Ross Tennenbaum, CFO of Avalara, a Seattle-based provider of cloud-based tax compliance automation for businesses, has witnessed the many ways technology has changed the finance role in recent years.
Prior to Avalara, Tennenbaum was a managing director in the technology investment banking division at Goldman Sachs and focused on advising enterprise software clients. And before Goldman, Tennenbaum served as an investment banking vice president at Credit Suisse and was one of the first employees of VIACK Corp., a web collaboration software company, where he held several operational and financial leadership roles.
Tennenbaum spoke with StrategicCFO360 about how the Covid pandemic has changed business, the importance of aligning your team with the corporate mission and what to expect in the decade ahead.
How has the role of CFO changed over the past year?
The volatility of the past year has had far-reaching impacts on businesses across industries. At the beginning of the pandemic, CFOs and finance teams had to pivot their priorities to address the uncertainty of the pandemic, the shift to remote work and the impending economic impact of mandated closures and supply chain disruptions. Because change happened quickly, finance teams had to focus heavily on efficiency and ROI.
As a result of these shifts, the role of the CFO has evolved in several ways. At the onset of the pandemic, CFOs had to become key decision-makers within their organizations on numerous functions outside of finance, including HR, workplace experience and more. This evolution from focusing on the numbers to becoming a business strategist has also changed how CFOs must think about technology and data.
At a time when ROI and business continuity has been on the minds of leaders, many businesses have turned to the CFO to derive insights on everything from spending to managing risk. As a CFO today, you must go beyond the traditional role of measuring performance and serve as a gatekeeper of data to guide your company forward.
What should finance leaders do to be a strategic partner to other business units?
The evolution of the CFO role in the past year has moved the function more toward being a strategic partner to the business. However, to effectively become the partner that the business needs, CFOs and other finance leaders must first embrace technology to drive efficiencies in their day-to-day roles. One example of finance technology that can be used to drive efficiency is tax automation. By automating tax obligations—registrations, calculations, preparations, filings—finance teams can free up essential personnel resources for more strategic projects.
Technology should also be used to support the strategic needs of the business. For example, emerging technologies like AI and data analytics can enable finance teams to provide predictive support for a range of internal functions like sales pipeline and marketing leads.
How do you ensure your team is aligned in advancing your corporate mission?
Avalara operates through the guiding light of four operational pillars: growth, efficiency, customer and partner satisfaction, and corporate excellence. The executive team strives to help every employee understand how their performance ladders to these pillars and drives results. While it’s easy to see how sales ladders to growth and support to satisfaction, it’s more difficult for shared services groups to understand how they ladder.
We’ve invested in tools, technology and education to help employees understand their role. For example, how the revenue operations team can improve efficiency by automating the quote-to-cash process and minimizing manual intervention, all of which increases satisfaction and drives growth. Another example is how the M&A finance team can drive growth by accelerating integration or how the FP&A team can improve corporate excellence and employee satisfaction by delivering insights that help employees more easily navigate and drive the business.
Ultimately, alignment between teams and the corporate mission is critical. Alignment starts by providing clarity around the mission, which can be organized in many ways. However, the key is to communicate a very clear mission and vision for where the company is going and then ensure all employees know how they ladder up and can drive the results. And don’t forget to incentivize what matters!
What will the CFO role look like in 10 years?
The fundamentals of accounting, financial reporting and FP&A are not changing. It’s the operations that are changing.
The last 20 years have been about automating routine processes with software—accounting solutions (ERPs), billing systems, FP&A solutions and more. The next 10 years will be about automating everything —from end-to-end order-to-cash to sales tax.
Finance organizations won’t need to rely on heavy systems and large consulting investments as the power of business process automation is being simplified by “AI bots” that can be programmed at the operator level to execute routine tasks. Increasingly, the mundane will be automated and the bespoke pieces of the finance organization will be stitched together in a more tightly woven operation.
This will progress the evolution of the CFO from what was historically the accountant to more recently a key business operator, and ultimately, the strategic capital allocator. As operations will be more easily automated, the marginal cost of change will go down meaningfully, enabling the CFO to allocate capital to new initiatives that drive future growth through a capital allocation framework.
Because of automation, the CFO will also be able to help enable a “fail-fast” innovative culture where new investments can be operationalized quickly to realize great success or be terminated and replaced with new investment opportunities. These are feats that have historically been difficult to digest due to the time and cost it takes to operationalize change.