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Role Model for the CFO as Strategic Advisor and Better Business Partner

By May 24, 2016Article

For many years the industry has been talking about the evolving role of the CFO from back-office scorekeeper to strategic advisor and business partner to the enterprise. And it appears that we are making progress. In a recent Argyle CFO survey, 55 percent of respondents said that their level of collaboration with the CEO had increased in recent years. Another 16 percent said their collaboration had increased with the CIO and 15 percent cited that their collaboration with the VP of sales / chief revenue officer had increased.  

These are all good signs that companies are making progress in evolving the role of the CFO and the finance department, but there’s certainly more room for improvement. As you look to make this transition, who can the CFO look at as a positive role model in becoming a strategic advisor and business partner to the CEO and other line of business executives? 

Using “Star Trek” as a model 

Well, it’s time for a true confession: I’m a “Trekkie.” OK, so I don’t wear costumes or attend conventions, but I’ve always enjoyed both the original series and “The Next Generation.” With that in mind, I can’t help but look at two key “Star Trek” characters as potential role models for being a strategic advisor and business partner. I’m talking about Mr. Spock in the original series and Lieutenant Commander Data in “The Next Generation.” 

Let’s start with Lt. Commander Data – also referred to as “Data.” Data was an Android, so he could not experience human emotion. But he was analytical, logical, quantitative and data-driven and could provide advice to the captain and others based on his analysis of data. Good traits for a financial analyst, but maybe not the best role model for a CFO. He would be a phenomenal operations analyst or VP of operations, though. For sales in particular, you may know people like “Data” who regularly analyze the current sales forecast, model the ramping of new sales reps and produce all the sales KPIs for quarterly business reviews. They are the “go-to” person for the latest metrics and analysis about the business and an essential, key resource for many business leaders. 

But Mr. Spock had additional traits that made him a better strategic advisor. Mr. Spock, the Vulcan, was logical and analytical, but he also had the wisdom and insight to give spot-on advice to Captain Kirk. I think Spock is a better role model for the CFO, who must not only be logical and analytical but also must have wisdom and experience to act as a trusted advisor to the captain (i.e., the CEO). And the CFO should also use these skills to be a business partner to the crew (i.e., line-of-business executives).  

This role of business partner is important in today’s organizations, as we’ve seen a proliferation of “operations analysts” springing up in many departments – sales, marketing, manufacturing customer service and other areas. Some of them were hired directly by the LOB executives, and some may have been moved into these roles from finance. But in many cases, these LOB analysts are disconnected from finance. 

So now there are all of these “Commander Data”-type operations executives and analysts who independently model and frequently update their individual, tailored models. For the most part, these models are built in Excel, which is readily available, cheap and easy to use for individual tasks.  

But the problem is that Excel models are prone to error, offer limited dimensionality and are disconnected from corporate models and plans. So while the operations guys are off creating and updating their own models of the business, Mr. Spock in finance continues to build and maintain a corporate financial plan that is, in turn, woefully out of date and out of synch with what’s really happening in the business. “Highly illogical,” as Spock would say. 

The real win — and next step — for companies will be to recognize and get Mr. Spock (in the finance department) aligned with what Commander Data is doing in operations and, most importantly, to get their respective financial models integrated and sharing data so that everyone operates from a consistent set of assumptions. But how can this actually happen? How can finance gain and command the view into this valuable operational data? 

Connecting finance to operations 

Commander Data-type operations positions will continue to proliferate across organizations — not unlike the famous “Star Trek” Tribbles episode with the furry creatures that multiply like crazy and overrun the Enterprise. The good news, though? Operations roles are increasing the overall analytical and financial aptitude of their companies. 

However, the challenge today is to reel in those Tribble-prone operations running amuck with Excel. There has to be a better way to directly link all the sales, marketing and other models to the financial plans and forecasts. Get everyone on the same page so resources and findings are aligned and the company actually can meet objectives with accurate modeling and reporting. 

But how? It’s the cloud. For too long, finance has been behind the eight ball with cloud adoption. Sales and marketing, of course, are leaps and bounds ahead with implementation of leading-edge cloud solutions. Now there is finally the opportunity with cloud-based enterprise performance management (EPM) solutions to enable the integration and alignment operational models with financial plans and models. 

Alternately known as corporate performance management (CPM), Gartner reported in its 2015 Gartner Magic Quadrant for CPM Suites that, for the third year in a row, cloud-based solutions dominate adoption trends. Gartner and other analyst firms have noticed increasing interest in analytical modeling capabilities within CPM suites in recent years as companies shift their focus from the periodic reporting needs of the past to more dynamic, forward-looking, what-if analysis required in today’s market. 

To allay some fears (or potential panic), it isn’t really a complete goodbye to Excel. But it will help alleviate the mass proliferation of spreadsheets that do not provide a wholly accurate view of the business. Successful EPM solutions in the cloud will ease both operations and finance into the transition. They provide an Excel-like experience on the Web, which leverages users’ familiarity with the tool. Many also leverage desktop Excel as a front end to the cloud-based applications. This allows users to retain and use their skills in the familiar interface of Excel while the EPM solution does all of the heavy lifting on the back end.  

Connecting the dots 

So the tools are available to better connect operations and finance. But it’s up to the CFO to reach out and embrace the operations analysts. Find out what they are working on, what tools they use and look for opportunities to connect their operational models to your corporate finance plans and models. This will give you a better chance of gaining alignment on business plans and resource allocations and a better chance of meeting your corporate goals and objectives. And in the process, the CFO will be viewed as a better business partner, providing tools and expertise that the operations analysts can leverage to make better decisions for their division and the company in general. 

John O’Rourke is vice president of product marketing at Host Analytics. With a background in accounting and finance, John has over 30 years of experience in the software industry including over 16 years of experience in EPM Product Marketing at Hyperion Solutions and Oracle. John has also held positions in strategic marketing and product marketing at Dun & Bradstreet Software, Kenan Systems and Decision.