58. The Digital CFO - Research Report from Sage – with Monica Arora

58. The Digital CFO - Research Report from Sage – with Monica Arora, EVP Commercial Finance at Sage

Hannah Munro: 1:11 

So, hello, everybody, and welcome to this episode of CFO 4.0. As usual, I'm your host, Hannah Munro, and with me today is Monica Aurora. So, Monica is the EVP, Executive Vice President of Commercial Finance at Sage and we're here to talk about Sage's latest research, the digital CFO. So, welcome Monica, awesome to have you on the show. Hi Hannah, it's a real delight to be here today. Wonderful. So, tell us a bit about yourself, Monica. What was your journey to Sage? How did you end up in the role that you are? 

Monica Arora: 1:45 

Oh, wow. It's a long journey. So, after qualifying with my ACA, I actually worked in a global engineering automation company for quite a long time where I did a variety of corporate finance roles. And then I got involved in some larger projects there, like setting up a shared service centre. Then we went through a major acquisition. So, I was involved in all aspects of that. And then I decided to come to Sage, where I was offered to sort of head up the FP&A function here and then slowly, slowly move into commercial finance. My role today is really interesting because I sit on both the CFO leadership as well as the COO leadership. So, my role is truly commercial, working very closely with the business. 

Hannah Munro: 2:33 

Oh, that's exciting. And I guess that's what we're talking about today, isn't it? What tools do you other CFOs and other finance leaders need to shift into more of that commercial support for the business versus the typical accounting style role? So, how have you found that shift? 

Monica Arora: 2:51 

I live and breathe it. It's what I say to the team, like we're all brilliant at producing the numbers, but what does this actually mean? Like my tagline, right? When someone comes and gives me this data, what do you want me to do with it? Right? It's just so, important that we shift that mindset as finance leaders to enable that business of ours to sort of go in the strategic direction that we need to go. 

Hannah Munro: 3:18 

And was that just, and again, we will get onto the topic of the report at some point today, guys, I promise, but was it a personal choice as in that's the area that you really enjoyed or was it almost something you landed in and just ended up thriving in? What was your journey into? 

Monica Arora: 3:34 

it? It's just something I really enjoy, even though I've done my accountancy qualification and no disrespect to my fellow accountant colleagues or friends, but I'm not a true accountant. I'm not really into sort of the controllership side. What really excites me and gets me out of bed in the morning is actually really partnering with the business and really trying to add that value to drive the business forward. 

Hannah Munro: 3:57 

Awesome. And out of interest in terms of a personal development perspective, were there any things that you found on your journey were incredibly useful in that shift? Or is there any recommendations for those that are looking to make that step change? 

Unknown: 4:12 

Yeah. 

Monica Arora: 4:13 

Oh, that's an interesting one, Hannah. I guess for me, what I've learned on the way over the many years of being in this line of finance, it's all about stakeholder management. You need to learn to manage different stakeholders differently, whether that be your team, your peers, your commercial partners, or even your leaders above. 

Hannah Munro: 4:33 

That's a great tip. So, I won't get too distracted because I can feel a whole bunch of questions brewing on your journey and how you ended up doing your role. But let's refocus on sort of the original reason that we were planning on talking today, which is about the report. So, for those that don't know, Sage recently released a report called the Digital CFO. You may have actually seen it. They did a massive piece in the Financial Times. There was a few webcasts with the FT on FT.com. I asked Monica to come on stage actually to talk us through that report, what it means, you know, and what the research says. So, Monica, do you just want to tell us a little bit about the report and, you know, sort of the context behind it? 

Monica Arora: 5:16 

Yeah, sure, Hannah. So, obviously, the headline of the report is... what's driving companies' digital transformation, and now this should be the number one goal for all CFOs. And what we found is that over half of the finance leaders we spoke to said that digitalization is number one for them over the coming years. This outranked any other sort of finance priority, being that cutting costs, debt-related matters, or tax or legislative changes as well, which really does highlight the importance of this push to digital transformation for us as finance leaders and as our finance function. As we know, like this has been a trend over the years, but it's significantly accelerated since the impact of COVID, right? As we as companies across the globe have had to re-forecast at speed, had to sort of pivot around our business models and make some quick decisions, it's become even more apparent that we need this digitalization and support to help us enable the business as a finance function. You know, some of the facts around the research, it said that over half said that they'd seen the increased demand of real time data, which we all know is really hard for most of us to get. And then nearly two fifths said they're being asked for more financial modelling and scenario modelling, which is even more demanding to do manually. So, for all of us, it's just so, important to have access to the right digital tools and the real time accurate data and this is like a real critical point for us in finance that provides the right guidance the right insight that companies need to be able to make their decision also making us stronger as a finance business partner we're not there just to produce the numbers and do the accounts right we want to add our value not by just providing that data but giving them the insight as well um We've also seen over time that businesses who've had access to this digital sort of infrastructure and tools, you also need the right skills and the talent in the organization to be able to extract these insights and the data. And those are the companies that thrived most successfully during the pandemic. So,, you know, it's really helped mitigate the impact of, you know, furloughs or even further cost cutting and really, you know, increase the confidence around our cash flow and the support that we as a business can make around investment decisions and driving our strategy forward. 

Hannah Munro: 8:05 

Yeah, and I think you make a really interesting point around skills and capabilities because it's not just the ability to obviously search the data and be able to put together the reports, but the ability to interpret it. And I guess I'd be interested in your opinion, maybe not directly from the research, on what skills you feel makes a really good commercial team and what are you looking for when you're getting information and reporting out of your team? 

Monica Arora: 8:33 

Yeah, no, it's a really good question, Hannah. And we at Sage, especially in my function, we're going through a lot of recruitment at the moment, either from revamping the teams or just sort of general attrition. As I said from the outset, you know, we're all brilliant at producing data. But I don't want just that. I want someone that can tell me what it means, be proactive and give me some insights. So, anyone I recruit into my area, we really make a point of Do they show that ability to crystallize data, be able to explain it to someone that's not in finance, and provide that proactive? And proactive is key here, because I don't want anyone in my team going to give advice to one of our senior leaders after a problem has occurred. And that's what we're really trying to move towards. I think Jonathan alluded to it as well in his interview. It's all about getting ahead. And ultimately, I'd love to be in a place where we can move to predictive analytics and we're not always looking in the past. 

Hannah Munro: 9:43 

Yeah that's always the that's the exciting trend and certainly with all the new tools that are coming through in terms of AI but again it's only good or it's only It's only useful if you've got the good data to base it on in the first place, isn't it? And that's where it's an exciting piece. And you mentioned a lot about proactivity and always storytelling, isn't it? Building the picture for a non-financial audience. How do you assess those skills? You know, that's a challenge because it's not something you necessarily have on a piece of paper, is it? 

Monica Arora: 10:10 

No, and that is the challenge when we do recruitment, right? Because you can't tell in an hour's interview or you can't tell in an hour's assessment if someone's good at that. I think, you know, I've been in the industry for a long time, and you get to know people quite quickly and you get to pick up on personality traits. So, you can very quickly assess if this person's able to tell a story, a finance story, if you like. And then that's also evidenced by some sort of case study. And then you take a risk, right? And you take other people's advice who are going to go meet the colleagues as well, if they're going to join, etc. And you assess over time. 

Hannah Munro: 10:55 

And just out of interest in your experience, have you often recruited from non-commercial teams and pull people across and built them up or do you tend to find that people have a natural ability for commercial and they end up there if they're the right kind of person so, you 

Monica Arora: 11:13 

know I think it's only natural whenever I've gone external, I've always gone for someone who's had commercial experience. But that's not to say at Sage, we are massive advocates of talent development. And we have had several finance colleagues move from the more control and financial accounting area into the commercial finance area. It's not something that can't be learned, right? So, giving people the opportunity to get there at different levels is always key for me. 

Hannah Munro: 11:45 

And I love your comment about it's not something that can't be learned. And again, I'm very much asking your opinions here. And I think that's one of the interesting. Do you think people have a natural aptitude for commercial or do you think it's something that can be taught or is it somewhere in the middle? 

Monica Arora: 12:00 

Oh, that's a difficult one. I think probably somewhere in the middle, right? Because you get different types of people that have different mindsets. Like I've got some people in my team that are absolute analytical wizards. They are brilliant at Excel. They could just you know, produce data just like that, give you the answer straight away. And then I've got other people that are really good at writing because it's just as important to write a story, the board papers, a business case and presenting. Then I've got other people that are really good at presenting to the audience. So, I think it's important to have that mix across the team. And therefore, there's not just one skill that you need to have. But to answer your question, I think it definitely can be learned. 

Hannah Munro: 12:48 

No, that's great. And I love your maybe thinking about, you know, the other areas of commercial because we just assume it's obviously, like you say, stakeholder management. There's a lot that goes behind that piece, isn't it, in terms of, you know, like you say, documenting, pulling out the data, etc. So, I love that viewpoint. So, going back to what you were talking about in terms of COVID and you said, obviously, that COVID has accelerated the pace of change. What other impact has COVID had on finance teams within the report? 

Monica Arora: 13:18 

so, I mean notably it's the huge shift to the digital priorities right um About 45% of the people that research said that digitalization has deviated significantly from pre-COVID goals, just to put it into context. The biggest change was caused by the move to remote working, of course. Two thirds reported that ensuring that we had the correct and reliable access to systems took priority over any of the concern that we had. And because of the changes and the greater demands of the wider business finance have had to play a bigger role than ever in this digitalization priority. Our research found that over two thirds of the CFOs have gained more influence over that digital journey during the pandemic period. And they're now working in close partnership with CIOs to drive this change. 

Unknown: 14:20 

So, 

Monica Arora: 14:20 

As Jonathan also alluded to in the report, it's really brought home the fact that finance cannot rely on the historical data. And sorry to repeat myself, but it is just so, important. It's all I talk about in my team. It's all about predicting for the future, being ahead of it and being proactive. And that proactiveness can only come if we've got the tools and the systems in place to enable us to do that, because otherwise we're just sitting there churning the data. 

Hannah Munro: 14:52 

And obviously, I guess it's a really interesting piece with remote working. Certainly, in the beginning, we didn't all have all of the screens at home that we would have had in the office and access to all of these infrastructures. So, I think it's quite an interesting shift in terms of not only where people are working from, but maybe the tools that they're using as well. And I'd be interested to know sort of how you and your team found the shift in terms of stakeholder management. Was it harder to have those conversations with people remote working? What kind of strategies did you develop to support that? 

Unknown: 15:28 

Yeah. 

Monica Arora: 15:29 

Yeah, look, so, I must admit, when we first got told to go home the day it was announced, little did we know that we were going to be at home for over a year or however long it was. All I would say is that we as an organization, SAGE, worked so, efficiently to make sure that all our colleagues around the globe, like that's about 13,000 colleagues were all set up. First of all, safe. And secondly, secure and were set up and were able to work from home. And we were really successful, touch wood. We had very minor teething issues, etc. I think there's been ups and downs on the journey. And it generally worked okay. But the feedback we've had that we found that people just felt they were just sitting on Teams or Zoom calls all day, etc. So, what we really tried to do is encourage a spirit of well-being and looking after yourself, making sure you had screen time away. We encourage team activities like, you know, logging things like how long you can walk or do things with your kids, etc. Because it's just so, important to make sure that we keep that team spirit up and more importantly, the well-being. We didn't want people to feel like just because they were at home, that they had to be on their laptops all the time, that they need that discipline of the work-life balance. 

Hannah Munro: 16:50 

And in terms of how you communicated and worked with the stakeholders across the business from a finance perspective, did that change over COVID? Obviously, not able to sort of sit down with people face-to-face. Did you notice any difference in the ways that you had to communicate or how you delivered and shared information? 

Monica Arora: 17:09 

Well, yeah. as you'd expect, everything moved to do everything online. Initially, I personally found it quite hard, especially when I'm having quite serious conversations with senior leaders, be it Exco or my immediate leadership team, where we have to make some tough decisions. Running a budget is not easy. I'm sure other finance colleagues will allude to that. And sometimes that That was hard. But then you just got to make the most of what you've got, right? I personally prefer sitting in a room with my team or with my leadership team, et cetera, to have these conversations. But we made the most of it, right? I mean, now we have a hybrid working model, flexible working model here at Sage. And it's a mixed bag. On the finance floor here, it's much busier, right? than it is in the rest of the building. And I think that's just by virtue of how we like to work and the culture we embrace. So, nothing's right or wrong. It's just, just really what works for people. Yeah. 

Hannah Munro: 18:18 

And each team's slightly different, isn't it? And is there anything in particular you hope continues that, you know, that, because we always talk about the challenges around COVID. But is there anything that you think has actually been a good thing that's come out of the last few years? 

Monica Arora: 18:34 

I think in terms of being sort of a remote worker for everybody, I think that flexibility piece is really good. Look, you know, I'm a working parent myself. So, I think allowing colleagues to have that little bit of flexibility really helps. And you want to be able to have that flexibility to be able to do your job better, right? There is no fixed, oh, I have to be at my PC from nine to five or whatever times everyone works. And I think that goes a long way when you've got that trust across your teams and the organization in general, right? 

Unknown: 19:13 

Yeah. 

Hannah Munro: 19:13 

Oh, absolutely. Trust, I think, is critical. And yeah, shifting from maybe attendance monitoring to output is always an interesting conversation. So, we've obviously talked a lot about COVID. We've talked about some, you know, top level about some of the challenges with remote working. Were there any other challenges that came out of the report that you, you know, in terms of that the CFOs were saying was something that they were experiencing either during COVID or sort of they're anticipating? 

Monica Arora: 19:44 

I think the real challenge is, for them, and not necessarily just directly linked to COVID, is this inability to access real-time data in the most efficient way. And I think the research said that the lack of the digital tools they had is the biggest challenge. that they have in order to sort of deliver against their priorities. And not just the digital piece, but it's the process side as well. More than half of our respondents in the research said that processes don't allow for greater automation and therefore working on outdated methods are delaying sort of our efforts towards that transformation strategy. So, I think that was that. I think the other thing sort of, Hannah, sorry, you specifically asked about COVID. One thing that was a real challenge was recruitment and attracting the right talent. Like while you can do interviews online, et cetera, it's not the same. I think you really need to meet, like we came back to the office and there was so, many, I walked the floor, so, many people didn't even recognize who are these people, like people that have joined through COVID, which is great to see that we were, but I think, that was a real challenge. And a lot of people have said the same to attract the right talent, right? It does inhibit it sort of slightly. 

Hannah Munro: 21:16 

I think there's an interesting point there. It's not just, yeah, you talked about interaction but also onboarding that talent because it must have been incredible. We took a few people on during, I think most people did because it was such a long, if you think about how long COVID's been around now, it's been a couple of years. That onboarding piece is quite challenging. And like you say, it's very strange meeting people face-to-face and figuring out what height they are was my one thing, right? I met a few people, and I expected them to be incredibly tall, and it was the opposite and vice versa. So, it was really interesting meeting a few people and people once the gates are lifted. Absolutely. Same here. Brilliant. So, some great challenges. So, obviously we talked about obviously digital tools and cloud as well. So, that's obviously been a massive shift for a lot of organisations. How widely has it actually been adopted? Have you got any interesting stats around that? 

Monica Arora: 22:09 

Yeah. So, look, it's been, of course, an increasing trend towards cloud adoption. It's all about cloud, right? Wherever you are, not just in finance, but in your day-to-day life, no one can live without their mobile phones at the moment. And we've also seen this with our customers. So, just under two thirds of those we research say that their business is not ready for cloud based financial management systems. And over half say that their business is not yet culturally ready. ready for automation. Almost over half cited the cost of the technology itself, while almost as many as 40% say that the related cost of training is the biggest obstacle. So, these are some quite eye-opening stats. But what people need to remember is the upfront investment always pays off in terms of return and investment in the future. And therefore, the focus of on the longer-term outcomes and the strategies is just so, important to encourage these investments in most organizations. And if you can sort of show these examples of where investment in technology can deliver the quick wins, then it can be used to support those larger investments that support wider strategy with more sophisticated tech, but also supporting the training and the process support that's required as well. 

Hannah Munro: 23:37 

Yeah, I think people sometimes underestimate the shift that cloud has because it's not just about obviously how you access, but it's all the underlying technology that you're then able to access and use in your finance life that people, I think, don't necessarily realize. Obviously, from a cost perspective, that's great because they added values there from a process piece. But yes, actually, the shift to cloud can often be a trigger for other conversations around, like you say, processes and how those work and how you share information. information across the organization. The classic, what I always say is people are used to being receiving PDFs of reports. And now we're moving into a world where it's on demand access to data and dashboards. And that's hard for some people to get there. They're like, where's my PDF, right? And I'm like, you don't have to wait for it to arrive. You just go see whatever you want. Live. Exactly. But that's the shift, you know, especially for stakeholders. If you go back to the original conversation, that stakeholder management and having those conversations can always be challenging. 

Monica Arora: 24:37 

Yeah, 

Hannah Munro: 24:38 

absolutely. Okay, so, we've talked a lot about cloud and there was an interesting stats. I remember reading in the report that actually those that where the businesses understood the need for cloud and new technologies, that the finance teams were better able to focus and able to deliver on that strategic CFO role as well, which I think is a really interesting stat. And for those that are listening, we will be sharing a copy of the report. It's well worth a read in terms of the content. So, I will put a link in the show notes as well. But very aware that if I ask Monica to recite it to you, it's going to take us a lot longer than the time we've got allotted for this meeting. So, let's just take a step. So, what does this shift, this digital CFO, what does this mean for organizations, not just finance? What are we seeing in terms of the shift? 

Monica Arora: 25:32 

Well, look, as I said, you know, finance is one part. of the enabler to deliver on strategic priorities. It's so, important that we have the right technology that touches every part of the business. And just to the point you just made, Hannah, live data dashboards is something we're really trying to encourage at Sage here as well where you know a couple of years ago we introduced the focus more on SaaS metrics like lifetime value cost of acquiring customers and we have live dashboards that anybody in the business can go and access so, for example if we have a churn issue in one of our products we can go into this dashboard click into it go down right to the customer level to try and understand the root cause and that's an example of a great win where we've been able to drive some commercial action um so, so, it's really important that we encourage this across the business and making sure that all touch points around the customer journey has the right data points the right support systems to make the right decisions um If we refer back to the survey, we found that, you know, the finance leaders who are ready to adopt clouds already have, have seen that greater growth. outcome in strategic value in this transition, then they're less cloud-ready peers. Cloud-ready leaders are more likely to link digitalization to achieving their business goals, including cyber security and customer experience, right? Which is number one. By contrast, those that aren't cloud-ready see digitalization as addressing more tactical skills. such as improving year-end close and supporting data governance and compliance, all equally important. Don't get me wrong, but being the commercial one, I'm more about the insights and driving strategic outcomes. So, it just shows that everybody's thinking differently, really thinking about that return on the investment we're making. So, you know, my big plea here is that everyone should be thinking like this in this new world. Let's move towards this visionary finance rather than historians, right? And moving more towards becoming predictive. 

Hannah Munro: 28:00 

Yeah. And I think that's a really great way to sort of set the scene for what you know what we're trying to achieve and it's one of the things that I'm personally quite passionate about thinking about what the vision of finance is and what we what finance could be and achieve because it seems such a shame for you know talented commercial acumen to go to waste just crunching numbers and actually is that the real value that finance offers so, it's great to really focus in on that and I think that's you know but you know there's some there's some steps I think there's a journey that everyone needs to go on in terms of getting themselves into that position. You know, and it sounds like Sage have made some great strides in terms of actually taking themselves on that journey as well as supporting others. 

Monica Arora: 28:45 

Yeah, we have. I mean, if you wanted me to touch a little bit on what we've done at Sage, I mean, obviously we've done the SaaS analytics piece, but in our back office shared service centres, you know, we've made great strides into sort of robotic automation, you know, for those more repetitive rule-based tasks. which means our teams are doing less of the manual repetitive work and focusing on more sort of value add. And it's much more attractive for the talent that we attract today, right? Because they don't want to be sitting there doing repetitive, non-value-added work. They want to be doing this more commercial, sexy, you know, adding value and being more strategic business partners. 

Hannah Munro: 29:32 

I was going to say, have you, is that, is that anecdotally or is that have you actually, has that come up in interviews, you know, when you're looking for new staff? Is it a point of discussion? Um, 

Monica Arora: 29:42 

Look, Hannah, I'm very biased. Because I'm not your traditional accountant. It has. It has. Whenever I've done recruitment, I always ask the question, why do you want to do commercial finance? Why is it this over the other side of finance? And everyone's, well, the people I've come across largely, they always give this example of being this value-added, business partner to the business right getting closer to the business driving the strategic outcome rather than sitting behind the scenes looking at process policy and compliance yeah. 

Hannah Munro: 30:21 

not absolutely um so, I guess um so, this has been a great 

Monica Arora: 30:25 

um 

Hannah Munro: 30:25 

a great summary of the report. And I think it's wonderful to hear it from somebody that has such passion about commercial finance as well. And it's been through that change and that shift. So, what is, for those that are looking to make that shift and are looking to step into that new, you know, or create the space to do that more commercial role, what's your advice to them? If you had to give me your top tips for making that transition, what's your advice there? 

Monica Arora: 30:56 

I think number one, it's all about the mindset. You need to really establish, is this what you want to do? And be able to shift that mindset of moving from producing numbers to actually really understanding what they mean and providing that insight, right? I think that's number one. And then secondly... wanting to be able to work with other parts of the business. Because you get some finance professionals that are very happy to just stay working in finance and doing their sort of specific area. And I think that's absolutely critical. And then also being able to embrace new technology. Because we need this systemization, digital automation to be able to produce the information. So, you need to be able to have the willingness to adapt and learn to that and move away from the old methods of producing data, if you like. 

Hannah Munro: 31:58 

Absolutely. So, two things is you yourself need to make sure you're ready for the journey and then you need to make sure that your systems, your data and your processes are there before you start that shift. Yeah. Great advice. Well, thank you so, much, Monica. It's been lovely to talk to you. And I might have to sneak you back for a whole session on stakeholder management because I almost delved into that at the beginning of the podcast but knew we wouldn't have time. So, much to cover. So, thank you again. It's been amazing to have you on the show. 

Monica Arora: 32:27 

Thanks, Hannah. It's been an absolute pleasure.