The CFO Software Stack: Tips for Implementation

CFO’s touch upon so many aspects of the business and a critical one is owning and managing the majority of a company’s software stack. As such, the CFO|Circle convened to discuss the good, the bad, and the ugly of the finance tools and software they are using today and learn if there were any emerging solutions worth implementing; but that part of the conversation will be kept private for our members (apply to join The Circle).

A takeaway we can share publicly discussed during the second half of the conversation was best practices for implementation and if there should be a specific role hired to manage the stack.

Also joining the conversation was Dave R Padmos and Kenneth Englund from E&Ys IPO Readiness practice, who helped provide framing on what will be expected of the software and data running a company as it nears its public life.

The CFO software stock is a critical tool for the growth of any business, especially one that is considering a leap into the public markets. A CFO will need a suite of corporate finance software and financial management tools to meet the rigorous accounting and reporting standards required for a public company.

Not surprising to hear that all members agreed that implementation is critical for any new system onboarded or changed; and to drive these implementations, one can consider hiring a consultant or doing it in-house with the right team in place.

Some recommended finding a consulting organization that’s done implementations in the past and, more importantly, not just finding this resource but also getting the “right” resources by doing the due diligence. For instance, if you are hiring an organization to implement a system for CPQ, you want to ensure they are familiar with the billing model concluding, in addition to ensuring you are putting the right team of people in place. And lastly, defining your business rules.

It was identified that there are usually three parties involved in all successful implementation. There is a vendor from the software you’re implementing, their PS organization, either directly inside the vendor or through a partner. There is a company’s internal domain expert. And then there’s a project management aspect. And sometimes, the project management aspect can be internal, or it can be external. 

If the budget does not allow for a consultant, ensure you utilize team members with robust and functional expertise inside the group. And those people can act as the project owners, whether it be in finance, or in sales ops, or in PS ops, as it depends on the organization.

Regardless of whether a consultant is hired or not, the most important takeaway was – “you got to have an internal owner.”

“If you have a dollar to spend on systems: 50 cents on data/data management, 25 cents on transaction, 25 cents on analytics in any project”

Should there be a specific role that owns implementation and maintenance for a CFO’s software stack?

It was highly recommended for finance – CFO’s – to have a point person for implementations and maintenance on their team. To hire into a role that is an overall system architect that understands where all the information sits, a view of all the company’s systems, and the source of truth. Someone outside of engineering that can understand where things could go wrong.

“In my experience, what ends up happening, if you don’t do it right (hire into this role) upfront, is you end up hiring headcount.” For example, if an internal onboarding process isn’t working for HR, that team in turn will ask for headcount. And justifying headcount seems to never be a great conversation.

Others thought a bit different where a specific role is not the solution, but instead, it’s about domain expertise. In other words, an expert in finance may not be an expert in other areas, so you will have to hiring consultant in those areas.

What is the skill set of this specific role? 

Someone that has developed a very strong technical background has deep experience in overall system rotation, large scale system rotations, and all the nuances. It’s all about the data – someone who can understand the data structure, data architecture, data flows, and the single source of truth kind of question, and Q&A is critical. The icing on the cake is someone with an accounting background. Perhaps somewhat of a mystical person – “a blue-eyed purple squirrel”  is being described, but apparently, they exist and are fairly available in the market. Additionally, it isn’t the experience that has a problem translating into hypergrowth companies; it’s working style, approach, working agile, working MVP. 

At what stage of the company would you say it makes sense to get your own systems person? 

There’s not a perfect answer. 

If you are just thinking from a stage perspective, then probably a C or D stage. A rule of thumb might be $20 to $40 million of revenue. Once a company starts to think about escape velocity, into scaling – $100 million, $500 million – and can see some possible path to that. Then you will need a good systems person. 

But another governing factor is that it’s more about the complexity of the systems that need to be built within a company and how integrated it is to the product because one can easily spend twice on consulting really fast. 

The experts said they don’t think in terms of rounds but when people want to go public and where they want to live in that space. 

What should a company and it’s CFO be concerned about three years down the road, as companies are considering heading towards public life?

A business architect is going to be put in place roughly 12 months before going public, or certainly going to have one before 12 months after a company goes public, given the number of controls, compliance, SOCs, and systems.

But until then, strategic architecture view led by data and by some tenets in one’s strategy can be taken. Keeping data simple, consistent, and efficient. Stopping all the customization and shifting focus on the data and functionality needed to drive the business. David and Ken of EY are finding that not many companies are segregating or thinking that way. 

CFO’s are advised to think of these business activities as end-to-end processes because when thinking from a controls perspective and SOCs, these are end-to-end activities.  As a company gets close to going public, what’s going to matter is that control and process that goes on end-to-end. “You don’t need to solve it all as a much smaller company, but if you can start thinking in that mode, you’ll go a long way.”