CFO to CFO: Evolving Finance Technology

Even before the COVID-19 pandemic created unprecedented challenges, many CFOs were accelerating the adoption of new technologies and capabilities such as data analytics, AI, and robotic process automation (RPA) to address organizational pain points and boost efficiency. Andrew Davies, the CFO of Sprint, a U.S. telecommunications service provider and wireless carrier, and Omar Choucair, the CFO of Trintech, an independent software provider, share their thoughts about the impact of technological evolution on the finance function.

SF: How does the rapid evolution of technology force CFOs to adapt?

Davies: When I first got into finance, a large part of the role was as much about producing information and doing the transactional processing as it was using and analyzing the information. Even before we get into talking about the advanced analytics and AI that have evolved in the last two to three years, there’s already a great disparity in companies’ investment in technology and what that means for the finance function. As an example, 20 years ago I was an operating-level finance manager within GE. Some of the things that I was doing 20 years ago in GE were actually more advanced than what I see other large companies, including Sprint, being capable of today even.

A long time ago, GE and others started going down the shared-service-center route, integrated ERP [enterprise resource planning] systems, integrated planning architecture, data warehousing, etc. You already started to have a shift away from basic production of information and just the scorekeeper and steward type of finance function toward more value-added stuff, from sales support to the strategic steering of the business. And what’s happening now—global lockdowns due to the COVID-19 pandemic—is only going to accelerate the need to move toward a more strategic approach of steering and business partnering. You see some companies today being left behind. There’s a generational gap. Typically, you find companies that are being left behind also have very mature, long-tenured teams who aren’t keeping abreast of the evolution in technology in the rest of the world, and that exacerbates the gap. It’s uncomfortable, because as finance people, we love playing with numbers and producing stuff—it gives us a false sense of control and worth.

If you’re producing the information or you feel you’re in control of it, then you have more, better knowledge than the rest of the business. A modern finance function needs to be very transparent and very comfortable with not so much sharing the information with the rest of the business, but being a co-leader of that information at the same time the rest of the business gets it. Some world-class finance functions have gone down a very heavy shared-service-center route [with] very heavy use of analytics. And if you’re a company CFO, you get to find out your results at the same time the rest of the business does because you don’t have any control over the accounting and the reporting.

Choucair: The office of the CFO has seen a massive technology shift over the last several years. These solutions are solving critical and routine functions that are in many different parts of the CFO’s responsibilities, including FP&A [financial planning and analysis], financial close, HR purchasing, SEC reporting, etc. Additionally, this technology comes with strong ROI and puts the CFO in a position to automate and realize pretty rapidly the financial benefits of moving from a manual, sometimes-inefficient process to an automated tool.

The current COVID-19 pandemic has also encouraged or forced CFOs to adapt, and certain companies were more prepared than others to execute a virtual close. We’re focused on the office of the CFO, but this clearly penetrates all departments inside a company. Our company was fortunate in that helping companies conduct a virtual close is the business we’re in, so we were prepared with the necessary processes and technology. Unfortunately, I think a lot of companies probably weren’t as prepared and potentially didn’t have the processes and technology in place to support a strong business continuity plan.

SF: What types of technology are impacting the finance function?

Davies: I would say the more advanced ERP systems, planning, architecture, and data warehousing are already impacting the finance function and have been doing so for at least a decade and a half. If I wind the clock back 20 years, you went down the shared-service-center route—you centralized all of the management reporting on the analysis within a very business-focused finance function. And that’s likely to impact the finance function in the next decade, quite possibly the next half decade, and this is particularly true of finance functions in very consumer-based industries such as mine. So this is a real-life thing that I’m grappling with right now in [telecommunications]: As we start to think about real-time analytics and AI, we have millions of transactions effectively on a daily basis with our customers.

And you can pull together analytics that allow you to understand customer behavior…but the question arises in the realm of real-time analytics and use of AI: How much of that number crunching needs to sit within finance vs., say, in marketing or some other function? It’s really going to impact how the role of the finance function evolves going forward and how finance interacts with the rest of the business.

Choucair: A host of SaaS [software-as-a-service] vendors have invested hundreds of millions of dollars to automate manual processes inside the office of the CFO. According to Gartner, intelligent applications are going to be critical for the office of the CFO as they look at enterprise software and automating manual processes that they currently use. One emerging technology is RPA, and the introduction of RPA with AI is a pretty significant opportunity to not only eliminate a lot of mundane processes, but also leverage machine learning algorithms to examine trends in your data over time, identify abnormalities, and automate workflows based on the associated risk. So that’s really interesting as CFOs, controllers, and FP&A executives look at how they can really benefit from this new technology.

SF: How can CFOs guide their company’s technology investment?

Davies: It depends on the size of the company to an extent. In a small to medium-size organization, it’s quite frequent for CFOs to actually have information technology in particular sit within their purview. And again, particularly if the IT within a given business is more related to back-office functions. Big [telecom companies] are different from that—our IT function is massive, and our technology function is even bigger. But the CFO needs to have a good understanding of technology; [he or she] doesn’t need to be a coder or anything of that nature, but certainly needs to have a good grasp of all the different technology tools that are available and needs to be able to partner well with CTOs [chief technology officers] and CIOs [chief information officers].

We have a capital investment committee, for example. So you need to have the finance team fully involved in assessing how technology can influence the business, whether it’s streamlining processes or getting information together more quickly and more effectively to aid decision making and then be able to crystallize the benefits of all of that so you can make decisions in business cases.

I’ve been fortunate in that I’ve always had a very close affinity with technology. That has to be the starting point—the CFO really needs to understand technology as it relates to his or her business.

Choucair: It’s really important to evaluate technology from a holistic perspective. We’ve always been a fan of implementing solutions that help the company to achieve full transformation. We’ve focused on order to cash and billing to revenue and go-to-market. There’s a tremendous amount of technology that’s behind the go-to-market, whether it’s the CRM [customer relationship management] marketing platforms or back-end systems. I’m a big believer in spending as much time as you can up front and becoming highly focused on flowcharts and documentation. The time companies spend up front pays off in big dividends as you go through the project.

SF: How can technology address CFOs’ pain points or challenges?

Davies: It’s fundamental. If I don’t have the right technology, I can’t move, right? If I didn’t have a good or even a basic ERP system, it would take me months to close the books. So a finance function in my view is only ever as good as the underlying technology that it utilizes. It’s like trying to run a racing car with only a one-liter, four-cylinder engine—you aren’t going to get very far. So, to me, technology is really fundamental.

Be careful with how you deploy the technology. You need to make sure it’s fit for purpose. In an ideal world, it needs to fit your purpose as you get it out of the box. I’ve seen a number of companies take a basic part of the technology or a basic bit of software and then they customize the heck out of it in order to fit their own business—and then end up in a whole world of pain, particularly as risk management and the compliance environment evolve.

I’ve heard and witnessed horror stories of companies that overengineered some ERP systems, and then when SOX [the Sarbanes-Oxley Act] came along they were in real trouble because they didn’t have sufficiently robust controls from a SOX perspective. It takes multiple years to fix all that. So while technology is fundamental, you have to be really careful that, as I said, you don’t overengineer the station, and you’ve got to make sure that you’re buying and deploying technology that’s really fit for purpose. And also you need to really avoid…having almost competing technologies. As an example, I’ve seen a business have an ERP system that provided reporting capabilities. They then layered a reporting infrastructure on top of that and then, in addition, deployed some real-time web reassurance software, which also provides its own reporting on particular customer transactions. And, all of a sudden, you’ve got a version-of-the-truth problem because you’ve got so many different strands of reporting going on. So being really invested in discipline in deploying the technology is super important.

Choucair: Tremendous opportunity exists for technology improvements as people look at the office of the CFO. Ultimately, one of the goals for every CFO is producing reliable financial statements and doing it in such a manner that it’s increasing the efficiency and the effectiveness of how you process this information and, all at the same time, saving costs and hopefully reducing enterprise risk. And if you speak to most CFOs, that’s really what they would say: Ensure accurate financial reporting and provide that confidence to the other departments in the company.

CFOs must take advantage of the massive opportunity that technology offers to eliminate so many disparate and manual systems and upgrade them. Leveraging technology to clean up the front end of your processes improves your financial reporting, overall efficiencies, and liquidity forecasting.

Note: Comments have been lightly edited for clarity.