Megan Wright: Today's CFOs are under growing pressure. Faced with a constantly shifting landscape, they must become masters of adaptability, fast. In parallel, the CIO's role is becoming more strategic as technology leaders work to unlock new opportunities in digital finance transformation.
Leaders on both sides recognize that this shift is taking place. Yet new Workday research highlights just how imperative the CFO-CIO alliance is to the evolution of finance. The question now is, what needs to be done to realize this new vision?
I'm Megan Wright, senior editor at Longitude, a Financial Times company. And I'm delighted to be joined for this conversation by two leaders who can share some of their insights and experience on this very topic. Workday's chief financial officer, Barbara Larson. Barbara, welcome.
Barbara Larson: Thank you, Meg. Great to be here.
Megan Wright: And Workday's senior vice president for business technology, Ernesto Boada. Thanks for joining me.
Ernesto Boada: Thank you, Megan, thanks for having me.
Megan Wright: Barbara, it's clear that there's a burning platform for finance evolution at the moment. If we start by taking a big picture perspective here, how, if at all, is finance driving wider business transformation?
Barbara Larson: The role of finance is really expanding. Successful finance leaders today are those leaders that can be agile in an environment that's constantly changing, exactly like you mentioned in your opening remarks. And also leaders that can really operate as strategic partners to the business.
CFOs today are required to provide more than just financial insights. They're required to provide insights that can drive operational change and guide business strategy, and ultimately provide long-term value to stakeholders. And what's critical in finance's ability to do that, is having the right technology foundation.
A unified, broadly accessible data core, combined with a very flexible platform, gives finance teams the ability to draw meaningful connections, collaborate across departments and business units, and continuously adapt and respond in real time. That's a game-changer for finance teams today.
Megan Wright: Workday recently conducted a survey in partnership with Longitude, and we asked more than 1,000 senior finance and IT leaders about their digital finance transformation.
Now it's clear there's so much business benefit to be gained here, whether that be upskilling finance and IT talent, improved management and reporting of data, streamlining traditionally resource-intense processes to the points you've just made there. Tell me about some of your current finance transformation priorities, and how is this data reflective perhaps of what you are seeing in the wider finance function?
Barbara Larson: Well, I'll start at the beginning, which is, since day one, Workday has run its finance operations in the cloud. A key benefit to the cloud is being able to continuously innovate, so we're able to create a finance organization that's built for growth and change without sacrificing rapid decision-making or agility.
Our technology priorities at Workday are focused on creating a frictionless finance experience, delivering better insights to the business, and really inspiring our team to reimagine the new world of finance. And the big value add here is the opportunity to build a vibrant function with new capabilities to access continuous innovation. That's just so important in today's competitive environment for talent. Having great technology is a differentiator when it comes to retaining and attracting talent.
Megan Wright: I think that's a good point to bring you in, Ernesto, because obviously technology really is the linchpin here. And actually, we see from the survey results that 69% of CIOs agree their team is under pressure to innovate finance technology, perhaps despite limited financial literacy. So I'd love to understand, what are your current digital transformation priorities? And how does finance technology fit into that, do you think?
Ernesto Boada: The world of technology continues evolving, and business continues evolving very fast. The key priority for us is to continue with the momentum and continue changing to be able to support all the business needs that we have out there.
We want to empower our users to continue using data, fast, real-time, be able to make the decisions as we can. And as mentioned, continue evolving through automation, and journeys, which is another thing that we continue doing.
In order to continue this evolution, what we've been focusing on is, as well, to change the way we operate as an IT organization. We not only want to continue to be a trusted technology partner, but also extend our partnership to be a strategic one based on products and capabilities. IT operating model is evolving to run as a product organization.
Now, the return to office and the pandemic we have had the last two years has also changed the way we're thinking, on not only customers, partners, but also, now employees.
Part of our priorities is to continue enabling technology that enhances productivity. That creates a better way to collaborate focusing on employee experience by enabling more automation, self-service and increasing speed to market, to become a trusted and strategic partner for our company businesses.
We're looking at ways across the range, from looking at the employee journey across an HR perspective, to all the tools and technologies, and how each business organization is working. So we can be able to partner closely and deliver the technology and capabilities.
Now, for the prioritization of finance technology, basically we have a dedicated team which we call the Workday on Workday, who actually has a fun acronym, called the WoW team. And this team has the right set of technology and product skills. It ranges from architects, engineers to business analysts and product owners.
And they work closely, and are actually co-located with our finance team, to make sure that they're not only delivering what capabilities we are offering, but also to continue evolving and reinventing what else we can do to make sure that all these loads of data, and enrichment of data, gets done more automatically and not just by hand, or by all the tools outside of the solutions that we provide.
In addition to that, our role in how we productize work is we also look out there for other technologies. And we look at what we're doing in areas of sales or even marketing to leverage technologies and data, as well. That's how we work with finance.
Megan Wright: I think perhaps the most interesting finding from the research, and certainly reflecting on what you are both saying here, is this correlation between finance and IT alignment, and the ability to which a business can tap into this finance transformation.
So we found for instance, that in businesses where the CFO and the CIO are working together regularly, digital finance transformation is more likely to have reached a more mature stage and vice versa. So I'm wondering how both of you would describe the relationship between IT and finance? To what extent do you see these departments being encouraged to work together, perhaps in some of the other businesses that you work with as well?
Barbara Larson: I'll just say it's really important for finance and IT to have this symbiotic relationship. Finance has to be careful not to shut down new technologies that maybe we don't understand, that are new, or that we don't quite know how to use them. And on the other hand, finance must articulate to IT what we want. And then we've got to work together to drive that.
Ernesto Boada: And I’ll add, as well, that one of the keys of our relationship is experimentation. Again, we don't have all the solutions and sometimes we were able to try something that may work and something that may not work. That agility, that conversation, the fact that we are both sitting around the table and having the discussion, allow us to pivot to any of the directions.
That's one of the key parts of the relationship. we have moved from, years back, being an order-taker to implementing our technology and capabilities. And like I said, we just implement it, we're done, to more of continued improvement, and working, and experimentation. And all these new things, or not new things, that marketing and sales talk about A/B testing, and see what is the results of what people are saying, we begin to apply it internally as well with our partners, and now with finance as well.
Barbara Larson: Ernesto and I, we share a close collaboration with each other, the IT team and the finance team at Workday. We're in constant communication with both IT, and Ernesto mentioned it earlier, but product development, as well, to share input on the needs of customers, and influence the product road map, as well as make sure that IT understands the metrics that we're measured on.
We bring recommendations to IT and how to partner with us to solve business challenges. A great example of where this happened was during the pandemic, when we worked with IT to create a dashboard that allows us to look at our accounts receivable balances through an industry lens, and it gave us much more precision in assessing risk to accounts as well as receivables and cash flows.
We could then contact those customers in the hardest-hit industries and discuss whether payment deferrals or other changes were needed. Customers were hugely appreciative of that. And it really came down to that collaboration between finance and IT to drive that outcome.
Megan Wright: And you've both touched on this, but actually something that stood out to me from the research is that in more than one-third of companies, the CIO still doesn't seem to have a seat at the table on finance transformation decisions, even when technology is a key part to solving these challenges. I'm interested to get your perspectives on that. To what extent do you see that playing out in the industry?
Ernesto Boada: We have very open and transparent communication between the two teams.
And also what is interesting for IT and CIOs is that we want to make sure that our technology is cool, and is working well for our business and employees, right? Again, we're not just the providers. The success of finance, the success of sales, or any of the business units, is our success, as well.We add value and we want to measure and make decisions based on value. And that's a big differentiation. I think that's something that companies need to look at really closely, where we have an opportunity to have the discussions.
And now when you put on just the IT hat, which tends to be in the past, think about an expense, right? We’ll always be a cost center, where everything that we do has to be a cost, because we have to buy licenses and headcount, and things like that. We're changing that to, what is the value that we’re bringing to the business? How much can we contribute to revenue growth?
That value that we bring is what energizes. But we also have to have difficult conversations because we cannot keep legacy technologies sitting around for a while. We cannot just build short-term processes that do not have a plan for a long-term because we don't want to acquire technology which then becomes a part of the headaches and expense that IT tends to have in different organizations.
That conversation, where we put the two priorities together - what finance is trying to accomplish, what we need to accomplish, as well - is what creates a very fair portfolio. And that's why you need to have both organizations at the same table. And not only just us, but our teams.
Barbara Larson: And I mentioned at the beginning, the fact that the scope of finance is expanding. And I think one of the things that finance increasingly owns is really this data strategy data model, as well as the business strategy. But we can't do that alone. Of course, we have to partner with the business, but it’s absolutely critical to have that partnership with IT to drive that data strategy, which really will help fuel the business strategy.
Megan Wright: So it's clear that within this wider conversation we're having, the roles of both finance and technology leaders are naturally evolving. To give an example, more than half our executives said that ideally in the future, they'd like the ultimate responsibility for ESG reporting to rest with the CFO.
Also we're seeing CFOs would ideally be tasked with finance technology decisions, according to the data. Barbara, if I can start with you, how is executive responsibility changing when we start to think about some of these areas that were perhaps traditionally more clear cut between finance and technology?
Barbara Larson: The way I like to think about it is, in my role, when I look at business challenges, and how we can maybe use technology to help solve them, I'm tasked with understanding the why and the what. And I lean on Ernesto and the IT team to not only help dissect the what, but enable the how. How are we going to solve that? What technology could help us get there faster?
Ernesto Boada: I think the advantage right now, the way we have it is, our biggest asset for us, is data. And our job is to enrich, cleanse and publish this data. We work with different business units to implement different solutions, but ultimately everything resides in one single source of data, right?
So if we try to divide that, then you end up having organizations that will be running their own technology and their own data. And ultimately, we want to make sure the companies get run with the same set of KPIs, and with the same set of information across all business units, not just finance or HR.
We have a central architecture, we have a central data team, central data governance team, that allow us to see this across. So we're able to support and bring what we're doing perhaps in sales that may work very well in finance, or what is working in HR that may work in marketing.
And I think that's the value to be able to be infiltrated across the organization, and not just in one single vertical. But it depends on the type of businesses that companies are.
I think there's not one single way of how we work, but I think the key is to have open communication, and be able to continue having the two organizations evolving together. I think that's the magic trick.
Megan Wright: So data then is really the fuel of finance transformation. And I know it's not necessarily just financial data either. We're seeing, for instance, that CFOs acknowledge increasing reliance on non-financial data sources to make finance decisions. So that could be operational data, people data, market data, the list goes on. Tell me what's needed to make this data usable so that it can really enable finance transformation?
Barbara Larson: The need to improve decision-making by enabling secure, timely access to reliable data is the biggest driver of technology modernization within organizations. Yet harnessing the vast amounts of data that are being generated and collected continues to remain a challenge - definitely does within finance.
At Workday, we really try to put insight at the core of everything we do. Having the insights you need to make the best decisions is the foundation for any company that wants to compete in today's economy. We use our intelligent data core, which allows us to ingest financial, operational, and third-party data, and then quickly put that information into the hands of decision-makers across the business.
Additionally, we give our finance team ownership of the financial data model, the accounting rules, the mapping, the calculation, the metrics. And doing that lets finance manage and enrich data to run their own reports, analytics, and planning models. And that's really been a game-changer for us.
A couple of examples where we've done that, the first one is how we've automated our stock compensation process. So we use E*Trade as our stock administration system, and with Prism and Accounting Center, we are able to ingest a significant amount of information automatically from E*Trade into Prism, perform all of our manual checks and processes automatically, then produce our journal entries using Workday Accounting Center.
Accounting Center then enriches that information with the right work tags, cost centers, spend categories, and a process that used to take us two-and-a-half days is now completed in just a matter of hours. And we're really just starting to scratch the surface here on what we can do to automate processes, and then also give our users access to immediate information. And it all ties that operational data sources back to our financials, which is great. And we are automatically reconciling it as well.
Ernesto Boada: We want to combine finance data with employee data, with customer data, or third-party data to put them all together. Then we want to be able to surface what we can call intelligent data, which is data that has been already processed through calculations, through different accounting rules, for example, right?
We've given them that intelligent data, so the finance team can start making the right decisions, and determine what they need to do and provide different strategies to the company. But also, at the same time, we are giving them the ability to drill down.
I think the power of processing large amounts of data, and to be able to recalculate if we want to make sure that we start having some levers, that they want to make sure they want to change something to determine what are the results, and things like that.
Or determine if different, let's call it, datasets were not utilized, we can change them pretty fast, right? But the power to process this amount of data constantly is what gives this benefit to finance, to be able to act very fast and have that real-time data available.
Megan Wright: Taking everything we've discussed today into account - this new vision for finance, the role that data, technology and skills will play in shaping that, and certainly this level of alignment between the CFO and the CIO that's needed to get there. What message do each of you want to share about the role of partnership in this context of a new vision for finance?
Ernesto Boada: I think that the key, we have said a couple times, is a type of relationship, that we get to work together. And it's also understanding that technology is not a tool but is an enabler for finance to continue doing more analysis and more work. We want to be that partner for finance.
It is nonstop. I mean, probably, if we were to have this conversation in a year, depending on where our business is heading, we might be coming with new processes, new journeys, new technologies. And as we continue having that communication and partnership, I think that's what is going to help us in our evolution to continue becoming better and better every day.
Barbara Larson: And I'll add to that with probably one word and it's “alignment.” I think it's really important that the CFO and the CIO meet regularly to align on the key challenges, and the role that technology can play across the organization, not just in finance. We make a lot of decisions that impact the entire organization, not just our function.
We just have to keep those priorities in mind and align with our values to ensure the right decisions are being made for the business. In some ways I look at it as we, the CFO and the CIO, have this broad perspective of the entire business. How do we stitch that all together so we're creating end-to-end process and technology improvements, not just trying to optimize within each of the different functions?
Megan Wright: Absolutely. It's clear there's a burning platform for both finance and technology leaders to really work together to shape this new vision and their relationship to one another in the context of the wider business. Barbara, Ernesto, thank you very much for your time today. I've enjoyed our conversation.
Barbara Larson: Thank you, Meg.
Ernesto Boada: Thank you very much for having us.