How CFOs Are Using the Return on Change to Fix Failing Projects and Rethink ROI with Vincent & Ilana
In this episode of FP&A Unlocked, Paul Barnhurst is joined by Vincent Messina and Ilana Esterrich to discuss how organizations should approach ROI and transformation. They dive into why traditional ROI methods often fail, the concept of Return on Change, and how financial leaders can better manage software implementations and drive business outcomes.
Vincent is a seasoned enterprise software sales leader with over 25 years of experience. Vincent is currently the Northeast Director of business development at UHY, a CPA firm, and works on advising CFOs through his partnership with UHY. Ilana is the Chief Financial Officer at Planned Parenthood Federation of America, where she oversees a comprehensive portfolio, including accounting, treasury, compliance, and financial planning.
Expect to Learn:
Why ROI calculations often fail and how Return on Change provides a more effective approach.
How to align financial decisions with business outcomes.
The evolving role of FP&A professionals in driving decisions beyond traditional reporting.
Key strategies for managing change during financial transformations.
Here are a few relevant quotes from the episode:
“The real value comes when technology enables people to do different, more impactful work.” - Vincent Messina
“As CFOs, our job is to help guide the organization by providing the right insights for informed decision-making.” - Ilana Esterrich
Vincent Messina and Ilana Esterrich emphasize the importance of shifting from traditional ROI to Return on Change in financial transformations. They highlight the crucial role of FP&A professionals in driving strategic decisions and managing change effectively.
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Explore Campfire today: https://campfire.ai/?utm_source=fpaguy_podcast&utm_medium=podcast&utm_campaign=100225_fpaguy
Follow Vincent:
LinkedIn: https://www.linkedin.com/in/vmessina/
Company: https://uhy-us.com/
Follow Ilana :
LinkedIn: https://www.linkedin.com/in/Ilanaesterrich/
Website: https://www.plannedparenthood.org/
Earn Your CPE Credit For CPE credit, please go to earmarkcpe.com, listen to the episode, download the app, answer a few questions, and earn your CPE certification. To earn education credits for the FPAC Certificate, take the quiz on earmark and contact Paul Barnhurst for further details.
In Today’s Episode
[00:00] – Trailer
[02:30] – Introducing Vincent Messina
[02:55] – Introducing Ilana Esterrich
[05:00] – What Great FP&A Looks Like
[08:00] – Why ROI Fails in Transformations
[13:00] – Shifting from ROI to Return on Change
[19:00] – The Importance of Consensus in Transformation
[25:00] – Business Outcomes vs. Software Decisions
[30:00] – How to Make Change Work
[35:00] – Mindset Shifts in CFOs and FP&A
[40:00] – Final Thoughts
Full Show Transcript
Host: Paul Barnhurst (00:00):
Welcome to another episode of FP&A Unlocked. I'm your host, Paul Barnhurst, AKA, the FP&A guy. And each week we bring you conversations and practical advice from thought leaders, industry experts, and practitioners who are reshaping the role of FP&A in today's business world. Together we'll uncover the strategic experiences that separate good FP&A professionals from great ones helping you elevate your career and drive strategic impact. Speaking of strategic impact, our title sponsor for FP&A Unlocked is campfire. Campfire is the ERP That's helping modern finance teams close, fast and scale faster. Today I'm thrilled to be joined by two guests I have with me today. Vince or Vin, welcome to the show.
Guest 1: Ilana Esterrich (00:47):
Thank you.
Host: Paul Barnhurst (00:48):
Excited to have you. And then I also have his favourite sister,
Guest 1: Ilana Esterrich (00:53):
Ilana . Hello, sister from the mother. Mister.
Host: Paul Barnhurst (01:01):
That was an inside joke. I couldn't resist. Now everybody is going to be like, what is he talking about? So before I completely lose everybody, I'll let them introduce themselves. Before we jump into our topic, we're going to be talking about everybody's favourite subject, ROI here shortly. But Vin, why don't you go ahead and take a minute and tell our audience about yourself.
Guest 2: Vincent Messina (01:22):
Okay. So my name is Vincent Messina, and it won't be long before people realize that I live in the Boston area and I have a CPA license. I don't practice accounting anymore. I was in public accounting for about seven years, and I transitioned into enterprise software sales about 25 years ago, culminating in the last couple of years where I do two things. One, I am working with Ilana on this book, and two, I represent a company called UHY, and I'm the Northeast Director of business development for this division of a CPA firm. And again, the CPA firm is called UHY, and I represent a portion of their advisory services up in the Boston area.
Host: Paul Barnhurst (02:01):
Perfect. Thank you for that introduction. And why don't we go over to cto give her a chance to introduce herself.
Guest 1: Ilana Esterrich (02:06):
Sure. I've been in finance for almost 35 years. I actually started in consulting and the precursor to FP&A when it was known as financial management and business analysis. I did FP&A in corporate at a variety of Midwestern companies such as General Mills and Thomson Reuters. Over the last 14 years, I've served as a CFO for 501(c)(3) nonprofits and 501(c)(6) associations. I'm currently the CFO of Planned Parenthood Federation of America, and this is my third stint as a CFO. I'm excited to be here to talk about ROI and why it's kind of a lie.
Host: Paul Barnhurst (02:45):
You gave away the whole idea, you telling us it's a lie, I am hurt. No. We'll get to that in a minute. Before I get there, a question I like to start every show with, and I'd love to get both of your perspectives on this. We'll let VIN go first here. From your perspective, what does great FP&A look like?
Guest 2: Vincent Messina (03:03):
So it's interesting because to me, I usually check my perspective against what you might enter and receive in chat GPT. And it turns out that I think exactly like the chat GPT agent that basically says what it isn't is data gathering and collection for the sake of administrative Excel spreadsheets. What it should be is what I've always wanted. So the software that I sell to help it be, and that is Visionary Strategic Insight Development. It's this idea of looking at the past, understanding the present so that you can predict the future and help guide the ship. So that, I think when you think of accountants and finance professionals, people often think of debits credits, Excel spreadsheets, and this mountain of data and reports. But in reality, what we are taught in school is how to think and interpret, how to help people make sense of the world. And nowadays that's even more important. So when I think of fp and a, when I think of the CFO's office in general, I think of strategic insight development. I actually think of strategic work, which is something you'll hear shortly.
Host: Paul Barnhurst (04:04):
Thank you. Appreciate that. Ilana , what would you like to add?
Guest 1: Ilana Esterrich (04:08):
I think it's all about influence. It is marrying finance with non-financial folks and being able to influence decision making based on data-driven analysis, right? Definitely not about any more than it used to be back in the day of just crunching through numbers. It's really about deciding what will really move the dial scenario, planning, future forecasting, and really making sure that every organization's leadership has just enough information to be dangerous and to be able to accomplish the long-term midterm and short-term strategy of the organisation.
Host: Paul Barnhurst (04:44):
I think a couple of things they heard there, and I think they're both really important, is the strategic side and influencing. It's definitely not, as you both pointed out, even though sometimes it feels that way, and I've had roles that have been like that, it shouldn't be primarily a reporting function. Yes, you have to do reporting, but it's so much,
Guest 1: Ilana Esterrich (05:02):
Well, nobody wants to do that as a career crunching numbers and creating reports. And from my days of being in Excel, I remember just how satisfying it was to make something work, to build a model that would give you insights, but if it stops there, that's incredibly unsatisfying over the longterm. And so I think where the rubber meets the road is taking all of that work and actually driving the organisation down a path that's successful and then monitoring success against your plan with numbers. So the value of FP&A is nobody really wants to do modelling for a living. They want that modelling to actually produce something and have greater value than just the model. Yeah,
Host: Paul Barnhurst (05:45):
I mean the model should be informing a decision. That's where the important part happens, not in the building of the model, although AI is getting pretty good at building them, but that's another story for another day. So how did you guys meet? You came as a package deal, so tell me how you met.
Guest 2: Vincent Messina (06:02):
So I will tell this story and then I'll let Ilana add her flavouring to it because in my past life I often found myself presenting at CFO conferences and I presented this concept, this model, this idea as a seller, as a software vendor if you will. And before I got up on this stage, do this presentation, Ilana was on a panel and it was actually a really good panel, but a lot of CFO conference panels, it was a little dry, she was not. So I actually acknowledged the fact she was sitting on the far right end as a bookend to this panel and she brought a lot of personality to it and I noticed it. It was actually quite funny to me. So then I did my presentation, I do what I do and this individual Ana walks up to me and she says, can I get your presentation? She said, you know who I am. I crack up LA the gagged, I just saw you. You are awesome. What do you want? And she said, can I get your presentation? And then she walked me through why. And so we built a relationship just based on mutual admiration in terms of our ability to have a fun and intelligent, less boring conversation about all things finance and software. That's how we met.
Guest 1: Ilana Esterrich (07:10):
And then over time, VIN has some great ideas about how to implement. And so if his slides were like, I need to steal those slides. So I actually didn't ask you for the slides. I said, I'm going to steal your slides. And because I was so enthralled by what he was presenting, it didn't occur to me to take photos of the slides, which is what everybody does now. I asked for permission to go and steal those slides. And then over the last two years we've engaged in some philosophical discussions and debates and we are aligned from the practitioner side, which is where I come from and the vendor side. And it was a very illuminating discussion to see how traditionally we disconnect. And through discussions with vin, we just found we kind of coalesced in an opportunity where both sides could actually meet in the middle and we think it's something that we want to share with everybody.
Host: Paul Barnhurst (08:04):
So I know the two of you are working on a book together. I'd love to just get a high level overview of the book. What's the goal? Why did you decide to write it then? Could you just give me a little bit about it?
Guest 2: Vincent Messina (08:15):
Yeah, it's a great question. So the goal of the book is starting off with why ROI is really the killer of finance transformation theoretically, as well as practically understanding the history of it, understanding the history of enterprise software and transformation and really the failure rate. But then it transitions into a roadmap for success, practical tools based on a formula and a model that Ilana and I put together last year based on our individual experiences. So the book is not a theoretical conceptual point of view, it's a, Hey, this is not working and why is it not working? And then, well, what can you do now in order to get more out of your technology purchase and your actual transformation implementation and change? The book is a formula based on this basic roadmap sort of framework, and we just elaborate on the realities of life today, how it can be different, why it should be different, and then what to do next. And then we give contextual representation of CFOs in different positions. So it's a practical with some theoretical and some common sense.
Host: Paul Barnhurst (09:19):
Thanks. Appreciate it. Anything you'd like to add along to the book about the book?
Guest 1: Ilana Esterrich (09:23):
It's going to come out at the end of the summer or early fall, and we're anxious to share it with the world.
Host: Paul Barnhurst (09:28):
Are you close on the writing part into the editing or
Guest 1: Ilana Esterrich (09:32):
We're in the final edits and we will be working to finish up the cover and all of the publishing details and you'll start to see marketing of it on LinkedIn, on Substack and on our website shortly.
Host: Paul Barnhurst (09:45):
Oh, exciting. Congratulations on that. Always a big challenge to write a book. So something you both mentioned and where I want to go a little bit, and I know we'll have some kind of follow up questions to this, and I know Vin, you and I have talked a few times, I think it started with a comment on a LinkedIn post, Elana, is that the whole idea ROI is you want to call it false narrative, you want to call it garbage, can't remember the exact term you used, but something we shouldn't be using. There isn't real value in using the current ROI method. So let's start there. Give me the, we'll let Ilana go first and then I'll let you share a little bit from the software side. Give me the reason that you've done a lot of transformations. I'm sure you've done more than one ROI calculation being a CFO. Why do you think that method doesn't work with software and transformations?
Guest 1: Ilana Esterrich (10:34):
So it is really hard to calculate that when on a mathematical basis if you are still doing the same things you've always been doing. And so the math doesn't always math and we walk away from great opportunities because the math doesn't math in our current configuration, the purpose of the book and the purpose of the work that I'm doing with VIN is before you get an ROI, you need to be looking at the return on change. What are you going to do differently? What are you going to stop doing? What is the solution that you're purchasing and how are you going to realign attention such that your implementation will then return a positive numerical ROI in the normal traditional calculation of the ROI.
Host: Paul Barnhurst (11:21):
Got it. So you mentioned starting with change, anything you'd like to add there?
Guest 2: Vincent Messina (11:28):
Yes, I would. That was great. And what I would add is this, when you asked the question about what makes good fp and a, we talk about strategic value and Ilana talk about influence. Well, as it turns out, transformation and change is driven by understanding the why do we need this and what is the value for people across the organisation? What are we doing to drive consensus? Consensus operates at different levels. You have the consensus of the leaders, you have consensus of the middle and you have consensus of the bottom. And consensus can vary in terms of, yeah, I'm participating in this or no, I reject it wholeheartedly. But the reality is is software decisions fail because of lack of consensus. Transformations fail because of lack of consensus, which is really trying to understand why are we doing this. So when you ask the question, why change and you focus on ROI, keyword here is myopic, ROI in ROI says, I want to know what the return is going to be on the investment.
(12:25):
And I'm simply saying there's so much more to consider because the investment is really transformational. So we say return on change because the change is what you want to factor into your decision and then your project going forward because it answers the why in such a way that galvanises people around a shared sense of value and urgency. And that's really mission critical because I'm not suggesting mathematically ROI is a failure. I'm suggesting mindset wise perspective on it. I'm going to implement technology and I'm going to get a return. No, actually you're not because nobody's going to change the way they work just because you bought technology. So the change is what drives the return. So why not just stop there?
Host: Paul Barnhurst (13:11):
Okay, so you start with change and I just want to make sure I understand this. So walk me through when you say start with change, what you mean by that when you're pitching this product is a persons supposed to go in and say, Hey, here's all the changes we're going to make versus kind of here's the ROI or here's the map number. How does that kind of work?
Guest 2: Vincent Messina (13:29):
I'll answer this. Yes. So if I don't understand fundamentally the workflow change that I am going to expect when I implement the software, what happens is I implement the software and people reject the actual workflow change. I haven't really addressed it up upfront. So I'll give you an example. I reconcile my bank statements, my balance sheet, my cash balance sheet accounts. Today I do this manual spreadsheet and I got all these bells and whistles in my spreadsheet macros. I got an import, I got an XY, I got all this wonderful stuff and now I'm coming in and I'm saying we're going to take that out of spreadsheets and what we're going to do is we're going to pop it into this automation tool. Why are we going to do that? Well, we're going to do that because it's centralised. It reduces the need for emails back and forth.
(14:10):
It's going to automate some of the population in a different way. But if I don't address then what's next? If we are successful in doing that, what does that mean for the person that had been using that spreadsheet? Well, it means we either don't need them anymore or even better and more valuable, they can do something different. What is that different? Well, the difference is I'm now going to go evaluate that company for my next acquisition. So what I've done is I've said, oh, I can make this more efficient and put the balance sheet reconciliation on autopilot, but now what? That's my ROI. Well, no, I want to know what is that individual going to do next and what is the value of that? And more importantly, what's the cost if they don't pivot and shift over to that acquisition? Am I overpaying for that acquisition? But the transition is what is the work they're doing today and how is this technology going to move it so that I can have them doing something else? I can give you other examples, but that's the best one, the easiest way to see it.
Host: Paul Barnhurst (15:06):
Got it. And so Ilana , anything you want to add to that? Any thoughts there?
Guest 1: Ilana Esterrich (15:11):
No, I think VIN is very passionate about it. He does a great job of explaining it. It's essentially, I feel that ROI is very limiting. It's a very one-time flat metric and as a CFO, the idea of being able to calculate change and actually show how we are moving the dial and how we are doing better, more value added work is the value of return on change versus ROI as an absolute metric.
Host: Paul Barnhurst (15:38):
So if I get it, so if you're trying to show to the CEO, you've done your big implementation, ERP planning tool, whatever treasury tool, we could probably list a dozen different ones. You've done a lot. How do you show them? You mentioned mathematical, what are you showing them on the return on change saying, Hey, we are able to shift this person's time here. How do you think about that? I mean some of that depending on who you ask, you try to get some of that on return on investment. There's a lot of subjectivity to that. So how do you think about that when they ask, okay, what's the return I got and they want to see numbers, they want to see some math. How are you thinking about that?
Guest 1: Ilana Esterrich (16:15):
Okay, so let's take a fictitious treasury example.
(16:19):
You implement a treasury management system, you can pick treasury management system A or you can pick B and a has lots of bells and whistles. It does global, it does multicurrency, but you're not multicurrency and you're not global and there's a lot of bells and whistles that you're not going to leverage, but what you really need is reconciliation. Okay, so ROI would say I would go with B because it's very simplistic and it will just do the reconciliation that we need because we don't need all of that other stuff, right? That's just plain math there. However, when I take a look at the team now doesn't have to reconcile manually 20 different banks and it takes 15 days to do. They can be doing reconciliation in real time. Now my treasury team can focus on working with the investment bank to make sure our reserves are being properly invested in.
(17:11):
They can work on developing cashflow forecasting that I can then take into senior management. And so the change is that we now have not just bank reconciliations automated. We now are able to do very different work. We are able to elevate that to management for decision making and we can do it in a timeframe that is actually usable for us, not 30 days after month end close, but in real time at any given time and it's a capability that we didn't have before. So an ROI would take a look at that software and say, did we get a return on that? Return on change? We'll talk about everything else of the value of investing into that new system or process.
Host: Paul Barnhurst (17:55):
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(19:12):
You really also need to be looking at what does that allow us to do beyond that? A fair
Guest 2: Vincent Messina (19:18):
Yes. Can I add something? That's right. I was just going to go there, Paul,
Host: Paul Barnhurst (19:22):
Go ahead. Yes, you may add something vin.
Guest 2: Vincent Messina (19:26):
So I start this whole dialogue off with the idea that it's not mathematical, it's a mindset shift. Think this through for a moment. What's happening is people will say, yes, our team will be able to do strategic work, and then they move on with their lives. They forget that they should actually document what does that mean for us? Which is why when you go back to what Ilana said by doing the work upfront, you start to now think through the lens of the change what it's going to get for me into your question, why isn't that necessarily happening now and why are people sceptical of what I'm saying is because they don't think this way. The idea behind my entire being right now is to get people to start thinking, if I think this way, I will document this way, and if I document this way, I'm going to be looking at the value in a much different way.
(20:13):
And so I'm going to be adding the narrative and the dollars to these things that basically I'm starting out saying the value of this project has nothing to do with the software, it has to do with this change. These people are going to stop doing work A, and they're going to start doing work B, and the moment I document work b, I now have a much different narrative and because that doesn't happen, the difficulty in assessing a realised gain, going back to my days in accounting school, realised versus or recognised versus unrecognised, the idea behind it is you now know what you're looking for because you've basically said, I need my people doing work B, and now you are purposeful in that shift versus just making it random. Yeah, I just want 'em to do strategic work. Well, what does that even mean? What I'm saying is document it.
Host: Paul Barnhurst (21:02):
Yep. So there's a couple areas I want to go and I know we've kind of been going down a little different path than some of what we laid out, but something mentioned earlier and I'd love to get your perspectives on it. Then we'll come back to this ROI. You've used the term several times transformation, which I hear all the time, right? Digital transformation or finance transformation. How often do you think it's really transformative? It feels like me. That's just a buzzword. It's an implementation. You put it in new software, there might be some changes even if there's some big changes. Software is really in my mind, not what transforms an organisation. It's a lot more to do with mindset, your people, your culture. So I'd love to just give you guys so I see you nodding your head and I can tell you're just waiting to say something here. Love to get your thoughts. I'll be honest, I'm not a big fan of the term trans. We've been doing transformation science.
Guest 2: Vincent Messina (21:53):
Yeah, yeah,
Host: Paul Barnhurst (21:54):
I'd love to get your thoughts on that. I
Guest 2: Vincent Messina (21:56):
Want to go first.
Host: Paul Barnhurst (21:56):
We've been very excited, so I'm going to let go first here. Yeah,
Guest 2: Vincent Messina (21:59):
I'm going to go first because this is a definitive element of how I got here in the first place. Years ago, an organisation that had since been bought by Gottner suggested in a white paper that CFO transformations fail essentially for one big reason, people did not shift and do different kinds of work, so they were not providing the different services to their internal customers and they were not reshaping what the internal customers expected of the CFO's team. It's definitive, right? It's like this is why it fails. And so absent that shift, absent that repurposing of people and getting a different return on your talent, there is no such thing as transformation. That's to address the word transformation. What does that even mean? The second piece is transformation is bogus concept in my view, and I'm going to tell you why. It's implying that there is a starting point and an ending point and there's no such thing in the world today I'm shifting to, and Ilana and I are going to be shifting to the word evolve.
Guest 1: Ilana Esterrich (22:56):
Evolution
Guest 2: Vincent Messina (22:57):
Because it's a constant state. People say continuous improvement, but what does that even mean? It's because you're evolving constantly. There is no starting point outside of sub-projects inside of that period of evolution. But in today's world, as AI comes in, as AI goes out, whatever the new shiny squirrel is, the reality is there is no time to even contemplate not changing. You always have to be looking at it. You always have to be making these decisions. So the word transformation to me is fictional because it implies that there is at some point going to be an end state.
Guest 1: Ilana Esterrich (23:38):
I have nothing to add to that other than to use a math comparison is evolution is asymptotic, right? It will never approach zero, so that's never getting to that final line. You're just continually curving down. And so I totally agree with that. Transformation I think is overused and it's also unfairly putting pressure on finance teams to do more with less, which I think should be different with better or better with different. And it's unfair to folks that are really working hard to say, well, not good enough. We're going to transform. I think a much better approach to it is we're going to continue to evolve and that opens the aperture for everybody to add something to ensure that we are only doing the right work for the right reasons at the right time with the right tools and the right people. Transformation I think is fundamentally unfair to the folks doing the work.
Host: Paul Barnhurst (24:35):
Interesting. I'd never thought of it as fundamentally unfair. I don't know that I disagree. Let me give that a little more thought, but I get the idea. I've always felt like it's more of an evolution, so I'm aligned with you there. I agree. Kind of return on change. Obviously there still has to be a mathematical calculation, but you need to be looking at the whole thing. But let's talk a little bit about mindset. We know most implementations, evolutions, if you want to call 'em that, although if it's a finite software project, it's kind of hard to necessarily call it an evolution. So let's just for the moment I'm going to use implementation of software as the term here. Why do so many fail? Is it the calculation? I think there's two sides to this and I'd love to get your thought. There's those that fell from how we calculated getting our dollars out, and then there are those that fell because they're not used, they're not successful, and often they go together, but not always. Someone may declare victory on an ROI, but the reality is the software was never used much and maybe they did get a return, they got a really great price, was used for a couple years and then it went the way of the year, whatever. So I'd love to get a little bit of thought here and I'll start with you, Ilana .
Guest 1: Ilana Esterrich (25:46):
Actually, I'm going to pass it over to Vin because you've laid up the premise of our book again, so Van over to you on this one. Yeah,
Guest 2: Vincent Messina (25:52):
So there's a couple things that have interesting and embedded in that question. The first thing is the world both on the buyer and the seller side. If you go to any vendor software side up in the right hand corner, it says request demo, right?
(26:07):
So the world is fundamentally aligned to I'm ready to see the demo of the product. A whole lot of problems with that. One of 'em is people oftentimes think that the demo is going to enlighten them on them. Fundamentally starting point for the era is they don't really assess the problems in a holistic way. That's the big picture. So they don't really take the time to understand precisely what's actually going on now, why is it a problem and what needs to go on down the road. So they go into the software demo without really fundamentally understanding how does any of what they're seeing align to what's going on with them. Second piece is they do assess things or they think and they want to jam the software on top of whatever it is they're doing without really have a fundamentally contemplating why do we do it this way in the first place?
(26:59):
And so that's sets the stage for the last 30 years of articles on why software implementations fail. The third piece is people fall in love with software demos. And so if you are a really effective sales presenter, you can sort of manipulate the crowd into thinking this is really what they need. And in reality, that's the wrong approach, both from a vendor perspective and the buyer perspective. In the world of SaaS, it's disastrous because people buy your stuff and they don't really use it, which creates all kinds of problems downstream in terms of revenue acquisition. But then you get past the purchase, you get implementation because you haven't really addressed the why at a holistic level, which is instead of the return on I return on investment, return on change, people lose momentum. People forget why they did this in the first place. Decisions have to be made that are not made because nobody knows who's making them.
(27:52):
Executives transition in and out and people are constantly having to reassess why did we do this? And instead of actually going back and answering it, they just say, we're too busy or they just get too busy. But the fundamental problem is built off these things that I'm talking about. And then you have to factor in types of solutions. You have the, oh my God, we're going to die if we don't buy this software. And then you have the bottom in that says, yeah, whatever, that's somebody else's problem, it's not mine. And in the middle of that, there's varying degrees. So you have to factor that in because sometimes software is mission critical and everybody is aware of that. So it works. This is just what we have to do. The vast majority of software solutions are not in that category. And so everything that I'm telling you now at the highest end is why these projects don't really take off.
Host: Paul Barnhurst (28:38):
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(30:11):
And let's start from the company side, not the selling, the CFO, the FP&A person who's ever championing it. Kind of walk through how you see success, how this process should work.
Guest 2: Vincent Messina (30:25):
Okay, so I'm going to try to speak as briefly as I possibly can because that question could take us on an eight hour conversation, but I'm going to try to keep it simplified and summarised eight
Host: Paul Barnhurst (30:35):
Hours. Pick me up when you're done. No kidding
Guest 2: Vincent Messina (30:38):
Thing. First thing is you have to establish a why at an organisational level that says, okay, what's our mission? What do we need to do? What does high-end performance? What does top line performance mean to us? Is it revenue acquisition? Is it serving the audience that AL'S organisation serves? Whatever that is, we have a mission objective and the goal for everybody is to work together to optimise the achievement of that objective. That's sort of the starting point right now from the finance organization's perspective. You want to take a step back and you want to say and ask yourself, and then you want to go out and ask your team, what is our role in this? So everybody's doing all of these different things and we have a mission. Everybody agrees with the mission. What's our role? Okay, terrific. Now let's talk about what do we do today and what are the outcomes that we drive today?
(31:22):
And when you start to contemplate what I just said, I'm not talking about efficiency and I'm not talking about process. I said outcomes align to the strategic goals and objectives. What are the things that we do today and how do they help us do four things that are necessary and essential for all organisations. We have to compete, operate, control, and grow or thrive? Those four buckets are universal, okay? But here's the trick. Everything interacts with each other. And I'm going to use an example here to illustrate this point so that when you start to think through the lens of what do we do today and why is this so essential and how does it help my CEO execute his or strategy? If you have audit analytics, it's audit analytics. It's AI machine learning, it has different control variables that are pre-established. It sits on top of an ecosystem of software and technology and it assesses risk.
(32:16):
It's the tool of the chief audit executive or it's the tool of internal audit. You following me? It's the back office of the back office. So how do I make that relevant to the board of directors, shareholders and the CEO EO? Very simple. I execute the CEO O strategy in a much more effective way if my processes are clean and risk-free. What exactly does audit analytics do? It ensures that my processes are clean and risk-free, but I'm connecting it to the execution of the CGO strategy. Business outcomes are more important than process efficiency. That's your starting point.
Host: Paul Barnhurst (32:53):
So let me just kind of see if I can recap, kind of summarise what I'm hearing here. One, you got to know the why, and two, it's really about what the business outcomes are. Anything you'd like to add to that? Ilana ?
Guest 1: Ilana Esterrich (33:06):
Anything that I can do to move from control and operate over into grow and compete is going to create more value than to put more time in operator control. And we give examples of how you can move and it's a very fluid diamond that allows you to make changes and we provide a framework that allows you to measure that. And when you can measure something, it's much more appealing to the finance folks who like to deal in metrics. We
Host: Paul Barnhurst (33:35):
Like metrics,
Guest 1: Ilana Esterrich (33:36):
We love metrics.
Host: Paul Barnhurst (33:38):
And what's your favourite metric you like to look at?
Guest 1: Ilana Esterrich (33:40):
I want to see costs go down cost per
Host: Paul Barnhurst (33:45):
We all,
Guest 1: Ilana Esterrich (33:46):
But in every organisation it goes down to two metrics. Revenue per and cost per, right? And I want to see top line go up and I want to see bottom line go down.
Host: Paul Barnhurst (33:54):
I like it. So you want the margins to increase, not compress.
Guest 1: Ilana Esterrich (33:57):
That's right.
Host: Paul Barnhurst (33:58):
Shocker is a CFO. You'd want that.
Guest 1: Ilana Esterrich (34:00):
It is a shock, isn't it?
Host: Paul Barnhurst (34:02):
No, I mean it makes total sense. How do you see AI impacting the way people buy software? I mean, I know you have your approach, you're teaching, we talk about ROI, right? We're seeing all this new pricing, outcome-based pricing, which makes the calculations easier if everything's an outcome-based price in the sense of, okay, here's how much value I've got from this outcome. What's your thoughts on how that may change the way we buy software? So not so much your framework, but just I'd love to get your thoughts first on AI and this outcome-based pricing and the world we live in now. How do you think it might change some of the way we think about and buy software? And I'll start with you. I'm sure you've seen some of this as we start to see all these AI products and new pricing approaches.
Guest 1: Ilana Esterrich (34:51):
Well, I'll tell you that I'm on my second conference this week, and the hot topic for CFOs is ai. AI is going to save the world. And yet the number one topic is we cannot justify the ROI. That has been the last three days. It's every session has been on ai and the CFOs are, we understand at the highest level of the value, but we are not necessarily seeing the impact come through or the savings come through. And everyone is struggling with this. And I was really surprised. I would've thought that we would've jumped on board and said, this is going to be amazing, but we're having a hard time actually quantifying the value of some of the ai. We have chat GPT, we have Claude, we have perplexity, we have all of these tools, but are they actually saving us headcount? No, we're not seeing that.
(35:43):
Are people actually using it to build models? There are definitely on the parabola, some real advanced folks who are definitely using, those are going to be really big organisations. They tend to be very global. They tend to have a very deep bench strength on the FP&A analytical side. But what do you do if you're in the mid to small or if you're in a resource constraint environment? Like many mission-driven organisations like mine, AI hasn't really been implemented. We haven't done AI policies, and so we're caught in the backend in the tail, and I think there's a much smaller group at the tip of the spear than we think. And so I'm not a hundred percent convinced that we really understand how AI can really save us because we haven't seen it yet
Guest 2: Vincent Messina (36:28):
Somewhat controversial in that I don't actually care about the technology. I care about business outcomes derived from what people do or don't do with their time. And so when I look through the lens of ai, I look at it through the same lens as any other technology. What can this do to produce better outcomes from what my people do on an hourly, daily, weekly, monthly, annual basis? And so some examples obviously are freeing up time, getting things done better, blah, blah, blah. But if you just look at from the perspective of buying stuff, so when I go in and I'm helping an accounts payable software vendor, and I go into chat GBT and I say, well, what does ap, how does an AP process help A CEO compete on a global scale? So that question chat, GBT pulls out an answer. So if I'm internal and I'm A CFO or a controller or the AP director, I now have an answer that tells me how to make this decision and how to align it to the people that AP impacts.
(37:20):
I can do that not in six to 12 months, in three to five minutes. So just that alone. And when you start to factor in, I'm giving you one example of how much time is thrown out the window evaluating solutions and trying to make a decision. Just that one example says, I want to get my buying process nailed down. How do I do that? Here's an example of how I do that. Now what have I done it give you a fancy use case for chat GPT? No, I've given you a very specific use case for how to think through making an internal business decision on a particular piece of technology in making sure that I align it to what the goals and objectives of the corporation are.
Host: Paul Barnhurst (37:56):
And I can appreciate that the whole idea of, look, technology doesn't matter. It still goes back to the fundamentals. I get it. Ilana , you mentioned something that I'm not surprised. I know a lot of people are struggling with the RO. I mean, just like the vendors themselves are struggling to justify their valuations, right? We're seeing it across the board, the opportunity, everybody sees immense value in it, but I don't think from the vendors to the companies, very few people have recognised the value that everybody thinks can be there. So it'll be interesting to watch with AI and see how it unfolds. I think anyone who's honest sees tremendous potential and opportunity in areas that can help. And some people are getting incredible value out of it, but as a whole, the hype is still out chasing the potential value.
Guest 1: Ilana Esterrich (38:50):
That's true. And once we figure out how to get that value, there'll be some new technology or some new buzzword or some new flavour of the month that will take over from there.
Host: Paul Barnhurst (39:01):
Yeah, I mean when you hear trillion dollars for companies that are a couple years old, you kind of have to pause for a minute. So one thing I want to talk about, vin, you had mentioned this a little bit, and I'm going to get Ilana 's perspective as A CFO. First, when you and I chatted, you had mentioned how the need to make decision to execute for CFOs have been overwhelming. I think fp A sometimes fills that as well, and it's only getting worse. And I will share a little bit of something to support that is the average period of A CFO is shorter than almost every other C-level position studies have shown, which implies there's some level of burnout. How long they stay at a company is generally less. A lot is kind of nodding. And generally finance people, CFOs, I would argue we tend to be risk adverse. So you would almost expect it to be longer in the role because not maybe not as willing to switch or change and take that next risk. So I'd love to get your perspective. What's driving that? Just continued stress and pressure to execute as a CFO to do more and more?
Guest 1: Ilana Esterrich (40:11):
Well, the volume of data that is coming our way, the speed at which we are being required to make decisions. I'm not A-C-P-A-C-F-O, I didn't come through auditor accounting. I consider myself more operational strategy. I have to imagine that someone who came up through auditor or accounting and is more of an accounting based CFO is feeling an immense amount of pressure to build FP&A skills and build more analytic and influencing skills. The burnout, I think, for in general comes from it's a lot. And we are fully sitting at the right hand of our CEOs in a way that maybe in the 20 years ago, 10 years ago, we weren't. The pathway to CEO now comes up through the C ffo. We see everything from the left and right barriers. We see everybody's budget, we know where people are spending their money. We've done all the analytics.
(41:07):
I mean aside from the CEO and maybe the chief counsel, we know what's going on inside the organisation. That means that we're almost, and I know I'm going to get into so much trouble for saying this CEO light because we marry the strategy with the numbers and then we've got boards, we've got external stakeholders. If we're in a public organisation, we've got Wall Street. If we're a venture capital, we've got PE returns that are hounding us. And it is a lot. And if you are an army of one or an army of five and you have this incredible burden, you're actually running two C-suite jobs at the same time. And I'm not surprised that turnover is there. Now, on the flip side, there's an amazing amount of opportunity for CFOs because we can easily step into the CEO role or into the COO role. And if you're really good, you have an increased mobility. And so being able to ramp up or move into an industry that you are passionate about, so there's a good aspect to the turnover and then there's a negative aspect to the turnover.
Host: Paul Barnhurst (42:20):
Sure, yeah. There's usually two sides to every coin as we like to say. So how you look at it, vin, anything you want to add there from? Yes,
Guest 2: Vincent Messina (42:31):
Actually hilariously, I want to simplify things. So years ago, a partner at Ernst and Young said to my team, having never met me, if you want me to bring something to A CFO, make it so that a 6-year-old can understand it. Why is that? So Ilana sits as the CFO of an organisation. She's got about 800 billion internal signals coming at her to make decisions, and then she turns over this way and she's got about 800 billion signals from the outside coming at her. Vendors can't tell her the difference between what they do and what their competitors do or anything else, right? Then she's got to go home and fix dinner and then she's got to do what? She's constantly trying to figure out, what do I do next? The hilarity of what I did years ago was that CFOs that give me the time, say, why didn't I think of that?
(43:15):
That's pretty straightforward. That's the point. The point is, how do you make sense of a world that is dramatically more complicated now than it's ever been before, and the pace with which things change faster than ever, the political environment on a global scale is absolutely insane. And the fact of the matter is now the C-M-O-C-R-O and Chief HR officer are in varying degrees of success. They point to the CFO and say, top line revenue, just completely cratered. Can you help CFO's like, well, hold on a second. I'm the CFO. But to Lara's point, this is where the real opportunity to be a strategic asset to the organisation lies. But you still need a simple, simple way that makes the really complicated fast moving world manageable.
Guest 1: Ilana Esterrich (44:06):
Yeah,
Host: Paul Barnhurst (44:07):
I agree. Thank you for that. You have to be able to find a way to boil it all down and make it manageable, make simple decisions and take complex and try to keep as simple, as hard as that can be. Sometimes
Guest 1: Ilana Esterrich (44:20):
I love what I do. I love my organisation. I've loved all of the roles, the CFO roles I've had, but some days I really miss the simple days of being able to just come in and do my analysis, send my report as an analyst up to the manager. I kind of do miss those Excel days, those very simple days. But then other times I go home and I'm like, I love this job. And the key is to find your comfort level on that spectrum of like, oh, I can't do this and I love this job.
Guest 2: Vincent Messina (44:51):
Can I make a VIN in Ilana joke right now? That's probably appropriate for me, but maybe not for Ilana . I sometimes miss the days before Ilana , when I wasn't getting
Guest 1: Ilana Esterrich (45:05):
Vin, we get stuff done. So that's another aspect of good CFOs these days. We get things done, she does get things decided. We move the dial and we move the dial in a way that we didn't do 10, 20, 30 years ago.
Guest 2: Vincent Messina (45:20):
I say that as a joke, but there's a graphic that I shared with her of somebody that goes from point A to point B in a straight line, and then another person that goes from point A to B in a rollercoaster. She's the straight line, I'm the rollercoaster. I mean the day comes and goes, whatever. But the balance is hilarious because as I give her trouble about it, I do it in a way that's super affectionate, but also incredibly, I'm honoured and thrilled because she is pushing me to not be such a squiggly line.
Guest 1: Ilana Esterrich (45:48):
What flex is it then?
Guest 2: Vincent Messina (45:51):
Yeah,
Host: Paul Barnhurst (45:52):
Mostly. Well, thank you for that. I'm glad you two work together and help balance each other. That's always important. I appreciate the conversation on ROI versus change transformation versus evolution. I think at the end of the day, everybody should really think about implementation software and make sure you understand your why you're doing your homework regardless of how you decide to calculate it. You need to make sure you're looking at that whole picture. And I think sometimes we get a little myopic. So I appreciate the conversation. What we're going to do now is we're going to move into a brief FP&A section. And since vin, you're a software seller, I'm leaving you out of this section, but you want a couple of the get to know you that we'll go through briefly. So these are questions I ask everybody. I always love to get CFO's perspectives. What's the number one technical skill FP&A professionals should master?
Guest 1: Ilana Esterrich (46:45):
So I'm not going to say what everybody expects, which is Excel modelling and forecasting. I'm actually going to say that it's decision architecture. I think it's the ability to translate really messy operating data into a really clean set of choices that include trade-offs and timing and capital implications, and have those clearly framed. I tell fp and a, my fp a team that we are not in the spreadsheet business, right? We are in the decision business. And if you can't provide or structure choices and pressure test your assumptions and really kind of understand the second and third order impacts, then you're just reporting, right? You're just reporting history. So with the decision architecture, it's a skill that allows you to build models that illuminate decisions, not just impressive modelling. So I would say I
Host: Paul Barnhurst (47:35):
Like that Need architecture,
Guest 1: Ilana Esterrich (47:36):
Pretty architecture.
Host: Paul Barnhurst (47:38):
Alrighty. What is the number one soft skill? We need
Guest 1: Ilana Esterrich (47:41):
Intellectual courage. I think FP&A sits kind of in the intersection between let's go, let's go do stuff that ambition and then kind of constraint that finance is traditionally known for. So fp a sees when the numbers don't support the narrative. And I think that they need that intellectual courage to step in and say, stop this. This story is not real or this narrative is not where we should be going. Communication matters and curiosity matters, but I think courage is the multiplier.
Host: Paul Barnhurst (48:12):
I like it. I think those are two answers I have not had in the way you framed them, but definitely have had some similar on the decision side, but a little different than the decision architecture. So I appreciate that. Always fun to get different perspectives. Alright, this is a fun one. We'll see where you go with this. I'm guessing you probably don't get your hands as dirty much in Excel these days like you used to.
Guest 1: Ilana Esterrich (48:33):
No.
Host: Paul Barnhurst (48:34):
But if Excel removed one feature tomorrow, which one's causing you the most panic?
Guest 1: Ilana Esterrich (48:38):
I think power query or data connectivity. I think that one would cause the most panic. I think without kind of an automated data ingestion feature. I think teams then revert back to manual stitching and version control cable.
Host: Paul Barnhurst (48:51):
That's a really good answer and I like it because I have been working on loading one of my power query courses to a site today. So
Guest 1: Ilana Esterrich (48:58):
Your clean data, you lose feed and when you lose feed you lose relevance. So I think that would be where the panic would set in.
Host: Paul Barnhurst (49:06):
Alrighty, so we got about two, three more minutes left here and then we'll wrap up. Don't want to keep you too long, but we're going to go over to Vin. What do you like to do in your free time? What's your hobby when you're not? I
Guest 2: Vincent Messina (49:15):
Have a 13-year-old son and I have a wonderful wife, but in my spare time, in my hobby, I actually play the guitar. I study jazz, I study blues and I study rock and I play quite a bit whenever I can find moments and the guitar is always sitting next to me. So if I had to answer one thing, I read quite a bit, but also I do play music quite a bit.
Host: Paul Barnhurst (49:35):
Great. Love it. Alright, we'll throw this next one over to Ilana and then we'll come back to you again. Vin. So we've got to give her at least one question here. What is one non-finance book you would recommend for our audience? Ilana ,
Guest 1: Ilana Esterrich (49:50):
Anything that isn't finance related. You know what, I have about 30 tbrs the books to be read in my TBR Kindle. It's whatever's next. I am a voracious collector of books. I'd have to give that one a lot more thought just because I have so many books competing for my attention. What I will tell you that I can read about a hundred books a year, but where I get the most passion is to not read any kind of business book, just complete fiction. And I a murder mystery fan because I just can't do it all the time. So I really just need to disconnect with something that's just pure fiction.
Host: Paul Barnhurst (50:25):
I'm a young adult fiction fan, so I totally get it. I don't read a tonne of business books. I like to uncheck, so I can appreciate that then I know you were wanting to answer this one. Oh, go ahead. What's your book?
Guest 2: Vincent Messina (50:36):
Well, so in answering the question on what is a soft skill? The soft skill is influence because influence has to happen in order for the FP&A professional to actually get their job done and influence without authority. There's a book called Influence, it's written by Robert c Aldini, and it was meant to be a self health book, but it categorises human behaviour into six buckets. And it's a fundamental, unbelievable read because it will blow people's minds. But as you read through the psychology of influence and persuasion and all these things, you think about the role of an FDN, A professional that sits in the middle of an ecosystem of humans and technology and data influence. Robert Cialdini and there's one other book, the FBI negotiator Chris Voss. Never split the Difference. You cannot go wrong any human in any World Family organisation, it doesn't matter. This book will change your life.
Host: Paul Barnhurst (51:27):
Never split the difference. Great book. I had the opportunity to attend a small session of people where Chris Voss spoke to us. He was the keynote at a conference I went to and a couple of us that were involved got to have about 30 minutes with them where we got q and a. It was fun listening to people, asking questions and hear 'em talk. So that's definitely some good books there. Alright, I think we'll do one more and then we'll wrap up. So we'll ask Ilana this one first and we'll ask Vin if you could take any one person to dinner in the world, who you picking and why?
Guest 1: Ilana Esterrich (52:00):
Anyone who will cook for me and I don't have to cook or wash, do the dishes. I will gladly invite them to do
Host: Paul Barnhurst (52:06):
You just want a free meal? Got it. Without having to do any work, which I preach
Guest 1: Ilana Esterrich (52:10):
Work. I just want to be pet.
Host: Paul Barnhurst (52:12):
Just save me from having to cook. That's
Guest 1: Ilana Esterrich (52:14):
Right.
Host: Paul Barnhurst (52:14):
Then I'm going to guess your answer is a little more than that.
Guest 2: Vincent Messina (52:17):
Yeah, no, my answer is a guitar player named Nuno Bettencourt. But it isn't just because he's a guitar player. Nuno Bettencourt is the guitar player for Extreme and one of the top 10 rock guitar players of all time. However, he had my mother for junior high school science when he was 11, and he went on to be a rock star when he was 17 and never finished high school. But he wrote my mom a letter when she had cancer and he recognised that she was passing away. And I still have this letter in my desk at home, but Nuno Betten, one of my all time favourite guitar players in the world and just a phenomenal musician. Wrote my mom a letter validating her experience with him when he was 11 years old. And it meant the world to me because it meant the world to her. So I want to take him to dinner and I'd like to thank him for that letter and then pick his brain about how to become a guitar. God
Host: Paul Barnhurst (53:08):
Love her. So there's two purposes I can appreciate both.
Guest 2: Vincent Messina (53:12):
Yes,
Host: Paul Barnhurst (53:13):
Thank you. Alright, I think we'll go ahead and call it there. I just want to thank both of you for being on the show. What we'll do is we'll put in the show notes, your LinkedIn profile so people can reach out to you if you want. And really appreciate you carving out some time today to chat with me. So thank you.
Guest 1: Ilana Esterrich (53:29):
Thank you, thank you.
Host: Paul Barnhurst (53:31):
That's it for today's episode of FP&A Unlocked. If you enjoy FP&A unlocked, please take a moment to leave a five-star rating and review. It's the best way to support the FP&A guy and help more FP&A professionals discover the show. Remember, you can earn CPE credit for this episode by visiting earmarkcpe.com. Downloading the app and completing the quiz. If you need continuing education credits for the FPAC certification, complete the quiz and reach out to me directly. Thanks for listening. I'm Paul Barnhurst, the FP&A guy, and I'll see you next time.