Brian Leibforth, Regional Vice President for Finance Services at Coupa, discussed how organizations are realigning to a risk-management model, focusing on meaningful data, and building automated workflows to prepare for the future.
“The role of the CFO is changing, and we need to start focusing on external factors,” stated Leibforth at the outset of his thought leadership presentation at the 2019 Finance Leadership Forum: The Evolving Role of the CFO, held in Chicago on May 16. “Reporting and financial analysis are now just table stakes when it comes to your financial organization. Most CFOs and financial organizations are focused on what’s happening outside—what’s going on in their industry, how growth is occurring, what’s the addressable market, and what’s the economic situation around the world. How do we start to enable ourselves to look around the corner and realize what’s coming next? The decisions we make will be dependent on that. Will there be an economic upturn or are we looking at a recession, and how do we prepare for those different scenarios?” he asked.
“The elephant in the room is risk. There’s been a lot of talk about risk management. There are three forms of risk—strategic risks, operational risks, and functional risks. In terms of strategic risks, we need to disrupt or die. We need to be agile and move quickly to adapt to the changing dynamics of the marketplace,” advised Leibforth.
“When it comes to operational risks, we need to ask ourselves if we’re doing business the right way. Do we understand what our consumers are looking for? How can we be sure we’re not missing the mark because we don’t have the appropriate data or aren’t analyzing it in the right way? You can have the greatest AI application in the world, but if you don’t have the data to feed that technology, it’s useless. It’s important to truly understand your customer base, what’s important to them, what’s important to your suppliers, and what’s important to the third parties you work with. How do you drive value out of those relationships? Operational risk is heightened in today’s world, because we need to understand how to set up our businesses and financial organizations to adapt and take advantage of the opportunities that come from better knowing our customer base,” he pointed out.
“Functional risk is pretty straightforward. Fraud is out there. A number of reports have found that as much as 5% of revenue has been affected by fraudulent activity when it comes to payments and transactional risk. We need to be sure we’re doing business with the right people,” Leibforth emphasized.
“Organizations are starting to realign to a risk-management approach. Risk is everywhere, and there are new regulations coming out every week. How do we interpret and manage these, and how can we do the best job of automating that process? We need to have the appropriate tools and processes in place to manage this heightening risk environment,” he said.
“Another concern is lack of visibility and control. Fifty percent of CFOs that we surveyed said they don’t have all of their spend visibility available to them. That’s ripe for fraud. Without that visibility and control, you need to invest additional resources and time to figure out what’s going on,” stated Leibforth.
“Finally, we hear a lot about manual processes. The drain on people—especially high-caliber resources—who are spending time doing something they shouldn’t be doing is affecting all of our organizations. If we can find ways to build automated workflows and put the right technology in place to automate and find efficiencies, that will free up those resources for more strategic tasks,” he said.
“At Coupa, we’ve been able to generate some key, performance index benchmarks through our data, and these are available on our website. The key points of Coupa’s BSM (business spend management) maturity model are:
- Transact—Focus on efficiency, visibility, and compliance. “It’s necessary to do the basics in an automated manner and build the workflow that identifies the starting point of all transactions.”
- Optimize—Once the transaction foundation is in place, optimization can begin to allow fuller control and smarter spending.
- Harmonize—After optimization comes harmonization, where it’s possible to understand if a company is doing business with the right suppliers and investing in the right organizations to find a way to strive for excellence.
Visit Argyle Executive Forum's CFO Live in New York, NY on Nov 13, 2019