sales, marketing, services, customer operations, etc.

John: Do you have any good examples of role models who serve as business partners to the CEO and the business?

Dave: Sure. Actually, there are two examples I like to talk about. One is Lt. Commander Data from Star Trek – The Next Generation. Lt. Commander Data is a good example of that unemotional number cruncher who can provide key metrics and information to the captain of the Enterprise. He’s logical, quantitative, data-driven, and rational, which is great. But he doesn’t provide a lot of value-added input to the captain.

A better example is Mr. Spock from the original Star Trek series. Spock shares a lot of similar traits with Commander Data – he’s logical, data-driven, loyal, and trustworthy.  But he’s more strategic and forward-looking as an executive. He’s a better sounding board for the captain and more of a right-hand person who provides value-added advice. This is the type of role the CFO should play for the CFO and line of business executives.

John: That’s great, Dave. I was a fan of the original Star Trek series growing up, didn’t really get on board with the next generation. So what steps can CFOs and Finance take to become better business partners to the business?

Dave: Yes, I was more tuned into the original series as well, loved Spock!  I have 5 steps that I like to talk about, steps CFOs and Finance organizations can take to become better business partners.


Steps to better engage Finance as a business partner

  1. Free yourself from the drudgery of Finance

  2. Live in the future

  3. Leverage big data

  4. Build more Finance agility

  5. Learn to think like a board member

John: Great, let’s explore these in more detail. Finance inherently has to perform a lot of tasks that qualify as “drudgery.” How do you suggest Finance frees itself from some of these tasks?

Dave: Yes, I get it. Accounting and Finance do have a number of mundane tasks they need to perform –but there’s opportunity here. The main thing is to substitute capital for labor, wherever possible. That means using systems and automation rather than spreadsheets and manual processes for key tasks, such as closing the books, reporting the results, and collecting budgets and forecasts.

Substituting cheap labor for expensive labor by outsourcing and offshoring more mundane tasks can also help. Think about Accounts Payable, Accounts Receivable, Payroll processing, and other tasks.  And Finance executives need to lose the “pay it forward” mentality. Just because you did things manually when you were coming up the ranks, doesn’t mean your staff should struggle with the same tasks today.  We can do better.

John: Makes sense. I sure spent a lot of time doing drudgery work when I was in Finance back in the day. I wish we had all the modern software tools available back then. Let’s talk about your second step, “Live in the future.”  What do you mean by that?

Dave: Well, as you know, John, a lot of Finance is about the past. Most of their time is spent on accounting for the past and reporting on the results.  Finance teams need to change their focus, look more at possibilities, not facts. Some of the key techniques they can leverage here include things such as Financial Modeling to perform “what-if” analysis on the impact of various business decisions. Driver-based planning is also a great way to add more flexibility and agility to the planning and forecasting process.  And benchmarking is a helpful way to analyze how your company is performing against peers and competitors.

John: Got it. If Finance departments can automate more of the mundane tasks, they can free up more time to focus on forward-looking forecasting and analysis. Let’s talk about your third step – “Leverage big data.” There’s a lot of buzz in the industry about big data. How do you think Finance can leverage it?

Dave: One of my favorite topics. You know, nothing distracts management from focusing on the future like missing a quarter, from a revenue or profits standpoint. Big data can actually help Finance predict future results, if used effectively. The opportunity is to integrate and harness big data from the operating functions in the business. Then within that data, find leading indicators that can provide predictive value.

Some examples include Sales pipeline data, Marketing lead funnel, website traffic, and social media sentiment. With this data, you can create your own forecasts and validate against the forecasts submitted by line managers to improve accuracy and defeat system gaming. Finance needs to use this data and forecasts to offer a second opinion, not just a summarization of what managers submit.

John: Very cool. I guess Finance needs to be looking at hiring more data scientists to help them sift through all of this data. Let’s move on to step 4 – “Build more agility.” What do you recommend here?

Dave: Actually, John, you covered this well in a blog article you wrote. Reducing reliance on Excel, streamlining the close, dynamic planning, leveraging the cloud – these are pretty basic things that Finance can act on to quickly improve their agility.

John: Thanks, Dave. That article and those steps have been well-received. OK, let’s move on to your final step – “Learn to think like a board member.”  What’s your advice here?

Dave: The point here is that too many Finance executives get lost in the details and lose the big picture. My advice is that, while it’s important to understand the details, to be an effective business partner, the CFO and other Finance executives need to lose the details and zoom out to the big picture. Focus on the key business trends, de-personalize the actors, and focus on the financial outcomes.  Think more strategically, especially about how your company is performing and acting versus competitors.  Like Mr. Spock, offer an opinion, not just a bunch of data points.

John:  Good stuff, Dave.  These are great points that are clearly actionable for Finance executives.  Do you have any examples of Finance executives and companies doing this well today?


Examples of engaging Finance as a business partner

Dave: Yes, we have a number of customers whose Finance executives are already doing a great job of being better business partners. For example, Jim Perry at iCIMS moved his Finance department off Excel, adopted our cloud-based EPM applications, and was able to shorten the close process from 4 days to 4 hours. He’s also created a comprehensive strategic and financial planning process that links Finance and Operations. To improve forecasting, iCIMS is leveraging data from financial, HR, and CRM systems – as well as data from Google Analytics about its web traffic.

Another good example is Matt LaVay at Ellie Mae. Matt has pushed EPM beyond Finance with Planful, linking financial planning with sales planning. Ellie Mae has pushed these planning processes down into the ranks of the business, giving everyone an ownership role. This encourages buy-in and decentralizes the process so that it works well within individual cost centers.

John: Great examples. I think that wraps things up. Thanks for your time, Dave.

Dave: My pleasure, John.

To hear more from Dave Kellogg, watch this video interview. If you would like to learn more about how Finance can become a better business partner, please visit our white paper library, customer videos, and webinar replays.

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