The role of a modern CFO is multifaceted. At one end a CFO is responsible for making sure the accounting and financial reporting for a company is compliant with local accounting principles, and at the other end the job also requires driving strategic decision making in the company. In the latter role, CFOs operate as trusted advisors to the CEOs and advise them on every aspect of company strategy. As the operating climate becomes more and more complex for companies requiring business leaders to constantly innovate and grow, it becomes imperative for CFOs to not only be on top of their company’s data but also have a deep understanding on how to put systems in place to access that data in a fast and accurate manner.
The skill set of putting in place systems to access data, interpreting that data, and help drive decision making is critical for any finance leader to master in order to gain or increase their influence in the company and create an impactful legacy.
Role of CFO to Drive Strategy
In a technology driven world, change is the only constant when it comes to company strategy whether it is related to product, marketing, sales or operations. Most of the companies despite having annual planning processes in place end up doing much more than planned at the beginning of year. In this context, CFOs have to constantly help evaluate and prioritize key company projects, raise capital and drive capital allocation decisions in a way that optimizes for return on investment. In order to inform these decisions, CFOs cannot rely on only gut feel or intuition. They need data.
Data-Driven Decision Making
Executing data-driven decision making takes a lot for any CFO. It involves building a pipeline for data from databases to applications where the finance team can access data, manipulate it, and then use it to form opinions about the company's strategy. If this sounds a lot, it is because it is a lot.
For that reason we spoke with Abhinav Swarup, a seasoned finance leader having experience at both Fortune 500 companies such as Amazon, Netflix and PayPal, and startups including Zeus Living and Patreon. Currently he serves as the Vice President of Finance at Zeus Living, a furnished housing rental company.
Interviewer: Hello Abhinav, thank you for taking time out to speak with us. Given our subject of data driven decision making for CFOs, I would love to know your thoughts on the matter.
Abhinav Swarup: This subject is very close to my heart and is something I have devoted a lot of time and energy to. As an advisor to the CEO and other business heads of a company it is important for a CFO to have an independent opinion on the health of the business and key performance metrics for the company. A lot of times folks leading different business groups be it product, engineering, marketing, etc do not have enough visibility in the overall health of the company. It is not due to lack of intention but due to various other factors. These business leaders are hired to do what is best for their divisions and execute on their individual priorities. Due to this focused nature of work they rely on finance leaders to guide them on the impact of their initiatives both cross-functionally and at the company level. And in order to provide this guidance it is imperative for the finance leaders to have accurate and timely data.
Interviewer: Can you elaborate more on the nature of guidance which different business leaders seek?
Abhinav Swarup: Sure, it could be for various reasons such as evaluating new product ideas, sales initiatives, marketing campaigns etc from a financial perspective, laying out company level goals during the company planning process to achieve plan for the next 12-24 months, or it could be around headcount planning and hiring.
Interviewer: Great. Given that you have worked for both large companies and startups, what are your views on the most important things when it comes to data strategy for the CFO organizations?
Abhinav Swarup: The most important thing to prioritize is having easy access to accurate and timely data. Most of the analyses which a finance executive does have to be finished in a time bound manner with a high level of rigor in order to drive well thought out and correct business decisions. This means having detailed and updated dashboards, SQL queries, excel add-ins etc to access data not just from product and engineering data tables but also from accounting and sales ERPs like Netsuite, Essbase, and Salesforce. Throughout my career, in all my roles the first thing I ensure is to build these pipelines in a scalable manner working together with data science, accounting, and other business teams. Once the initial versions of these systems are set up I ensure timely improvements in them so that the data remains current and relevant.
Interviewer: Can you give an example of how you build these systems and processes?
Abhinav Swarup: Definitely. In my current role when I joined Zeus Living, I spent the first 2-3 weeks going over the existing business review decks and dashboard reports which the company was using. Then over the next 1-2 months I worked with our head of data science to build dashboards and reports for key business metrics which I wanted for the finance team such as active listings on our platform, booked nights, bookable nights etc. I prepared a list of dimensions and measures for each report and worked with data science to refine the list. I also worked closely with our accounting team to build downloadable reports on Netsuite, our finance ERP, for our entire general ledger having details on each P&L account and transaction. This exercise was very crucial for me in order to put in place the company’s financial forecast model, monthly finance reviews, unit economics model, etc.
Interviewer: Thank you for that information. What has been the toughest data to get and deal with in your experience?
Abhinav Swarup: Without getting into any specific company, the hardest data to work with in my experience has been for subscription plans or products where the customer can switch between plans anytime. This movement of customers across different plan types makes it difficult to get an apples to apples comparison of user behavior over different time periods. So you have to really work with groups of customers who are moving from one plan to another over multiple time periods and look at the characteristics of that group in an aggregate manner. This makes the data requests very complicated and in my experience requires building separate data tables by the data science team.
Interviewer: Any other thoughts on the subject?
Abhinav Swarup: I think in the end it is essential for a CFO or for that matter any finance executive to be able to earn trust as a strategic advisor with the CEO and other business leaders. The only way to do so is by providing right advice supported by data. This helps build credibility and drive consensus on important issues. Given this, every finance executive should invest both time and effort into building a successful data backend supporting their organization.
Interviewer: Great advice! Thanks a lot for speaking with us and sharing your thoughts.
Abhinav Swarup: Thank you. It was a pleasure speaking with you.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.