The CFO blind spot

Finance | Tue 6 Jan | Author – Business & Finance
Revenue Forecasting

Strong competition and more demanding customer requirements are changing and challenging the traditional role of the CFO, writes Ian Stone.

A survey of CEOs [1] by PwC recently highlighted the issues faced by businesses today, and the conclusion is not altogether surprising: companies are facing more diverse and demanding customer segments while at the same time fending off intense competition and new market entrants.

This is something which we hear regularly from customers and as technology continues to advance and impact on consumer and business preferences, it’s no wonder that more than 90% of CEOs want to change customer growth and retention strategies to reflect rapid changes in customer behaviour. But there are signs that the focus on the customer outside of the organisation is not being matched by sales planning on the inside, leaving CFOs exposed to inaccurate sales forecasts and unable to respond confidently to change. The impact can be far-reaching with potentially adverse consequences for market capitalisation, reputational risk, staff morale, and the bottom line.

For many CFOs, the sales forecast set at the beginning of each quarter is the last that they see of their businesses’ revenue prospects for the next three months. Many CFOs are working in a vacuum – a blind-spot created by outdated technology, organisational structures and processes; yet relatively small unplanned events that crop up in a quarter can have a profound impact on trading outcomes.

Take for example, the sudden departure of a key account manager, staff illness leaving unassigned gaps in sales quotas, an unplanned shortage of vital components, unforeseen changes of personnel on the customer side, or unseasonal weather that delays product shipments. Any of these events on their own could be seriously disruptive to the integrity of the sales plan and with no visibility of the problem, the CFO cannot influence the outcome, manage market expectations or help to bring the organisation back on track.

So how can an organisation tip the balance back in its favour?

New generation cloud-based technologies are offering businesses new opportunities to build greater accuracy and agility into their planning. Not only this, but this type of businesses technology is increasingly intuitive, allowing the processes to be managed by business users rather than IT experts. With the power of the cloud and the data processing which it enables, even with substantial changes to data sets, ‘in-memory’ processing allows large data sets to be recalculated in real-time, pointing the way forward to more accurate, up-to-date sales forecasts that give the CFO confidence in the integrity of the numbers.

Leading companies, like HP, Britvic and McAfee, are now taking this different approach to help them respond to changing events on the ground, and they’re already seeing the benefits. These businesses use analytic technology to speed up processes and enable a broader view of data and insights from across the business and wider industry influences, allowing sales plans to be recalculated from the ground up in seconds.

For example, HP cascades its strategic goals to over 30,000 sales reps, 263,000 accounts, and 170,000 territories globally using modern analytical capabilities. What this means in real terms is that disruptive events, which drive unexpected changes in sales plans, can be recalculated in an instant and the effect on projected revenues and costs made available to the CFO immediately.

With powerful analytical modelling engines at their fingertips, key stakeholders in the process (such as the CFO and sales management) can collaborate in real-time around the best scenarios to fulfil or exceed the quarterly sales plan, taking changing circumstances into account. Having one place to go for information permits a virtually unlimited number of stakeholders to engage in the process wherever they happen to be and using whatever device they choose.

Of course technology alone will not eradicate the CFO’s blind spot. This type of approach also requires collaboration across the business and a willingness to share best practice and knowledge across function silos. But in a low-growth economy, which offers slender opportunities for expansion, it is essential that businesses leverage sales planning processes to the maximum extent possible, in order to drive revenues and keep financial plans in step.

Crucially, this technology ensures that forecasts are resilient to change and that CFOs will not be caught off-guard by impenetrable blind spots in the sales planning process when the unexpected inevitably happens.

[1] PwC 17th Annual Global CEO Survey

Ian StoneIan Stone is the managing director for the UK and Ireland at Anaplan. Stone’s role includes responsibility for sales, pre-sales, marketing, consulting, support and operations, while day-to-day he aims to ensure that Anaplan’s customer focus is driven throughout his region.

Prior to joining Anaplan, Stone held positions with Business Objects and Cognos before going on to found Vue Analytics – a reseller dedicated to bringing the Anaplan platform to the UK market. Following a successful launch Anaplan acquired Vue Analytics and in 2013, he was appointed to his current role in the organisation.

Stone has over 15 years’ experience working in the Enterprise Performance Management (EPM) and is widely considered an expert in the application of EPM across the sales function.