CFO THOUGHT LEADER

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740: Illuminating the Home of the Future with a Brand from the Past | Roy Simmons, CFO, GE Lighting, a Savant company Oct 06, 2021

Show notes

Twenty years ago, when Roy Simmons first joined General Electric Company as a rookie financial analyst, it likely would have been difficult to imagine that he would someday occupy the CFO office of GE Lighting.

Of course, occupying the CFO office of “GE Lighting, a Savant company” would have required the young analyst to be endowed with not just imagination – but a crystal ball. This being said, in 2019, when a more seasoned Simmons joined the former GE business (now owned by Savant Systems, Inc.) as CFO, he had little trouble imagining a list of finance leader priorities for the coming year.

“We’ve been together for the last 14 months and we together have a vision to bring that brighter life to the people,” explains Simmons, who spent a combined 18 years at GE, a span of time during which he served in a number of senior FP&A roles including one with GE Lighting.

“Back in the lighting days, we realized that our customers who bought lights for their businesses were also finance professionals and operating professionals who had goals, so we asked ourselves, ‘How do we sell lights better than anyone else?’ and ‘How do we actually create a meaningful opportunity to provide value to the customer?,’” recalls Simmons, as he begins to outline the thinking behind a strategic pivot from GE’s past.

Says Simmons: “Normally, a customer would say, ‘We’re just going to go buy a series of new lighting fixtures for our parking lot, and this will cost me $100,000.’ However, what if instead we went to a customer and said, ‘Rather than spend $100,000 on lights, how about a solution that means that you’re going to save $40,000 a year in energy consumption?’”

According to Simmons, the GE team narrowed its lens in order to target CFOs and other operationally minded executives with a commitment to deliver the customer savings within two and a half years.

“Sometimes we could get it down to less than a year. Sometimes it was a bit longer, but by doing it this way, we changed the paradigm on selling,” comments Simmons, who credits the solutions approach with helping GE to land a landmark deal valued at $180 million¾a hefty price tag for what Simmons describes as “the largest lighting deal ever closed.”

Looking back on the approach Simmons says: “It really brought to life a solution for customers that has survived past those days and which has now gone on to morph into a company that’s today outside of General Electric Company in a different capacity, and it set a paradigm in an industry that had been thinking of things in a singularly focused way and changed them.” – Jack Sweeney

739: The Rules of Play | Craig Abrahams, CFO, Playtika Oct 03, 2021

Show notes

It was after he had worked 3 years as an investment analyst with Bear Stearns and spent more than 2 years inside the corporate strategy bullpen of The Walt Disney Company that Craig Abrahams decided to head to business school.

However, Abrahams says that unlike many of his future classmates, he had made up his mind that hedge funds, investment banks, and strategy consulting firms would not be on his preferred menu of postgraduation career opportunities.

“I wanted an opportunity to work really hard and stand out but also to go somewhere a little bit different, where I wasn’t competing with 10 versions of myself,” explains Abrahams, whose earlier experiences at Bear Stearns and Disney had left the MBA student searching for a less traditional route to career success.

Observes Abrahams: “I was looking for a place where I personally could have an impact.”

That place became Las Vegas, where upon graduation Abrahams joined Caesars Entertainment as a director of broadcasting and new media.

“This was about putting myself in a position where I would be in the right place if an opportunity came along,” comments Abrahams, who within 6 months of joining the gaming giant was tapped to help launch Caesars Interactive Entertainment.

“I remember when Gary Loveman, the CEO of Caesars at the time, said to me, ‘There’s an opportunity to work on a business plan to create a new entity,’ so that opportunity fell into my lap,” remarks Abrahams, who had served in a number of corporate development roles before advancing into the new entity’s CFO office.

It was as CFO of Caesars Interactive that Abrahams first became acquainted with a small Israeli company that had a megahit mobile game known as Slotomania.

Caesars was smitten and in 2011 acquired the Israeli firm, Playtika. Over the next 5 years, Caesars Interactive invested more than $300 million into the business, which allowed Playtika to complete a series of acquisitions that led to the sale of the company for $4.4 billion in 2016. “This was just the first step in the evolution of Playtika,” explains Abrahams, who joined the newly private firm as CFO in 2019 and subsequently spearheaded a debt raise of $2.5 billion. The company was able to pay investors a dividend before management became focused on taking the company public, a goal that would be realized early in 2021. –Jack Sweeney

738: Using Digital Insight to Unlock Business Value | Sameer Ralhan, CFO, The Chemours Company Sep 29, 2021

Show notes

Unlike many of the up-and-comers who populate the corridors of The Chemours Company, CFO Sameer Ralhan spent the balance of his career building years with the company inside its manufacturing plants.

It was there where Ralhan says that he observed everyday executives making decisions that routinely impacted the business, and it was there where his M&A activities allowed him to imagine new avenues for value creation.

Says Ralhan: “The heart of this company beats at the plants.”

Still, the many hours that Chemours’s future CFO spent there made him aware of a growing disconnect between finance and the plant’s decision-makers.

According to Ralhan, Chemours, not unlike many U.S. manufacturers, had undergone decades of reorganizations designed to streamline and centralize its operations. However, one consequence of this was that the bond between the plants and the Chemours finance team had become weakened.

“It was really limiting the finance support at the site and undermining decision support that could really drive the right financial outcomes,” recalls Ralhan, who after stepping into the CFO role made reallocating finance resources to support plant decision-making a priority.

Ralhan reports that one of a number of Chemours businesses that have benefited from the reallocation has been the chemical company’s Advanced Performance Materials (APM) business, where the finance and the operations teams came together to build new decision-making models as well as return-on-capital models for each manufacturing site.

Observes Ralhan: “These models really provided the insights to drive the right decisions, and this is evident in the margin improvement that we're seeing today in the APM business.”

Meanwhile, the Chemours manufacturing sites, as well as their bottom lines, are expected to benefit in the coming years from different digital tools and applications that promise to build on APM's recent margin improvement success.

Comments Ralhan: “Once you achieve this, you earn the right to do more things, and that's what I'm really excited about.” -Jack Sweeney

737: The Future Before Us | Chris Kuehn, CFO, Trane Technologies Sep 26, 2021

Show notes

It was a complicated transaction that Ingersoll Rand’s then-CEO Mike Lamach challenged his finance and operations people to address by “turning over every rock in the company” to nullify the possibility of unforeseen snags.

Recalls Chris Kuehn, who at the time served as Ingersoll Rand’s chief accounting officer: “I remember Mike coming back and telling us that he had never been through an IPO in his career, but this transaction was likely going to be the closest he ever got to one.”

Today, Kuehn is CFO of Trane Technologies, the spinoff and resulting offspring of the transaction that involved the merger of Ingersoll Rand’s industrial business, Milwaukee-based Gardner Denver.

“Mike didn’t want us to accept the status quo. He wanted us to review every one of the 600 cost centers and every organizational chart and function,” continues Kuehn, who adds that the exhaustive process spanned between six and nine months.

Part of engineering the spinoff’s early success, Kuehn explains, involved proactively moving processes that had been managed centrally to regional locations where they would be better suited for the management of the entity’s future operations.

Still, putting a reorganization in motion on the eve of a defining transaction is no doubt a tricky management feat, especially when the dimensions of the proposed spinoff are not yet fully visible to the company’s incumbent employees.

According to Kuehn, the approaching transaction deadlines brought an operational opportunity into view.

He comments: “We said, ‘Let’s be courageous enough to change what has not been working, with a bias to moving those processes that are centrally led.’”

For Kuehn, the reorganization and eventual 2019 transaction swung open the door to Trane’s CFO office, where the finance and operational opportunity remains front-and-center.

“We’re still on the journey today,” he points out. “We’re not done, but this has certainly allowed me to get inside the finance function as well as our other global functions and see what is working well and what we need to change.” –Jack Sweeney

736: Inside the Growth Cauldron | Pramod Iyengar, CFO, Veem Sep 22, 2021

Show notes

When Pramod Iyengar returned to school after working for several years as a manufacturing engineer with United Technologies, he was ready to change careers.

The young engineer headed back to the University of Michigan, where as an undergraduate he had earned a B.S. in mechanical engineering. However, this time he had a business degree in mind

Post graduation with an MBA in hand, Iyengar landed at Intel Corp., where he had the opportunity to join a “very efficient and very well-structured finance team,” he explains.

For his part, Iyengar says Intel gave him the opportunity to learn not only the discipline of finance, but also how to use financial data and analysis to influence and improve operations across the company.

Intel also offered the opportunity to move into a variety of other areas. "Employees just had to take the initiative and take advantage of them," comments Iyengar. At Intel, Iyengar began as a finance manager with the distribution channel and soon became a senior financial analyst with the microprocessor products group.

Looking back, he credits the chip maker with regularly bringing together finance professionals from across the company.

Says Iyengar: "They would share best practices and strategies for using finance to improve decision-making in other areas, like accounting and sales."

735: Recognizing Windows of Opportunity | Akash Palkhiwala, CFO, Qualcomm Sep 19, 2021

Show notes

Back in 2014, when Akash Palkhiwala was first approached to serve as treasurer of wireless technology company Qualcomm, the company’s future CFO was uncertain as to what the role of a treasurer might actually entail.

“I’m not making this up: I did a Google search on what a treasurer does,” explains Palkhiwala, who recalls that the approaching retirement of the firm’s incumbent treasurer had led then-CFO George Davis to gauge Palkhiwala’s interest in the role.

Palkhiwala had first joined Qualcomm in 2001, and during his early years with the firm had been involved in the wireless firm’s M&A activity. Eventually, he graduated from a succession of financial planning and analysis roles through which he had rendered a steady flow of strategic insights for Qualcomm management as the company climbed from 3G to 4G to 5G along the wireless continuum.

“Although I’ve been here for 20 years, I feel like I have changed companies multiple times,” comments Palkhiwala, who notes that the treasurer role ultimately proved to be one of his career’s greatest learning grounds.

“It was just a fantastic experience. I did a lot of different things that I had never done before and worked with a whole new set of people, got exposure to the financial markets and the banking system, and created these new relationships that today I see as foundational in being successful as a CFO,” observes Palkhiwala, who adds that while today he knows that he made the right decision, accepting the treasurer position did require a degree of courage.

Says Palkhiwala: “I was recently talking to someone who was facing a tough career choice. He explained that you get maybe three windows of opportunity in the course of your career, and your success or failure over time is largely defined by your courage when windows of opportunity show up.” –Jack Sweeney

Making Your Next FP&A Hire | A Planning Aces Episode Sep 17, 2021

Show notes

Featuring FP&A Insights & Commentary from Planning Aces: Ian Charles, CFO, Flexe, Beth Clymer, CFO, Job Case, Mark Shifke, CFO, Billtrust, Mike Rasic, CFO, Synapse.

734: The X Factor: Being Approachable | Geoff Brannon, CFO, Oversight Systems Sep 15, 2021

Show notes

Back in 2011, when Radiant Systems was acquired by NCR Corporation, a door swung open for Radiant Systems controller Geoff Brannon, who received an invitation to join NCR’s plus-size FP&A function as a finance director.

The appointment had been made possible by a former Radiant boss who had stepped into a divisional CFO role shortly after the acquisition’s completion.

“He took a bet on me,” recalls Brannon, who says that the former boss knew his skillset well and had witnessed firsthand “a willingness to learn.” However, up until his NCR appointment, Brannon had resided mostly in the accounting side of the house.

Looking back, the one-time controller tells us that he was also known as a collaborator and problem-solver who had distinguished himself through an easy manner when it came to working with others—a trait coveted by many FP&A leaders.

A few years later, when the divisional CFO was recruited elsewhere, Brannon was tapped to be the division’s new CFO. As a new leader, he has come to appreciate the management approach that NCR used when it came to forecasts.

Reports Brannon: “On a weekly basis, the division president, the division CFO, and the sales leaders would gather. We’d talk about not just the forecast for the quarter but also ‘weekly commits’ and how that particular week, for example, was going to generate $15 million of new sales. The following week, when you came back to the table, you’d be asked, ‘Did you do $15 million?’—and if not, you’d be asked, ‘Well, why did you only do $12? million? Why did you miss?’”

Brannon adds that his division was known for having an enviable distinction: “We were probably the smallest division from a revenue perspective but the most profitable. So, we were something of a shining star at NCR.” –Jack Sweeney

CFOTL: Tell us about Oversight Systems. What does this company do, and what are its offerings today?

Geoff Brannon: We’ve been around for, let’s see, 18 years. We’re not a new company, but we’re a growing organization. When I joined back in 2017, we had about 65 employees; now we’re up to 165. Our revenue certainly has continued to grow at a 30% annual CAGR. We’re a software company that serves enterprise customers, and what our software does is essentially to analyze spend.

If you look at our customers, we are ingesting their spend, whether it’s in payables, P cards, T&E. We ingest that spend into our system and analyze it for duplicates, noncompliant spend, errors, fraud, waste—you name it. It’s almost like an insurance policy for cash leakage and all of the things that go along with this.

When it comes to a metric that is top-of-mind, it’s ARR, annually recurring revenue. This is really what we measure ourselves on at the highest level and the number one metric that matters to us. It’s not the only thing, of course, but, you know, when we talk to our board or internally, it’s always like, Where are we on ARR? The other key metric for us is retention, so retention of customers and the recurring revenue stream are both super important to us.

Over the next 12 months, the biggest thing for me and my team will actually be to implement a new ERP system. As we’ve grown over the past few years, we’ve gotten to the point where we’ve outgrown our current ERP system. We’ve already started seeing some demos by providers out there, so I think that this is something that we will probably be taking on in early 2022.

733: Eyes Wide Open | Laurence Capone, CFO, Pipedrive Sep 12, 2021

Show notes

Back in the early 1990s, Laurence Capone was a Paris-based public accountant serving a distinguished list of oil and gas industry clients when she heard about an audit assignment unlike any that she had taken on before.

It turned out that a manufacturer of cotton fabrics had engaged Capone’s firm to help to audit the operations of its subsidiaries located in central Africa. As a team was being assembled for the client engagement, Capone did not hesitate to express her interest and shortly found herself departing for a monthlong stay on the continent.

From the start, Capone knew better than to expect an indulgent environment. In fact, the region of central Africa—including Chad, where she would be based—was still experiencing waves of casualties from the AIDS epidemic.

“I was working with this local CFO, and even just getting together an accounting team was a challenge. Locally, 30% of the individuals had passed away due to AIDS or HIV,” recalls Capone, who says that early in her career she would frequently take on assignments that no one else wanted.

However, the audit assignment in central Africa stands out.

“The experience really marked me,” comments Capone, who adds that at this stage of her career she would also purposely pursue assignments involving different industries and different world cultures to broaden and test her business acumen.

The audit assignment in central Africa included both of these, as well as another realm from which to learn.

“You can imagine the social and human facets of the challenges that these companies were facing in the early ’90s,” remarks Capone, who credits the assignment with opening her eyes to the human side of the enterprise.

Says Capone: “It was the people and the people story behind everything that I was able to gather and learn from. The personal side and the life experience were very important.” –Jack Sweeney

732: A Walk on the Creative Side | Matthias Tillmann, CFO, Trivago Sep 08, 2021

Show notes

It was little more than 6 months after Matthias Tillmann first joined Trivago—and shortly after the travel booking company’s December 2016 IPO—when the company’s future CFO decided to step away from his senior IR role in order to head up Trivago’s creative production function.

However, the jump to the creative side was not triggered by a sudden creative itch on Tillmann’s part. Instead, he was determined to extract new ROI insights from Trivago’s television advertising dollars, the very allocation that the online travel platform is credited with having converted into a groundbreaking strategic advantage.

“I started to develop my own hypotheses but was unable to test them,” reports Tillmann, recalling his frustration when it came to extracting greater ROI from Trivago’s annual TV budget, which by 2019 had grown to more than $600 million, or roughly 70 percent of the company’s annual revenue.

“In finance, you see numbers, but if you really understand the decision-making processes behind them, this changes how you identify opportunities and look at risk,” explains Tillmann, who today credits his tour of duty on the creative side with having bestowed upon him detailed knowledge about marketing decision-making.

When COVID arrived, Tillmann notes, this knowledge allowed him to confidently respond to the crisis and take steps that would quickly modify the company’s brand marketing strategy, thereby saving the firm millions of dollars.

Still, the lingering pandemic has continued to stress test a number of Trivago’s market assumptions.

Says Tillmann: “Pre-COVID, we had a very good idea with regard to how many people were out there and how many were willing to travel, and we knew how much to spend on TV—but this has now all changed.”

In certain markets, Tillmann observes, roughly 50 percent of the traveling public may still not be willing to travel just yet.

“For a mass channel like TV, this means that the channel is only half as efficient as it used to be,” comments Tillmann, who adds that the current environment has led Trivago to keep a steady eye on the size of each market and its accompanying pool of potential travelers.

“We began looking at what ratio we needed to hit in order to make our economics work on TV,” continues Tillmann, who says that the travel platform has recently turned to alternative channels such as online video when the economics for TV haven’t panned out.

Tillmann explains: “On YouTube, you can target certain audiences. For example, 25- to 30-year-olds may be more willing to travel at the moment, and that channel allows you to target certain groups much more specifically.”

As for whether the TV-driven brand is opening a new brand marketing chapter, Trivago’s CFO says, “The way we do brand marketing now is much more granular. This is the way that it has to be, as we pay more attention to how the markets develop.” –Jack Sweeney

CFOTL: Tell us about Trivago. What sets this company apart today?

Tillmann: Yes, sure. This is a topic that I love to talk about. I love travel. We started as kind of a Wikipedia for travel 16 years ago and then only focused on hotel price comparison. The core value proposition is still our hotel metasearch, which is based on a cost-per-click model. We have over 5 million properties through more than 200 booking sites on our platform. It’s a classic marketplace, where travel agencies, hotel chains, and independent hotels bid in our auction and essentially buy refers from us. This is how we make most of our revenue. I would say that we were very early in the game and one of the first focusing on hotels only.

In 2008, the founders made the decision to diversify their acquisition channels by building their brand through TV advertisements at a time when most bookings were still happening offline. With this strategy, we became an essential part of the offline-to-online transition, which we could then observe for the next couple of years. Online travel was a major tailwind for us and for the whole industry. Later, we added apartments, houses, and vacation rentals to the platform, capturing the whole accommodation space. Obviously, today, there are a few more players in this space. Competition has increased, in particular since Google started to push into our domain with their own meta product, but I think that what sets Trivago apart is the ability to learn very fast and adapt quickly.

For example, as a response to the COVID crisis, we developed a local travel product with the idea of offering a more inspirational product. We launched after a couple of months and have now extended the use case for unique weekend getaways. We recently rebranded the product as Trivago Weekend. Essentially, with it, you can find local things to do even if you do not wish to travel or stay somewhere overnight. If you just want to take a short trip and go somewhere, you can also find great deals there. I’m really excited about this opportunity. Nobody owns this category, and we are excited to try it.

I think that we have the ability to move fast and develop great products that solve travel-related pain points. This is the core of what we do. Looking ahead—obviously now, with COVID—everything is a bit uncertain. We already are seeing change in travel behavior. A lot of people speculate on how permanent some of these changes will be and what comes next, but I think that whatever happens, it’s a dynamic space—and I’m sure that over the next 5 to 10 years, there will be many more changes. COVID won’t be the last event that maybe changes the way that we travel. It’s important to stay flexible and adapt and look at it from the user side, really. Look at user pain points because with every development, new opportunities come up and new problems need to be solved. We have a decent-size tech team working on these kinds of products, and I’m excited to be a part of all of this.

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