Can the office of the CFO be the single source of truth in a business?

Eugene Lee
OMERS Ventures
Published in
9 min readJul 15, 2021

How do we get 1 + 1 to equal 3? What’s the revenue impact if we do this? Where should we invest? Holy bleep, what do we do with our COVID adjusted plan. These are all questions we as VCs hear, and sometimes ask. More importantly, it’s something that a great CFO and finance team should be able to answer.

Having spent time as part of the finance org at Pinterest and Copper, I’ve had to answer these questions myself! Our belief is that the CFO and the Office of the CFO is becoming more of a strategic source of truth for companies and because of this, finance tools have evolved to fit this new role and need within an org. Instead of being siloed in a corner just doing traditional finance things, finance teams are becoming more integrated within orgs and are considered “business partners” if used correctly.

Over the next 10 years or so, we’ll continue to see this evolution take place and change the way that “finance” is done at companies. We’ve seen trends accelerate this thinking over the last few years. COVID played a big part as teams were forced to navigate the pandemic quickly and continuously iterate and adjust. We believe the office of the CFO will ultimately be involved in all strategic decision-making at a company because it naturally has a view of the entire business.

The finance team sees not only the impact of sales and product,but also how marketing affects sales, how sales affects product, how product affects something else and on and on. But how did we even get here and how will technology continue to evolve across the finance stack to ultimately make the org into a stronger, more influential, more strategic function.

What trends are pushing us here

The last generation of great finance companies started in the early 2000s with the likes of Anaplan (2006), Adaptive Insights (2003), Bill.com (2006), and Coupa (2006). Of course, there have been other great finance companies but none have broken through like these 4. But over the last few years, certain trends have accelerated the creation of the next generation of great finance companies. Let’s walk through them.

1. COVID: We already mentioned this above, but the pandemic threw a wrench into everyone’s plans. COVID exposed how quickly we need finance teams to move, adjust to not only uncontrollable external factors but also future internal ones. Many of the current processes in the CFO org are still manual with inefficient workflows.

2. The CFO is becoming more strategic: again, we touched on this briefly but the role of the CFO has changed from one of audit and financial governance, i.e. ‘let’s close the books faster!’ to one that’s more strategic of identifying where we should invest to scale.

3. Rise of SaaS: the explosion of SaaS tools has caused headaches for finance teams by not only trying to manage spend and all the apps that the teams are using but also trying to analyze all that data that has been created by different systems. Hooking up these systems (another problem) to get a unified financial view is difficult as a result of how much data needs to be modeled and analyzed.

4. Rise of the user/no code: Yeah yeah, we know this already and it’s been here for a while in other categories. But I don’t believe the user-led, no code, democratization (insert buzzword) has hit the finance function until now. We will start seeing “modern finance” companies — two words that have probably never been put together.

5. Excel’s best features: Companies are starting to unbundle some of Excel’s best features. Traditionally it’s been a fallback because that’s what finance professionals grew up with. But now because of the no code (also known as software), companies are able to bypass Excel’s best features all together — creating new, simple workflows for finance AND workplace professionals.

How did the finance org evolve?

It’s important to understand the evolution of finance companies and why we are seeing such a shift today. In Finance 1.0, companies were built on the backbone of being on-premise, led by iconic companies like SAP, Oracle, Hyperion and Sage.

Later came Finance 2.0, when everything moved to the cloud and we saw the first iteration of finance companies, as mentioned before, the likes of Anaplan, Adaptive Insights, Coupa, etc.

We’ve now entered Finance 3.0 where finance is extending out of the finance org and into other orgs, linking all the separate processes and data silos together and hopefully bringing in collaboration and change to the org as a whole. Said another way, changing the narrative of a function that was traditionally reactive to one that’s proactive and a driver of growth.

And what do these finance people even do?

After speaking with numerous CFOs and VPs of Finance, the consensus around what their role entails is simply, to help build the best version of the company. To use my friend and former colleague Greg Roseberry’s (Head of Strategic Finance at Pinterest) words, you need to “know the play calls and know which play calls to play next.” In order to do that, I believe that the office of the CFO is responsible for 4 key areas, as seen below.

Traditionally, CFOs have been focused on controls, a more independent role focused on making sure the company is following rules as laid out by tax, compliance, risk, etc. As with finance org, the key is to understand financial and operational data to determine the health of the business. That is brought to life through the budgets and forecasts but really driven home by setting the operational cadence for the company.

With this understanding of key drivers, the org can move into what I think is the more fun part of finance: contributing to actionable strategy and helping shape the direction of the company through financial analysis and decision making. Finally, I believe a strong finance org continues to extend into various other functions to help drive alignment across the business. The finance team is theoretically the unbiased function and can really be a voice of reason for the executive team.

To drive these key areas and help facilitate decision making, leaders of finance orgs need to be informed with data. Finance professionals need to be able to pull this data from multiple different sources (i.e. ERP, SaaS tools, financial and payment systems), think financial data, and potentially operational data to get a great perspective on the business. This can be cash, revenue metrics, expenses, or leading operating indicators like pipeline and marketing metrics.

Most current solutions are very manual and still involve the use of Excel number crunching despite the evolution of finance tools over the years. More importantly, a lot of these processes, if done right, involve collaborating with business partners yet a lot of the current solutions lack great collaboration tools or aren’t built for business partners and are still built for finance professionals. This is the reason that Google Sheets is still used with orgs to collaborate due to its far superior features (and that’s not saying much!). You can see below the many other functions and tools that the finance team is split into and where it aligns with the 4 pillars.

What does this all mean for the future and what have we learned?

We’ve already said that the CFO role and team is changing. But there are 5 learnings that will continue to push finance into the future.

  1. Data needs to be fresh: stale data leads to bad decisions and recommendations which leads to failing companies. The current complexity around data and the multitude of tools make it hard to get good clean financial data in real time. This will need to change.
  2. Silos exist between teams, financial plans, and data: collaboration continues to be a mess. That creates mismanaged plans, long hours, wasted hours, and of course inaccurate numbers. Teams will need to agree on a single source of truth and clean and fresh data, as mentioned above, will lead to better working teams and better companies.
  3. Processes are still manual: teams continue to verify accuracy, update Excel models, track multiple versions, and yes, you got it, plan separately. Correcting these inefficiencies using technology tools will be low-hanging fruit.
  4. A product/ tool needs to be accessible by more than just one audience: finance tools have traditionally only been built with the finance professional in mind. But we need to evolve to include their business partners (Marketing, Sales, HR, etc.) and how they interact with Finance and their tools. Furthermore, analyzing data is a core skillset across all teams now, why not enable those teams with similar tools that have traditionally been built for Finance teams?
  5. Excel won’t ever go away completely but the unbundling of Excel is already happening: new tools are enhancing some of Excel’s features and there will be software that will continue to extend Excel’s capabilities further, think of what Airtable has built.

What are we looking for?

There are 4 key things we are looking for in the office of the CFO that we believe will put it on its track to being a highly used and valued center of gravity among all different parts of the org.

  1. The right wedge into a category: what is the right use case that gets team members off of Excel and Google Sheets? Is that new workflows, new processes or something else that solves significant challenges other than efficiency gains.
  2. Collaboration: we’re looking for finance principles pushed beyond the finance department, how do you get everyone involved?
  3. Data integrations: does your product become the connective tissue for the org in some respect, this involves forwards and backwards compatibility to leverage real-time data and analysis.
  4. The reverse mullet: we’re looking for companies that are so simple, easy to use, potentially built for non-finance people (the party) but have all the complexity of integrations and workflows built “in the back” (the business).

We believe this will be the start of a new era of finance tools. One where 3 key trends will emerge:

First, we finally have “finance in a box,” meaning complex financial models and analyses are created by non-finance professionals yielding evolving business plans and analyses.

Second, finance teams will finally evolve as their counterparts have and have more automated workflows and processes, allowing them to be even more strategic.

And finally, a new ERP will emerge from this generation of finance companies. The last ERP, Workday, emerged with an HR lens, it’s now finance’s turn.

Categories we are initially focused on

In our current state, we’re particularly interested in technology evolving the traditional financial planning and analysis and strategic finance tools (i.e. Mosaic, Stratify, Finmark, Causal, Trace), A/R and cash forecasting (i.e. Tesorio), procurement/purchasing (Procurify, Zip/Evergreen) and finally tax (i.e. Anrok, Neo.tax, Keeper Tax, Boast.ai). If you’re building something in these categories, let’s chat!

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