Amidst the continued pressure to deliver innovative, services-driven business models and continued growth, financial leaders are playing an important, evolving role. Already the most important interface with investors, the CFO now also needs to become a key force in supporting business strategy and growth.
iStart caught up recently with David Krauss, cloud evangelist for San Francisco-based ERP provider FinancialForce, in a wide ranging discussion on why the landscape for CFOs is shifting – and found it is the software business that has a lot to blame for the changing sands.
It is tied to a perceptible shift from ‘product’ to ‘service’, and adding lifetime value to customers.
“For the CFO of yesteryear, it was about cost containment and pure operational efficiency. Now, it’s about how the back office can deliver top line growth to the organisation – and that means blending and evolving the responsibility for the CFO to facilitate growth, while cutting the cost of maximising lifetime customer value,” explained Krauss.
“For the CFO of yesteryear, it was about cost containment and pure operational efficiency. Now, it’s about how the back office can deliver top line growth to the organisation.”
In short, it’s a shift from ‘cost’ to ‘revenue’. “That’s in the context of a services economy; it’s easiest to think of that in terms of software as a service, but it applies to many more organisations, too. Think of the old days, when you sold software on a perpetual license. You couldn’t care less what the customer did with the software, whether they even used it or not, because the relationship ended right there.”
With SaaS (or anything ‘as-a-service’, for that matter), the vendor cares a lot about what the customer does with the goods. If they don’t use it, they stop paying for it. They stop paying for it and the CFO, the traditional bean counter, has fewer legumes to worry about. And that’s not a good thing.
Krauss knows this better than most. FinancialForce, part owned by Salesforce, is a member of a growing community of cloud software providers living and breathing on the Force.com platform.
And that environment really sums up the ‘value shift’ which has come along as part of the move to services. Vendors have far more interest in creating and adding ongoing value. Customers enjoy far more choice and (in most cases) have the power to simply move on if it doesn’t work for them.
Or as Krauss said, “The value is no longer in the ownership, but the utility of it.” You don’t want the digger, you want the hole.
Fair enough, then. But why is this a CFO problem; shouldn’t it really stay with sales and marketing, or maybe even the CEO? “Well, good question,” said Krauss, and it turns out, the answer is something of a data story “Consistent with the shift to the subscription economy, we’re seeing an evolving role and responsibility for office of finance, because with the right systems, the CFO has an unprecedented insight into the customer lifecycle.”
Krauss said the traditional notion of a separation between back and front office systems is giving way to one where it is possible to capture a multitude of data points from across the whole organisation: the touchpoints include customer interactions, invoices and billing events, support contracts and any engagements in the provision of the service. “These, in totality, create additional insight into how to maximise the value of the customer.”
Or, to look at it another way, to maximise the value your organisation can add to the customer. “Absolutely,” Krauss agreed. “You’re now able to put the customer at the centre of the universe. It’s a different way of looking at ERP, which in legacy terms, was architected around product and supply chain. We’re talking about architecting around the customer. And that should be exciting for everyone in the business – and CFOs in particular.”
iStart’s upcoming Lunch Box webinar “Top 4 CFO Imperatives for 2018” is a panel discussion looking at the evolving role of the CFO. You are welcome to register and join the live discussion on Mar 14, midday AEDT (2pm NZDT).