The role of the CFO continues to evolve. No longer restricted to number-crunching and spreadsheet management, today’s finance chiefs are fast becoming the go-to source for business insight and strategy. Forbes recently met with our CFO, Jim Johnson, to discuss what’s required of the modern CFO. Read on and enjoy!
The Modern CFO: From Storytellers to Data Experts
By Jeff Thomson, Forbes contributor
On CFO Insights, I’ve long discussed the challenges associated with the evolving business landscape, particularly its effect on the finance function. From the need to adopt new skills to hire the right talent, CFOs have had to stay nimble and ahead of the curve. This month, I sat down with Adaptive Insights CFO, Jim Johnson, to explore what’s actually required of the modern CFO. For Jim, it’s a mix between being the storyteller and adopting the role of Chief Digital Officer in tandem with your finance work.
This interview has been edited and condensed.
Jeff Thomson: Your diverse financial leadership experience includes positions with startups such as Jaspersoft and larger companies like Sun Microsystems, Veritas, and TIBCO. During your time with each company you played a role in scaling operations (e.g., making strategic decisions to have more effective and efficient operations) and successfully transitioning during stages of growth and acquisition. How are you planning to utilize that experience as you transition into your role with Adaptive Insights?
Jim Johnson: All companies have unique opportunities and challenges, but there are some constants in any business transition. Probably the most important consideration for a CFO when joining a company is to ensure that the right team is in place within finance, legal, and IT to strategically guide the business. The CFO needs to be supported by a strategic FP&A team that is excellent at all levels, from accounting for financial statements to planning for the company’s growth and providing insightful analysis. The smart CFO knows that having the right, modern team is the first priority, and it should be a team that is prepared for where the company is going—not where it’s been. Adaptive Insights is at a very exciting stage of growth right now and we have been fortunate to be able to attract some of the best and brightest talent to help reach the next level of success.
Thomson: In December 2015, I sat down with Adaptive Insights CEO, Tom Bogan, to discuss the challenges—and opportunities—that come with utilizing big data in the finance function. What role do you feel big data and technology play in your position as CFO?
Johnson: I once heard a general manager say “if we are making this decision based on opinion, I prefer mine!” Data is the lifeblood of an organization. It separates opinions from facts and can provide a competitive advantage for an organization. From knowing who your customers are and what they are doing with your products, to understanding how profitable a line of business or geography is, more companies are looking to the CFO to define the metrics and measurements that will be tracked to manage growth, enable agility, and ensure long-term sustainability.
But defining the measurements is just the first step. The next step, and perhaps the hardest part, is to set in motion a cadence for the management team to know and really understand performance through key performance indicators (KPIs) so that they can use that knowledge to make the right decisions as a management team.
The ability to mine, organize, analyze, and act upon data is crucial to the modern CFO. Technology goes hand in hand with data management. CFOs are taking a leadership role in deploying the technology they need to define and measure performance. Many organizations, including Adaptive Insights, run their businesses entirely on SaaS applications. This movement is empowering not only the CFO, but also business leaders across the company, to optimize their use of purpose-built business applications that give them the insight they need to be successful.
Thomson: What do you feel has changed most since you began your career in finance and what do you feel is required to be a “modern CFO”?
Johnson: The proliferation of data has created a new role for the CFO as Chief Data Officer. In the past, most organizations looked to the “Office of the CFO” as the source of truth for actuals and plan, basically ensuring that the financials of the company were accurate. Today, with the increase of data across organizations, CFOs are now looked upon to provide predictive insights into the business and advise business leaders as they plan out the strategic future of the company. But not all data is created equally and because of the volume, definitions, policies, and usage, it must be governed. The CFO has become the owner due to previous experience managing mission-critical ERP and planning data.
The modern CFO also needs to be a storyteller in the sense of helping management and employees understand the direction of the company and the measurement of success.
Thomson: In a report on the evolving role of the CFO, nine key issues and emerging priorities affecting the finance function were identified; regulation, globalization, technology, risk, transformation, stakeholder management, strategy, reporting, and talent and capability. Which do you believe is undergoing the most change for CFOs?
Johnson: I think the area of most significant change for CFOs is the ability to use and embrace technology and information. What differentiates a modern CFO is his or her ability to see how technology can radically change the cost and performance of the finance organization and really change the role of finance in their company. Finance is no longer a department in a building. It is a discipline that is understood and used effectively across the management team to guide a company in its attainment of a successful business model. That means that technology has to be useable and understood by key business people across the organization, so that it truly can be embraced. And, of course, the outcome of deploying technology should be to break down silos, ensure cross-functional collaboration, and enable everyone to participate in a company’s success. The net-net of embracing technology should be business transformation.
Thomson: You’ve previously stressed the importance of CFOs obtaining strong communications and interpersonal skills—what about these skills makes them essential to a CFO?
Johnson: These skills are the foundation of collaboration and all roads lead to the CFO, as the old adage, “follow the money,” still rings true today. Regardless of the tools available, the CFO must be able to communicate easily and openly with a broad set of stakeholders. From investors, board members, and company leaders to frontline employees, CFOs will be the guiding force that sets the strategy and enables successful execution, laying the foundation of data, metrics, and measures the company will use to guide them.
In order to communicate effectively, the CFO must also be able to simplify complex information and problems in a way that can be communicated and understood. The typical CEO is surrounded by complexity and typically looks to the CFO as the objective person to help him or her make sense of complex topics and communicate direction in a way that people will understand and embrace.
Check out the Adaptive Insights CFO Indicator Q2 2016 report, “Peak Ascent: How FP&A Can Guide CFOs to Great Heights,” for more info on how modern CFOs are planning to build a strategic FP&A function.