Business Transformation im Tech-Tempo
Interview mit Kelly Kramer, CFO von Cisco
CFOs rücken immer mehr in den Mittelpunkt, da Unternehmen ihre Geschäftsabläufe als Reaktion auf Marktstörungen und sich schnell verändernde Technologien neu gestalten. Die Umsetzung einer Geschäftsumwandlung vom CFO-Office aus erfordert eine strategische Vision, eine enge Partnerschaft mit der/dem CEO und den Geschäftsführern sowie ein Finanzteam mit einer Change-Agent-Mentalität, so Kelly Kramer, CFO von Cisco Systems, Inc. Sie spricht mit Kirsten Rhodes, Managing Director, Deloitte Services LP, über ihre Rolle als Leiterin von Ciscos Geschäftsumwandlung, als treibende Kraft für Innovation und Wachstum - und darüber, wie sie Finanztalente entwickelt und wie wichtig eine starke Finanz-/IT-Beziehung ist.
Kelly Kramer, CFO of Cisco Systems, Inc. talks with us about her role leading Cisco’s business transformation and driving innovation and growth.
Deloitte: Where are you and your finance organization focusing your efforts?
Kelly Kramer: Finance is playing a major role in the transformation of Cisco’s business model, a multi-year effort that is key to driving shareholder value. We are in the midst of transitioning from our traditional business of selling a product to selling as a service, a shift that has huge implications for finance and requires a great deal of change throughout the company. For example, in the previous model, when we sold a product together with a service, we were done once the sale was made and we received payment. Now, with customers consuming our product as a service for a three-year period, it’s a much different operation.
A major part of the transformation is educating both our internal and external stakeholders on why we’re going through this, what we are doing and how we’re getting there, in clear and simple terms. Chuck Robbins, our CEO, and I are spending time with investors, explaining the strategy and the roadmap. We also provide proof points to show that we’re moving in the right direction on the transformation path, for example, revenue growth and acquisitions we’ve done in the segments we’ve identified as critical to our growth strategy—software companies, subscriptions businesses or SaaS companies.
Internally, I’m making sure that our people, from the most remote sales office to corporate headquarters, understand that selling software helps our margins, but that it also changes our revenue profile, and so we need to create the capacity to fund that. We’re also helping the businesses come up with new offers, modeling how those offers will be consumed and recognized financially. And the transformation effort even requires thinking through how we incentivize our sales force and getting our back office and operations to work differently. We want everyone thinking about the levers of achieving profitable growth versus just the outcome. And then we have to have the right operating mechanisms in place to make sure we’re going in the right direction, and the visibility to make adjustments in real-time as needed.
Deloitte: What do you consider critical to your ability to help lead the transformation?
Kelly Kramer: First and foremost, I have a CEO who wants finance to be a strategic partner and who values how finance can help drive the business. Since Chuck became CEO, he has made a point of pulling finance into the decision-making and strategy process. Whether it’s challenging the business or challenging him, he truly sees the benefit of having that partnership with me and wants finance to have that relationship with the businesses all the way down.
Second, it’s important to be able to take the strategic vision and set milestones to guide and measure progress from the beginning point to where we want to be three years from now. Having those target milestones helps me know whether we’re on the right path versus just having a vision so we can adjust on the fly while keeping the end goal in sight.
Third, it takes a world-class finance team with new skillsets, new insights and a change-agent mentality to help drive and accelerate the transformation. I want people who understand the business strategy and can translate that into day-to-day actions with the business, and use that understanding to know when it’s worth it to take risks, how the investments they’re making today will help move us forward, and when to say “no” if they won’t.
A strong bench in FP&A—the ultimate place where business operations and strategy converges with finance—is also essential. A good FP&A team knows the pulse of the business, is constantly assessing how market and customer behavior impacts it and modeling out the implications. They have to use real-time insights and data to inform financial planning. They also have to be effective communicators to influence business partners to make decisions aligned to the strategy.
Deloitte: How are you building those capabilities in your finance team?
Kelly Kramer: I am fortunate to have worked in many different industries, geographies and business models, and I believe that experience set is critical to building the kind of well-rounded finance professional who can be a CFO. Within finance, I’ve started initiatives to encourage people to take different roles to get broader exposure. We’re developing a finance training program for our newest talent that has them change roles every six months so they get exposure quickly, and we’ve built international rotations to help build their global experience.
I’ve also brought in external talent from other industries because I want different perspectives and experiences in the mix to help challenge the status quo. We’re finding great finance talent in the SaaS companies we’ve purchased, people who are attuned to innovating new ways of doing business. That’s a critical capability because in the tech business constant innovation is a necessity, and finance needs to be front and center in leading that.
Deloitte: What are other ways finance supports innovation at Cisco?
Kelly Kramer: We spend $6 billion on R&D every year, so managing the business shift is critical there. Acquisitions are core to how we build out businesses and get into emerging areas that drive new growth. My job is to make sure we are leveraging our balance sheet to acquire innovation. We’ve been very acquisitive in network security, IoT, SaaS or other cloud offerings. Analytics too will be a big future growth area for Cisco, and we’ve done a few acquisitions in that arena.
We also have a large venture fund and are investing in early-stage companies in areas that may soon be in our space or are close tangents—or in areas we simply want to learn more about. We typically get board observer rights so we can learn about these technologies and spaces. At the end of the day, we may acquire these companies, or they may be acquired by somebody else, so these investments help us understand new and emerging markets and stay ahead of transformations.
Deloitte: How do you balance investing for growth against driving shareholder value in the near-term?
Kelly Kramer: It can’t be an either-or; we have to do both, and do both well. That requires constant assessment of what we’re seeing in the market to ensure our investments don’t get ahead of where we see the top line going. We do scenario planning, using key early-indicators that allow us to adjust our plans in a short period of time. For example, we do a five-quarter rolling forecast, which in our second quarter enabled us to see a slowdown in the enterprise segment. When we see early signs like that, we may slow hiring or govern investments so we don’t get ahead of our top-line forecast. We closely monitor technology trends as well as macro trends. For instance, we spend a lot of time talking to our commercial business salesforce because those customers will be the fastest ones to transition to a new technology.
I’m a systems geek, and I believe it’s critical for finance to leverage real-time technology tools because you can learn so much about what’s happening in advance of normal monthly reporting.
Deloitte: How do you cultivate a strong relationship with your IT organization?
Kelly Kramer: I believe strongly that finance needs to work closely with IT to help us provide the data-driven insights that can power the business. Rebecca Jacoby, who owns IT as head of operations, views IT the way I view finance: it’s there to help drive the business’ strategic objectives. Together, we have invested a lot of energy and effort to building a strong relationship between finance and IT, establishing multiple processes for collaboration between the two teams, whether we need to invest in different systems, look at countries where we want to expand our footprint, or explore capabilities for our sales people now that we’re measuring them on margins. We are lockstep in terms of what outcome we’re trying to drive and having the right information at the right place for whatever person in the organization needs to get it. I wouldn’t be successful without a great relationship with the IT organization, and the CIO in particular.
My advice to other CFOs is to have an aligned strategy with IT to drive the business, and for those in IT, it’s about getting insights from different data sources out earlier to finance, which can change the game for a finance organization.
For example, if we’re rolling out a new ERP system in Russia, both finance and IT have dedicated teams working together on the project. We do leadership report-outs where the joint team gives progress reports to my finance management team and to IT’s management team. We also do company-wide transformation portfolio prioritization report-outs to make sure our investments make sense from the company-level perspective. That level of integration with IT is especially important as we venture into a new world that requires not just new systems but new ways of doing business.
Editor’s note: This article is part of an ongoing series of interviews with CEOs, CFOs and other executives. Ms. Kramer’s participation in this article is solely for educational purposes based on her knowledge of the subject, and the views expressed by her are solely her own. This article should not be deemed or construed to be for the purpose of soliciting business for Cisco Systems, Inc., nor does Deloitte advocate or endorse the services or products provided by Cisco.