A good read on how the role of the CFO is evolving. It’s no longer just limiting it to financials and due diligence but having the capability to integrate that with business and change management skills.
Signpost’s Radhika Samant is A New Breed of CFO
Today’s CFO is a new breed, and Signpost's Radhika Samant is no exception. An ops-savvy CFO, she sees partnership with colleagues in sales and marketing as key to enabling success. In this Strategic BizOps profile, Radhika challenges her fellow CFOs to think more expansively about the CFO role and its strategic contribution as well as the metrics that matter to SaaS businesses.
Stephanie Fox: As CFO you interact with people from all over the company to inform decision making, how do you work with BizOps professionals? What role do they play in helping you make intelligent, proactive decisions?
Radhika Samant: I’m responsible for the financial planning process, which is essentially more of a business plan than it is a financial plan. When I joined Signpost a few months ago, the first thing I looked at were the drivers for the business. To understand how the company makes money I reviewed the different aspects of our high velocity sales model, such as how leads are created and converted to sales. There are close interaction points at each stage of the sale with marketing and sales. Our BizOps team ties in the sales, marketing and finance organizations on the revenue spectrum to create a cohesive point of view, so communications between myself, BizOps, and sales and marketing leadership is critical. We look closely at customer acquisition costs (CAC) and constantly analyze our efficiency. For example, we look at things like whether to spend money on increasing the productivity of the sales team with training, a new tool, or on inbound marketing to generate more leads. Finance facilitates these decisions, but BizOps is the partner.
SF: What changes do you see in the role of the CFO in a SaaS business in 2017 and beyond, and what changes do you see in how the CFO engages with colleagues in sales?
RS: I think a successful CFO in a SaaS organization today is one who really understands how sales and marketing actually work together, and is a true partner to the leaders of these departments. Finance, like Marketing, has to be in service to Sales. What we are ultimately doing is creating the fastest path to generate revenue for the business, and in the most efficient way.
In my view, the finance function, in its most value-added form, is one that really understands the business drivers. You can’t just state historical trends and carry them through. You have to identify what it is that you are going to change or do in terms of creating drivers. One of the things that I’m working on is a LTV to CAC calculator for the sales and marketing leadership. When we are thinking about adding cost to the business, we need to look at which lever is going to change. For example, if we go out and get a new tool for sales, what are we improving and is it going to give an output that actually matters to the business? This is an example of what I call Value Add Finance.
When I was conducting my job search I was very happy to find that the heads of sales and marketing at Signpost were hungry for a finance leader who understood their role and would partner with them to help them with efficiency and other important factors. I truly believe there is a shift underway to a “Strategic CFO,” because recurring revenue businesses really break the mold when it comes to practices in support of account acquisition, retention and growth.
SF: The metrics tracked by a SaaS company are pretty different from a traditional license model software business. At a high level, what do you think are the most important metrics to track at a SaaS company and why?
RS: For a CFO in a SaaS business, the starting point for metrics is Monthly Recurring Revenue (MRR) or Annual Recurring Revenue (ARR). This is the cash coming in and is a major focus area.
CAC is the second most important metric. You have to know where ALL your costs are. Hidden overhead can kill your business. You have to determine if investments in tools or other things will increase productivity – or not. There has to be a corresponding win, i.e., higher LTV, with any investment, because your CAC went up.
Cost of retaining your customers and cost of servicing your customers are the other critical metrics that must be tracked in a SaaS business.
SF: How has the relationship between the CFO and the Chief Revenue Officer/VP Sales evolved over the past few years?
RS: Over time, I’ve seen that it’s about the culture in a company more so than it is about how the relationship has changed. I think that CFOs have to change their mindset and understand what it means to be a business partner to the head of sales.
I think that CFOs have had to pay a lot of attention to the things that were part of the controllership function of the company because the other aspect of the CFO job is to make sure that the lights stay on in the office. Your controller is very critical. They enable the day-to-day accounting and ensure that the business, regulatory and other requirements are being met.
From my standpoint having a strong controller changes the CFO’s world. I brought in a very strong controller and also an acting accountant, which means I can actually focus on business and be a good business partner to our VP of Sales.
SF: What advice would you give to people in BizOps or FP&A roles who aspire to become a CFO?
RS: First and foremost, you need to really understand the job of today’s CFO. The CFO role has changed significantly. It’s not being an accountant. It’s not being a controller. The CFO needs to continually ask thousands of questions so you really understand the business now and as it evolves.
The most important thing you can do is reach across all the departments. You’re an advisor to the CEO, so there’s no part of the business that’s not your job! You’re in service; so it’s important never to be adversarial, only collaborative. Your job is to provide a cohesive picture for the CEO and be a resource and true partner to your colleagues in marketing, sales and elsewhere in the company. We all want to support revenue growth, and the CFO needs to help people see how to move the appropriate levers to make that happen.
Thanks, Sam! Radhika's perspective is refreshing, isn't it?
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Steph served as Rekener’s Community Manager and CMO. A Rekener co-founder, she was previously Senior Director of Marketing at CCC, a $300M+ recurring revenue business, and served in marketing leadership roles at Vertical, @stake, Informio, DotContent and Meridian. Her first recurring revenue role was as an inside sales rep selling real-time stock pricing subscriptions.
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