Finance chiefs go from counting beans to planning

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The days are long past for chief financial officers (CFOs) to hide behind the adding machines and spreadsheets in their corporate suites.

The broadening of the role into a wider range of company operations – from helping combat cyber-security threats, using data to spur growth without antagonising customers and fielding calls from activist investors demanding a quick return – was a focus of the finance chiefs making presentations at this week’s Bloomberg CFO Conference in New York.

“The role of the CFO historically was ‘what are the numbers’ and now the role is ‘why are the numbers and what can you do about it’,” Adena Friedman, the departing finance chief of Carlyle Group who returns to Nasdaq OMX Group next month, told the conference. “To be able to answer those questions, you need to have a more strategic seat at the table with the rest of senior management.”

The data crunchers have gained leverage across industries from technology to airlines and private equity. For some, such as SanDisk’s Judy Bruner or Jarden’s Ian Ashken, that influence has extended to board seats at their own companies or other firms.

“The role of the CFO is evolving so it’s all about leadership influence – that’s kind of the cusp of where we are,” said Dipak Golechha, the finance chief of Chobani, a maker of Greek yoghurt. “Do you have the right activity systems in place to be able to deliver that next bit of growth and still maintain what you have?”

Informed by data

Mike Herring, the finance chief of internet radio service Pandora Media, said the biggest change he had seen in 18 years in technology and finance was that his job was being “informed dramatically by data.

“As a technologist, I spend a lot of time making sure we are pulling data from the right sources, that it’s complete and accurate, and that we are looking for inflection points.”.

It is all about trying to strike a balance between protecting consumers’ personal information and using some of that data for marketing purposes, according to John Rainey of United Continental Holdings.

The chief financial officer cited as an example a hypothetical customer who spent $15 000 (R156 000) a year flying with United and used reward miles for Christmas season family trips. Data now allowed the carrier to spot occasions when that customer came up short in accrual of miles.

“We can tailor an offer specifically to you that says ‘Would you like to supersize your miles and spend a little bit more money so that you can still take that trip?’” he said.

Financial heads were not the “handbrake” they used to be because they were much more involved in strategy, said Todd Papaioannou, the chief technology officer of Splunk, a San Francisco provider of software that helps chief financial officers at client companies analyse and manage data.

“Over the next decade, companies who leverage, monetise and compete on the data will be the companies that win. Companies that don’t invest in how to use data will be those that get left behind.”

Finance chiefs were in the cross hairs to provide the balance between sticking with a risky bet and folding up the cards, said Mitchell Scherzer, the chief financial officer at publisher Hearst Corporation.

“We also have a philosophy in our company of failing fast,” he said. “We want to try things, but knowing when to say ‘when’ is sometimes the most difficult thing we all face.

“The most challenging thing from a risk management standpoint is when to fail fast.” – Bloomberg


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