The arrival of Industry 4.0 has seen a new relationship form between consumers and technology. For many companies, this development has forced them to take risks and modernise their offering to maintain a competitive advantage.
Sage has spent the last four years shifting its business model away from on-premise business solutions to offering SaaS and cloud-native products as it steps into this new technological era. As such, the company has recently undertaken its largest transformation project to date, which has seen the organisation cut profit margins and led to a temporary 30% reduction in earnings.
In the latest episode of CFO Notebook, we spoke to Jonathan Howell, CFO at Sage to discuss the steps its taken to pivot the company’s business model, the lessons he’s learnt along the way and how he’s been rebuilding organisation’s finance function.
00:42 Pivoting the business model
03:06 Reassuring shareholders
05:09 Setting new key performance indicators
07:06 Rebuilding the finance function
08:00 Hiring fresh talent
08:50 Setting SaaS metrics
10:18 Navigating the transition challenges
13:20 Hitting the ground running
15:59 Advice for CFOs on pivoting the business model
Looking more closely at what this move has meant for the finance department, what changes have you made to the finance function to support the business transformation?
Jonathan Howell: This, as I’ve described, is not running a business as usual. This is not straightforward. There are many components of processes, people, product, and go-to-market that are all being changed at once. So it’s very clear to me, that the first step I needed to do was to put in place a young, agile, dynamic, and resilient finance team that was able to move at this pace and also navigate the bumps that you invariably have in this type of transformation.
Investing in the type of people has been absolutely critical. Primarily young people but also with a mix of people who’ve got the experience to make sure that the routine cornerstones of a good finance department are still running well; the month-end close, the quarterly reporting, the reliability of forecasting and strength of the balance sheet. Whilst you are transforming and modernising and moving the finance function forward, it’s important you don’t forget those fundamental cornerstones.
More CFO Notebook episodes:
Watch our previous episode with Vineta Bajaj, group finance director at Ocado Group, on what it’s like working in a fast-growth environment and her definition of good leadership here.
Click here to watch previous episodes from our CFO Notebook series.
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