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Strategy

The Most In-Demand FP&A Professional: A Q&A With Adaptive Insights CFO Jim Johnson


Just two years ago, 78 percent of CFOs considered proficiency in Excel as the most important skill for their FP&A teams. Only 5 percent feel the same today. Instead, CFOs rated adaptability to new technologies as the top skill for new hires.

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A survey released earlier this year reveals CFOs’ increasing appetite for automation. Adaptive Insights released its global CFO Indicator report, which revealed that CFOs are embracing automation across various areas of finance, driven in large part by a requirement to be more strategic and provide better analyses. 

Automation initiatives are also impacting required skills for finance professionals. Whereas two years ago, 78 percent of CFOs considered proficiency in Excel as the most important skill for their FP&A teams, only 5 percent feel the same today. Looking ahead, only 7 percent of CFOs list better Excel skills as important for new hires. Instead, CFOs rated the ability to be adaptable to new technologies as the top skill for new hires, signaling a shift in desired skillsets for finance professionals in the future.

FEI Daily spoke with Jim Johnson, CFO of Adaptive Insights, about the implications of the survey and how automation initiatives are impacting the skills CFOs are looking for in their hires.

FEI Daily: How would you describe the current state of automation in FP&A today?

Jim Johnson: There’s no question that there's a transition going on from a spreadsheet-based FP&A culture to a much more automation-based FP&A culture. It's hard to say where we are in that transition, but as you've seen from the survey results, the desire to move towards technology skills in finance versus spreadsheet skills, is a pretty dramatic shift. The 78 percent thinking Excel skills were the most important skill two years ago, and now 5 percent. The automation applications that have become available to finance professionals are driving that shift. 

20 years ago, we used to talk about the 80/20 situation in finance, where you spent 80 percent of your time just trying to get the numbers right and 20 percent trying to add value or insight into it. And always wanting to switch that pyramid. We're not there, but we have the capability to get there now. 

The technology is available today to make that shift. I think CFOs are realizing that, and that's part of the driver behind the desire for more automation. The cloud and SaaS applications are a big driver of this, because they're giving finance professionals capabilities that they can own themselves, usable SaaS applications that they just didn't have available previously. And those SaaS applications are carving off functionality of the finance function and optimizing that functionality. So, whereas it used to be you had a big on-premise Oracle installation and you had to do your reporting and consolidations and accounting and everything through that large on-premise complicated suite, now you've got lots of different options to do commission accounting or reporting or budgeting and planning or accounting process management. Those are all SaaS applications that are much less expensive, there's no administration required, they're much more usable, and they optimize a specific functionality, and they integrate with everything else. So, it's a hot technology opportunity for the finance profession.

FEI Daily: What would you identify as the biggest takeaways from the survey? Any surprises?

Johnson: The shift in Excel skill did surprise me, that it has moved so fast in such a short period. And it's not that Excel is an obsolete tool, it's still a very valuable tool. It’s just the realization that it is not a good tool for certain types of bigger needs in finance. 

The last time we spoke, we spoke about the characteristics of good planning, being collaborative, comprehensive, and continuous. That's impossible to achieve with Excel. Excel is not a collaborative product. It's a worksheet that you built and you understand it. It does not share, it does not automatically update. It creates a very cumbersome process. It's not powerful enough to really do enterprise-wide planning and certainly you can't do things quickly, because you've got this static model spread across multiple people's laptops. Trying to bring that all together is extremely tedious. 

But the other areas, which are pretty obvious, especially about automation of dashboarding, scorecards, visualization - those are the top level of focus along with planning and forecasting. Every CFO I talk to, every head of FP&A, is focused on how they can take a lot of information and turn it into KPIs that can help manage their company. Those key performance indicators are typically not just financial, so that you're not just presenting metrics of financial information. You have to bring in sales information, operating data, professional services data, and marry those to the financial information to create really meaningful KPIs. So, in a SaaS business, for example, you want to know a lot about renewal rates and contracts and the churn in your contract base and the productivity of your sales reps. Those are combinations of financial measures and operating information brought together.

Finance has had a reputation of looking in the rear view mirror. We have to close the books, we have to file financial statements. But the value to the management team of the company is really the forward-looking process. The ability to marry actual financial data with forecast financial data and operating data, that's absolutely critical. 

SaaS apps are typically much easier to integrate with other applications. So, if you're integrating your general ledger data into your cloud planning system, then you have a basis in your information for projecting forward. And you have to be able to update that regularly. If you're updating daily with actuals or monthly with actuals, those actuals help inform your forecast going forward.

FEI Daily: How are automation initiatives impacting the skills CFOs are looking for in their hires?

Johnson:  Without question financial analysts today are expected to be more facile with data, how data is structured, how integration occurs. Being able to effectively use systems, being able to use multiple systems, because you're not just understanding how to use SAP as a big financial ERP, you have to understand how to use Adaptive or BlackLine or Callidus or whatever cloud application you're really using to optimize those functions. You need to have that kind of versatility. 

The biggest challenge for financial analysts today is to be able to have both the capability of understanding data, or being able to understand the structure of data, how it integrates, to be able to do some of the minimal coding or whatever is required to use a system and develop with different technologies. You have to marry that with the same analytical skill of being able to understand insights and kind of the planning and analysis side of FP&A. That's challenging. We have financial analysts who are really good with data, they're really good with integration of systems, report building, modeling, but they may be missing a skillset around what does all this tell you? How do you draw insights from it? The person that can do both of those is the most sought-after FP&A professional today.