EY helps clients create long-term value for all stakeholders. Enabled by data and technology, our services and solutions provide trust through assurance and help clients transform, grow and operate.
At EY, our purpose is building a better working world. The insights and services we provide help to create long-term value for clients, people and society, and to build trust in the capital markets.
How new age data analytics is pushing private company CFOs to adapt and innovate
Jennifer Crowe, CognitiveScale CFO, and Anthony Sgammato, Americas EY Private Assurance Leader, discuss how private company CFOs can use data to make a difference.
The EY DNA of the CFO survey revealed an increased growth in data volumes, with 35 percent of the finance leaders significantly involved in providing data and analytics to reduce cost and improve effectiveness of their organizations.
In this episode, podcast host Myles Corson welcomes Jennifer Crowe, CFO of CognitiveScale, and Anthony Sgammato, Americas EY Private Assurance Leader, to discuss how private company CFOs can identify and effectively use this rising amount of data to make a difference.
They explore how private company CFOs use data analytics to maintain a competitive edge. Tools such as business intelligence systems, artificial intelligence and cloud storage can offer insights from data, in real time. However, these tools may bring new challenges of cyber-attacks and staff and cultural issues.
Key takeaways:
Private company CFOs are flooded with data and understand that data analytics is a critical tool for maintaining a competitive edge. They recognize that the end benefits exceed the challenges of cyber-attacks and offers the opportunity to leverage business intelligence systems, AI, and cloud storage to bring insights from data in real time.
Finance accounting is seeing an acceleration in adopting cloud technology into the finance function.
Private companies, as opposed to public companies, are more likely to provide young talent the opportunity to really build from the ground up, potentially leading to new and exciting accounting and finance initiatives.
For your convenience, full text transcript of this podcast is also available.
Myles Corson
Hello, and welcome to the Better Finance Podcast, a series that explores the changing dynamics of the business world and what it means for finance leaders of today and tomorrow. I’m Myles Corson from EY.
Today I’m delighted to be joined by Jennifer Crow, CFO of CognitiveScale, an enterprise AI software company that makes augmented intelligence software that emulates and extends the human cognitive function to transform customer engagement and operational productivity. I’m also joined by Anthony Sgamatto, the EY Americas Private Assurance leader. In his role, Anthony helps private companies address risk complexity and identify opportunities, delivering confidence and trust in financial reporting and supporting them as they grow and transform. I’m delighted to have them both here today to discuss how private company CFOs can use data to make a difference. Jennifer and Anthony, welcome.
Jennifer Crow
Thank you.
Anthony Sgamatto
Thank you, Myles.
Corson
Let’s start with a little bit of background on each of you on your roles and career paths. So, Jennifer, perhaps you can start?
Crow
Sure, thank you. My name is Jennifer Crow, and I’m the CFO of CognitiveScale. CognitiveScale is a trusted AI software provider that helps companies leverage machine intelligence to drive top-line revenue and to lower operational cost. I’ve held CFO positions in both public and private companies, focused primarily in the software space. I started my career in public accounting, which was a great training ground, and have held other senior finance roles at different Fortune 50 companies. For me, the decision to choose a private company and land at CognitiveScale was twofold. One, I was excited to work with the truly innovative technology that is involved in nearly every aspect of our lives, AI. And two, to work with a team that is committed to using that technology in a responsible way.
Corson
Anthony?
Sgamatto
Thanks Myles. I’m Anthony Sgammato and I’m an Audit partner here at EY. I’ve been working at EY for over 20 years, and as Myles indicated, over the past couple of years, I’ve been happy to serve as the EY Private Assurance Americas leader for our firm. Spending a fair amount of time working with private companies as they grow and transform.
Corson
Let me ask the first question to you. We’ve been doing a lot of research with EY on the “DNA of the CFO,” and I think one of the things that comes through is this issue of growing volumes of data. How are you seeing private company CFOs deal with that?
Sgamatto
You’re right, Myles. Our DNA of the CFO survey confirms that the CFOs are simply awash in data. As we discussed with our CFOs, 35% of the finance leaders survey told us that they are significantly involved in providing data and analytics to reduce the cost and improve effectiveness of their organizations. They understand that data analytics is a critical tool for maintaining a competitive edge, yet they recognize the challenges — the challenges of cyber attacks and overcoming staff and cultural issues. However, they believe that the benefits still far outweigh the challenges, and data offers the opportunity to leverage business intelligence systems, artificial intelligence and cloud storage to bring insights from data, in real time. These real-time business insights have a significant impact on the business and on the bottom line.
Corson
Thanks, Anthony. So, Jennifer perhaps I can turn to you and ask what functions you think benefit most from the increased data volume and why?
Crow
For us the increase in data has given us true insights in our route to market. We’ve used our AI intelligent-generation-lead product to integrate with another off-the-shelf sales tool to target our customers in a smarter and more efficient way. This helps our sales team and marketing team to reduce our sales cycle and get the customers on the platform in an efficient manner. My team’s role is to take the high volume of data and turn that data into metrics so that we can drive decisions in identify problems as we need. We combine the information across different platforms into one scorecard, and those metrics include customer acquisition costs, net dollar retention, customer lifetime value. This enables us to measure the productivity and effectiveness around our sales cycle as well as making sure that we manage our customer life cycle as well.
Our investors have had an insatiable desire for additional information, so we’re able to take our internal metrics and then compare those to the metrics of similar-sized companies to gain further insights to see how efficient our organization is compared to software industry benchmarks.
Corson
You’ve talked about some great examples there about supporting the sales side of the business. Are there other examples where your organization has leveraged data to manage the cost side?
Crow
The biggest area that we’ve been able to use that is how we invest in our selling and marketing departments in our company. So, traditionally we’ve only used a direct sales channel, which makes it expensive to acquire new customers. But following the insights from our data, we’ve changed up how our direct sales team operates, and we’ve expanded our focus to include partner and resale opportunities with much larger companies. Both of these things will expand our selling footprint and reduce our customer acquisition cost.
This data will improve our sales velocity as well as allow us to scale faster and make sure that we’re able to benefit with our customer relationships over the long term. Some of that data also will show you where perhaps you’ve made a decision where you need to readjust, and so, we had an effort last year to remove any unnecessary business costs. We analyzed the data to monitor the effect of those reductions and our recent data show that perhaps we cut too deeply in the cost around our selling and marketing efforts; and so, in 2021 we’re reinvesting and reemphasizing our spend in those areas.
Corson
Maybe it’s a bit off-the-cuff question in terms of the relationship with sales and marketing. The research that Anthony referenced, one of the highlights, and there was also some of the challenges the CFOs have with cross-functional relationships, including CMOs, so could you maybe talk a little bit about how you and your organization have been able to use some of this data to improve the way you interact with your sales and marketing function?
Crow
Sure. I work with our selling and marketing leaders to identify the traditional data points — budget, cash flow, spending — all of those things you would normally see and hear from an accounting and finance professional. But also, how we invest in those things, their initiatives and where we get the greatest ROI. Lead generation is always very important to both our marketing and sales team. Our marketing efforts are very focused out in the PR community as well, and so, what we like to do is use the data, the coming back in to measure whether those investments were worthwhile and if we should accelerate in one particular area and invest more dollars, or where we should back off and perhaps not continue a long-term spend plan as it’s not showing the return that we would like to see.
Corson
Anthony, you mentioned the area of cybersecurity as one of the areas of focus. How concerned are CFOs about the threat of cyber attacks?
Sgamatto
They’re concerned, Myles. All the CFOs that we interviewed for our articles say that a cyber attack is indeed a major risk. It’s a major risk from an enterprise perspective. It’s a major risk for their building analytics capability, and all that we’ve spoke to have indeed invested funds and resources in additional security. Some of them are reskilling some of the employees they currently have. Some of them are adding incremental staff. All though with the thought to focus on information security and cyber threats. In addition to just adding internal staff or reskilling the current staff, what we’ve also found are some are using services to help with monitoring and identifying open-source threat indicators. Suffice it to say, they are concerned, and they are indeed focused on it.
Corson
Not a surprise there, and I think if you look back, finance is not necessarily being one of the early adopters of cloud. I think that has been changing, and we’re seeing an acceleration of adoption in finance. Jennifer, perhaps I can ask you as a CFO, given the environment and some of the threats and some of the risks associated with it; how do you see the potential for storing data in the cloud and how are you seeking to leverage it?
Crow
I think most accounting and finance professionals would agree that there was an initial reluctance across the board to put financial data that’s very sensitive into the cloud. However, for us, once we made the commitment and the decision to do that, it’s really been seamless and no problem.
The cloud has allowed us to work anywhere on a real-time basis; and in this current work from home environment, the cloud has really been key to online collaboration. Not only from my team but across teams both in Austin and across the world really. We also use the cloud for our product; our product is cloud-agnostic so it can be used on any cloud anywhere.
We interface with all of the major cloud providers, our customer can choose their own cloud and we will help them enable our product set to their configuration requirements or they can choose our cloud. There’s a lot of flexibility both internally and externally. Occasionally this will create some challenges for us so with all of the different preferences and flexibility we have to internally manage that each day on a day-to-day basis and make sure that we’re balancing the usage across all those cloud providers in an effective and efficient way.
Corson
Anthony, coming back to you with the cloud use. How are you seeing CFOs working with external partners for data hosting and management?
Sgamatto
They’re leveraging them in various different ways. What they really can continue to stay focused on when teaming up with partners for data hosting and for management, is how can they find a partner that can continue to help these private companies stay nimble and implement what they want to quickly. Some that we’ve spoke to have leveraged infrastructure-as-a-service model, which they believe really removes the worries about managing infrastructure and offers the ability to scale activity up or down as needed. They’ve also commented that it also helps improve disaster recovery options. Others that we talk to are considering the use of AI and bots to collect information and to improve customer inquiry responses and even help implement new ERPs.
Corson
Jennifer, what are the areas that benefited most from the use of real-time data in data-driven insights?
Crow
For my team, we’ve invested in automation. So, we rely primarily on our current ERP and spreadsheets to produce our metric and KPI reporting dashboards. We use a third-party bill pay platform, and we use that in addition to interfaces with our banking and other platforms to generate daily cash and operating information on the company. So, the old monthly close, we still do that and, of course, we still produce all of the normal financial statements, but the biggest advantage for us is to enable daily cash forecasting. So, we’re able to take those updates and perform real-time reporting. This gives us insights into our company’s burn and enables us to manage runway effectively and maximize our shareholder investment. This is really key for a private company of our stage, but I think would be beneficial for companies really of any stage.
Corson
That’s really interesting and helpful, and one thing I did just want to touch on is some of the talent aspects of this. So, what you’re describing Jennifer, presumably is having some impact on the roles you ask your team to play and, therefore, the skills they need to be developing. Can you maybe just share a little bit about how you’re helping your team to build these skills and capabilities to respond to these new opportunities from real-time data?
Crow
Earlier in my career we relied heavily on our IT organization and accounting and finance, and today that’s not really true. We have a subject-matter expert on my team that really helps us build interfaces, make sure we’re getting timely information. He will also work with our third-party vendors to get those feeds in place, and that way it really frees up my team to move away from any data entry type work and focus on the analysis and really turn all of that data into information. So, we’ve been able to shift those resources from data entry to really review and management.
Corson
Great, thank you. And maybe just one question because you mentioned obviously your experiences with public and private companies. Is there anything you see differently in terms of attracting talent to a private company environment? What is it that would incent people to join and the kind of career experience they’re going to get in a private company?
Crow
I think a private company gives you the opportunity to really build something from the ground up. Most are smaller. For us it was really about the technology. For me, for people that are in my group and other individuals that we’re recruiting today, it’s really exciting to be on something that’s so innovative. Building the trust into AI is something that we’re all excited to get around. From an accounting and finance perspective, I think my people have the ability to wear lots of different hats. They don’t get stuck in one area of contracts where you work on letter A to letter C, you really are able to take on new and exciting projects and do all kinds of different things across the board.
Corson
Fantastic. So, Anthony, maybe I can ask you a similar question. And again, one of the findings in the research was obviously this need to balance investments in technology and talent. How are you seeing that play out in private companies? And what are the most successful ones doing to attract and succeed in attracting the best talent for their organizations?
Sgamatto
One of the benefits of being a private company is you can remain really nimble, Myles. We don’t have a lot of the investors to answer to quarterly earnings. The ones that I’ve seen really successfully crack this code is be a little cutting edge, be a little innovative, take a risk a little bit, and really embed that into your culture; and I think that they are pleased with how the talent agenda and the technology agenda can really move in tandem when they push the envelope a little bit in an appropriate manner.
Corson
We’ve covered a lot of ground; so maybe, just in closing, is there a key recommendation each of you would share with our listeners on how private CFOs can make a difference to their finance organizations and to their broader companies? Anthony, maybe start with you?
Sgamatto
I think the final recommendation is get creative with this data. We’ve talked about how much data out there; we’ve talked about how the world is changing. Continue to push the envelope, get creative with your observations, get creative with your insights, and continue to look for new ways to add value to the organization.
Corson
Great, and Jennifer?
Crow
For me it would be to embrace change. These new systems and the data that’s being driven from them really are providing you with insights that you can do things in a more efficient way so that you can, one, do more with less and be more cost efficient, as well as do more exciting topics and work on different things throughout the organization to expand your experience.
Corson
Great, well on that positive note of exciting opportunities, I just would like to say thank you to both of our guests, Jennifer and Anthony, for joining me today and sharing your insights.
Sgamatto
Thank you.
Crow
Thank you.
Corson
And to our listeners, as always, thank you for listening. If you’ve enjoyed the episode, please remember to subscribe to the series or leave a rating or a review. If you’d like to find more about the topics discussed, or to access the research mentioned, we’ll be posting related links to ey.com/betterfinance.
I look forward to speaking with you on the next episode of the Better Finance Podcast, a series that explores the changing dynamics of the business world and what it means for the finance leaders of today and tomorrow.