The Future Of The Finance Function

Getting your CFO to step up and be your strategic partner may well determine how successful you are at creating value long-term.

Technological disruption is affecting all corners of business, and finance is no exception. Cloud applications, AI and machine learning make it possible to automate many number-crunching tasks, enabling businesses to lean on reporting functions that once focused primarily on balancing the books to inform strategic decision-making. 

More and more CEOs are doing just that. “If you’re an accountant or finance person, not only do you have to count the beans, but you’ve got to grow them too,” says Tom Kelly, director of Oracle NetSuite. “Organizations need to move from spending all the time closing the books and more time being able to interpret that data.”

At Quatris Healthco, the events of the past year underscored the value that data-crunching technology brings to the table for CFO Cari Thomas. “Our reliance on our financial system as we needed to pivot quickly was critical,” she says. “We put into place a lot of different tracking within our ERP so that we could monitor customers most impacted by Covid, and we enabled reporting throughout the organization. So, if a customer were to call in, a support representative would know, ‘Hey, this clinic’s really struggling,’ and treat the scenario or the situation differently.”

The ability to generate insights like that, however, hinges on how well organizations have been able to get more efficient at routine tasks like applying cash, paying vendors and paying employees. “While critically important, when you look at the steps that go into all of these things, they are ripe for automation,” says Kelly. In fact, Accenture estimates that automation technologies can take on between 60 to 80 percent of backward-looking accounting activity, freeing up finance teams to focus on data-driven initiatives that drive profitable growth.

Quatris is four years into that journey, explains Thomas, whose company recently completed an accounts receivable automation stream. “We’re not applying cash any longer, not scanning checks any longer,” she says. “It’s about being able to focus my time, my controller’s time and that of people across the organization on what steps we’re going to take to grow the business based on the data versus spending all of your time with the inputs. Now, we’ve got the data.”

BEYOND THE NUMBERS

Insights from CFO Leeny Oberg, whose strategic partnership with the late Arne Sorenson, former CEO of Marriott International, helped build the company into one of the world’s largest and most successful global organizations.

On lessons from the pandemic…

In a situation like the pandemic, it became really clear that you have to be willing to make decisions without perfect information, and you must make them quickly. That probably is a muscle that, at many big companies, doesn’t always get used perhaps as much as it should. For all of us at Marriott, it was a good reminder that we’ve got to be really good at that.

On the ideal CEO-CFO relationship…

I want to make sure that I do everything I can to help him or her see the pitfalls, the good things, the bad things, the possible outcomes, look at it from all sides of the equation, and then go like crazy to execute it successfully. When I think about where I can add the most value, it is really about helping to analyze, evaluate and structure strategies such that you were getting the economic value that you want for the enterprise. Also, you’re trying to accomplish what you’re trying to accomplish for, in our case, the customers, the hotel owners and the associates, but with this underpinning of, it’s got to have an economic value equation that hunts, so that sources and uses of capital in the market will say, “Yes, I get that. I think that’s valuable, and I understand why.” To me, that intersection of the two is, frankly, I find it delicious. 

On allocating capital…

Being known as “Ms. No” is not always the fun part. But it gets back to really being able to explain why, explain the strategy, explain the choices. A company can’t have 30 priorities and throw capital at all 30 of them effectively with the same amount of effort. It’s not possible. There have to be better defined priorities about where you think you’re going to get the most value. Wouldn’t you be better perhaps doing 10 projects and doing them really, really well and maybe getting more bang for your buck? Those are the kinds of discussions at the senior table where the CFO can be quite useful in helping evaluate where are we going to get the most value and advantage with our various constituencies, including the supply and demand for capital.

On M&A lessons from Marriott’s acquisition of Starwood…

First and foremost, you’ve got to make sure you’re paying a good price for it. For the first number of months, especially since we had another bidder try to come in and top us out and take the deal away from us, we were overwhelmingly focused on what is the right way to think of the value of this combined enterprise?

That’s fascinating work and probably the dream of a lifetime for most CFOs in terms of really being able to take your ideas and then translate them into economics and think about how the market was truly valuing each company on that day. Really exciting.

But you had to always keep the big picture in mind: What was our ultimate goal? You, of course, don’t want to pay too much, but you also ultimately have to say, “Are we making sure that we are going to really get the value out of this merger that we think is there, and are we looking hard at the reasons why?” Every single leader involved in that deal was incredibly involved.

‘LET THEM SHINE’

Thomas Song, CFO of Aimbridge, on delegating during a crisis:

“As a leader, it’s tempting sometimes to say, ‘Hey, listen, I have to be involved in everything.’ But, actually, the opposite is true. You have to really prioritize more than ever before what you’re going to get deeply involved in and then trust your team and let them shine. They want to help more than ever on some of these critical matters, and you don’t want to be the bottleneck. It’s impossible for larger organizations to have that clarity and objectives and to execute against those objectives if you don’t trust one another.”