Head-to-Head: Who Will Win Finance, Sales or IT?
February 21, 2015
It is no question that each department within an organization might have different agendas, tasks, and success metrics, which can cause some heated debates. However, one thing should be common amongst all departments – ensuring that the organization is profitable and is in good health. The two leaders that can have opposing view points are the Chief Financial Officer and the Chief Sales Officer as a consequence of the processes that are in place because they each have a different visions of success. While the CFO trends to focus on total predictable revenue and finance operations, the CSO is focused on new sales bookings, which is a leading indicator of future revenue success.
Sales teams are encouraged to build the biggest pipeline, often resulting in inflated numbers and reporting disasters because no one knows what they should report on, causing angst for the CFO who is primarily concerned with presenting an accurate forecast. The CFO will then have to explain those numbers to the CEO and board – not the happiest of conversations. How can these departments avoid misalignment and create a predictable forecast?
There is a way for sales and finance to find both common language and visibility to help align success. Sales Performance Management (SPM) is more than just a CRM tool. When it is integrated across performance management solutions for Sales, Talent and Finance it becomes a powerful asset and provides line of sight across all business divisions. By linking these together, the sales team sees the impact on pipeline bookings, which then translates to revenue alignment for the company, in turn providing complete transparency for the company. Furthermore, SPM can show what capacity is available or potential scarcity of resources and talent is in what divisions. From there, the leadership team can make decisions on budgets, proper reports can be built out, and sales can report their numbers to the finance team. The CFO is then able to understand and analyze how others define their success metrics. This provides line of sight for taking action because one team is working together, not a bunch of individual departments, and the organization is able to focus energy on the most important asset of any company, its customers.
Grow Your Revenue Stream with Customer-Centric Finance from Forrester research sums it up perfectly. While traditionally finance is only worried about the areas such as a compliance, there’s a new kid on the block that needs to be measured, and that is the customer, which is at the hands of the sales team. This means finance needs to develop strategies and execute on actions that increases all types of revenue – also known as the ability to create a predictable revenue stream. So why is the customer important to finance? As new industries and revenue models like subscriptions emerge and technology solutions are available on every website, finance and operations systems must support the age of the customer by continuing to keep customers engaged, servicing customers and retaining customers long term.
Finance must transform their business processes to support sales and customers by accelerating order-to-cash processes, measuring and forecasting business performance, and improving the customer experience from a financial perspective.
The reason? Finance leaders are becoming more equipped to become a growth engine for the company. They are transforming the way finance optimizes the revenue stream across the organization and their customers. Traditionally, Finance was the conservative lager in adopting new technologies whereas sales were quick to leverage any tool available to accelerate sales performance.
So who will win? The CFO, CSO or CIO? Everyone will win when the organization is moving down a path of transparency and clarity to one company vision. The most influential is the CIO; part of their role is having the foresight to align technologies to support all divisions. However, it’s not as easy as flipping a switch, as reported by CIO Journal and Wall Street Journal - many CIO’s say the benefits of shifting business applications to cloud services can be more complex than just selecting a vendor and turning on the application.
How can organizations ensure that they are moving down the right path and are set up for success? Rethink your processes to drive revenue and customer growth. Set your organization up with an end-to-end solution to gain insight across all levels of performance management. If you look at the SPM market, as reported by Gartner, it is a segment under CRM with a project CAGR of 25%. The CPM market has a CAGR of 8% and is expected to be around $4B by 2018, with financial planning and SaaS applications growing rapidly. Anaplan and IBM Cognos TM1 are just two systems that fall into the these categories and can help close the gap between sales and finance. However, CPM and SPM coupled together can provide the planning solution that both sales and finance need to drive success. They are also programmed with strong analytics so that trends can be analyzed and forecasting decisions can be justified – a “win-win” situation. When evaluating sales performance management solutions, it is important to look at all the key technology vendors highlighted in Gartner’s report and OpenSymmetry’s SPM Vendor Guide to determine the best solution set for your business goals. With the technology markets growing rapidly, it’s critical for organizations to have the right playbook and processes in place to optimize the technology to their advantage.
Interested in learning more about the trends and best practices surrounding CPM and SPM applications or in getting a read out on some of the analyst reports mentioned above? Contact us for a free 30-minute briefing. We also encourage you to register for a webinar we are hosting on March 26th at 1 pm CDT. Paul Hamerman, VP and Principal Analyst at Forrester Research Inc. will be highlighting decisive business technology trends in 2015 and how best-in-class companies are driving unstoppable business performance through integrated planning. Register Today! Can’t make that date and time? Still register and we will make sure that you are notified when the recording is available.
What’s your opinion on the finance and sales gap? Let us know in the comments section below.