CFO Stack technologies pt 3

In this conclusion of CFO stack wanted to provide brief perspective on the current landscape of the ecosystem and key benefits for companies looking to adopt the technology. This is an exciting time in corporate Fintech and innovation within the CFO bailiwick can lead to financial ownership across the entire organization!

Competitive landscape

In the status quo some of the predominant movers in the FaaS space are names such as Anaplan, Adaptive Planning, and Vena Solutions. These companies have cut their teeth on being first to the punch on proffering enterprise-wide forecasting and planning solutions that amalgamate well with sundry operational data and facilitate cross-aisle collaboration. However, with expanding product breadth comes limited reach towards certain kinds of prospects. At an assiduously scaling startup, financial due diligence often becomes an afterthought after such frontiers as Sales, Product, and Marketing. When a new venture is ready to reign in burn rate and optimize cash flow it is frequently on an extemporaneous basis where the goal may be to prepare operating plans or financial models to share with investors ahead of an impending raise. Since this is the case on the fly speed-to-value is paramount and incidentally where newer FaaS entrants are staking their name. Current startups blazon a customer promise that is markedly abbreviated from settled incumbents a la helping get models and schemas up & running in a matter of weeks, not months. Recent initiates also offer a slightly more white glove, consultative service approach where they can help less experienced finance directors become efficiently groomed in the archetypal mores of any savvy CFO. This is usually done by employing technical concierge to partner with customer in helping transform feedstock such as raw financials and operational insights into a fully-baked financial model, replete with what-if analysis, KPI dashboards, and push-button reporting of salient metrics. This tack of high touch versus flip-and-fend is a reason I believe recent inductees into the FaaS ecosystem have a value prop that might be especially topical for SMBs with annualized top-line within the realm of ~$500K — 200M and 50–1K FTEs and who require expeditious transformation to more sophisticated financial analysis when their businesses hit an inflection point.

Customer success management also isn’t the sole way newer competitors are thumbprinting their strategies but also accented by productization of solutions with a more minimalist feel. Streamlined, curated UI’s help engender intuitive adoption by Finance teams and facilitate ramp-up almost right out of the gate. And while monoliths such as Anaplan and Adaptive assuredly excel at integrating with most adjacent IT backplanes, newcomers are making their bones by investing appreciably in AI, NLP, and RPA technologies to help surface financial insights and automate processes in a manner well suited to smaller, more bootstrapped organizations.

Coda

One of the most atavistic notions of financial analysis and forecasting was that it needed to occur in a “blackbox” of arcane knowledge and techniques only understood by those with accounting acumen. Classically, discernment into financial forecasts used to be the primary domain of the “finance guys,” but with the ubiquitous nature of financial benchmarking every team gets bonused and indexed according to how well “they hit their numbers.” Bearing this in mind, I think offering a democratized solution where professionals from sundry disciplines can digest, analyze, and provide feedback lends itself to greater cross-functional engagement, fluency with overall company performance as opposed to one specific team’s, and bias towards taking corrective measures prior to operational dislocation. One misprized dimension of FaaS platforms is also their ability to trim finance teams’ communication efforts by serving as highly efficient bi-directional information gateways. Finance teams are able to solicit inbound feedback from business partners re making adjustments to forecast/analysis while simultaneously fielding outbound requests from stakeholders vis-à-vis furnishing guidance and commentary on actualized results all within one integrated communication conduit.

I believe these leitmotifs of transparency, collaboration, and automation are prime drivers that can elevate an organization’s cohesion and lead to more of a “one team, one dream” ethos by which a company can deliver ownership of the firm’s financial health to all stakeholders, within and without. As we have seen with the evolution of data science, the more diverse the data and backgrounds of contributors training ML and AI-based models the more intelligent predictions will become, eventually creating less of a variance to reality. And at the end of the day isn’t that what a forecast is, a financially-minded prediction? To me, the heart of FP&A is using all flavors of data to augment strategic decision making while creating value not just for finance folks but for all members of an organization. Artificial Intelligence is what is powering the analytical engine of the future but Augmented Intelligence is what will steer its course.

For more information please reach out to rgupta@mba2022.hbs.edu