Finance expert Liz Brittain has held several chief financial officer posts in a storied career leading finance for tech companies for decades – and she’s an early supporter of Precanto, a leader in headcount forecasting, as a believer in creating better systems to enable FP&A leaders to become more strategic partners in driving business growth.
Brittain spoke with Precanto recently about the future of FP&A tech stacks, the power of machine learning, and how she’s putting the “A” back in FP&A.
The following are excerpts from her conversation, which has been lightly edited for clarity.
Do you feel that FP&A is one of the last processes to be brought out of spreadsheets and into tech stacks?
There are lots of systems out there when it comes to planning and budget versus actuals. I think it's finding the right systems that allow FP&A teams to give up their spreadsheets, or finding the right systems that give FP&A leaders a second check and give confidence that their spreadsheets are right.
For example, right now I'm part of a very small team. I'm doing my own cash forecasting, and I'm anxious — is it right or wrong? To have a second set of eyes from a systems perspective would be very comforting. That would be almost like adding an analyst, without having to hire an analyst.
Do you see more companies looking for this?
Everyone's looking for this — more automated ways of testing the forecast and making sure the forecast is right, or a second set of eyes for it. A lot of systems today are so cumbersome, from a planning perspective — what you have to know, what you have to add. The checks and balances for validation aren't there.
What's the overall impact on the business if you have those challenges in your system?
The benefit of having something systematic as a check is, ultimately, you will save expense. You will be able to leverage systems versus adding people, especially in a very tight labor market for FP&A hires. Over time, when you can figure out systems that FP&A trusts, you'll have more accuracy and greater predictability too.
Does that give rise to fears that machine learning and artificial intelligence will take finance jobs from people?
Back in my early days, I heard (something similar) with low cost computers — “they’re going to take our jobs away.” I've managed to last a long time under that threat.
The reality is it allows you to move to more of a business perspective. I can look at the data from the systems and I can impact the business.
Finance has the unique ability to have a very objective view of the business. Sales people worry about hitting their number. Engineers love whatever product they're building. Whereas we're not attached to anything other than growing the best business we possibly can. By having more systems in the FP&A tech stack that we leverage, we can drive more business impact.
We can also drive the conversation to be not about the numbers, but about the business.
How do you have these internal conversations, with the CEO above or the director of finance below, about bringing in new systems?
Whenever I've done systems implementation, I don't necessarily have to sell it to anyone. It’s a given that we’re on a journey to public company like systems and processes.
However, I do need to make sure I'm comfortable with the decision.
I look at:
- What's the cost of implementation?
- What's the cost of running it?
- And what are the benefits?
These I compare across multiple vendor alternatives, and look at which vendor would be the best partner.
For example, take the major planning solutions. When you implement in a private company, you know you’re probably never going to have to do another systems implementation again, which can be a huge challenge – not just from an actual cost and time perspective, but also from a risk perspective. By risk, I mean the risk of adding errors into the system and mis-forecasting, for example.
If I can implement something once, if it will scale with my business — that’s important to me.
I want to know if I can leverage a solution to reduce risk, versus leveraging people . As you know, spreadsheets are error prone, especially when many people are editing the same spreadsheets and you don’t know who has made what change.
If we all have one automated systematic model, that eliminates the human risk.
Would it be fair to say that systemizing the FP&A function is going to be a competitive advantage?
Yes. It comes back to finance becoming more of a business driver. A lot of times the A in FP&A gets forgotten. The competitive advantage comes with less time spent reconciling and discussing the numbers, and more time analyzing the numbers. It allows us to challenge the business a little bit more.
Can you give an example of what challenging the business looks like?
A classic example with sales hiring: When you've got the data about rep performance, and pipeline, you can say, “We’re better to have fewer happy reps than a lot of unhappy reps, because no one can make that number because the market isn't there yet.”
That’s not just challenging the business. That’s also being able to respond to challenges from the business perspective. We want to add more sales reps. Well, why? Because these are the numbers, and they don’t support that.
Or, looking at research and development resources, versus benchmark data. I might say, “no, I don't think we need to add more heads. I think we just need to be more effective.”
Leveraging the different pieces of data that you've analyzed based on data and benchmark information are priceless. Without that, you’re just trading opinions.
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