I'm always fascinated to hear from a person who has a long history of finance systems and then makes the successful transition to a CIO role. Why? Because a great financials executive understands that the numbers are a gateway to understanding the broader business, a discipline that's rarely discussed in the hype around the impact of today's technology. Say what you want about the value of third party data, social data and what not, no business or organization can succeed unless its decisions are underpinned by a solid finance operation. And so it was I found myself on a call with Welles Hatch, CIO and SVP City Year, a non-profit that supports students in K-12 schools.
Hatch has held a variety of finance related roles over 20 years and you might think with that degree of experience, that his natural inclination would be to implement on-premises systems. Not so. Hatch has understood that cloud environments allow him, as CIO, to pursue a focused strategy of adding business value through specialized core competencies but at enterprise scale.
The only expertise we want is supporting the work. Network management and administration is something we can outsource efficiently. If you follow that logic then you naturally end up with the cloud.
But let's step back a moment to better understand what was going on at the time Hatch determined that cloud approaches would best fit his organization. City Year operates in 28 cities with affiliates in both the UK and South Africa. It helps support disadvantaged students; those whose economic or family circumstances are likely to have a high risk of failure to perform at schools grade level.
The intervention work we do comes in two levels. Tier 1 - we are seeking to improve the school environment, creating a more positive environment. Tier 2 - we're really tutoring, mentoring and coaching for students who are at risk of failing at the basics. We're very pointedly not part of the teaching staff. We deliver thorough a national service model, where we recruit young adults to work with us for 10 months. They're paid a stipend by the government. We're additive to the teaching process and like to think we're partnering but we're not administered by any authority.
Some six years ago, City Year engaged Deloitte to better understand the kinds of system it needed to operate efficiently at scale. That exercise led City Year towards cloud solutions. It started with CRM, looking at systems from SAP, Microsoft, NetSuite and Salesforce. City Year settled on Salesforce with its NGO Connect solution. The benefits are obvious:
All student data is tracked in Salesforce, including bi-monthly progress reports and benchmarking data to maintain a clear, real-time view of how students are doing. This allows corps members to create and implement targeted learning paths during tutoring sessions. Salesforce also keeps best practices at everyone’s fingertips. Since everything is logged in the tool, corps members in San Jose can see what teams in Boston and Miami are doing differently to help students.
Having seen value from one cloud based solution, City Year wanted more. Hatch says:
There was something of a sub-plot. At that time we had 15 cities and around $85 million in budget but we hadn't developed good business processes. We used the opportunity to introduce an environment where we carefully established and documented processes. In selection, we filtered for an established reputation of succeeding with a cloud implementation because we made a promise to users that if they can get to the web they can get to their tools. Simplicity for users but hiding inevitable complexity and the particular needs of fund accounting.
Hatch was concerned to ensure that the final outcome should reflect care and thoughtfulness in the way financial work is organized. They chose Workday. At one level I was surprised because NGOs are usually risk averse, largely because of sensitivity around fund raising costs and accountability. And let's not forget, these were relatively early days for Workday as a cloud based financials provider.
There was a decent amount of hand wringing but the user experience was hands down better than anything else. Dave Duffield (co-founder, Workday) presented and the CFO said 'That's pretty cool.' It was the logic and focus of the user experience that mattered alongside the rigor and consistent thoughtfulness of design under the covers. For instance, operating journals work on the principal that you can abstract account numbers to natural account names.
This may sound trivial and I recall that in the early days, this was not something to which I paid much attention. My bad because I can easily see how natural names makes a lot more sense to business managers than some arcane 30 character account block.
Throughout our discussion, I was curious to better understand how Hatch sees his part in the organizational support puzzle, especially as new software releases come around. In 2013, Workday changed its release cycle from three times a year to twice. At the time, customers were experiencing difficulty swallowing everything Workday had to offer. Hatch takes a nuanced view of the release and implementation cycle.
We bake in cyclicality for innovation. We can use the release cycle to simply turn on needed new functionality and/or focus on business process improvement opportunities and then use the release cycle as the method by which we get the improvements. It's true that there was a perception the release cycles were disruptive. I think the question is a matter of outlook and perspective. If you're not signed up for improvement then change will be disruptive. Put simply, you're either a body surfer or you're a toddler.
The inevitable question of analytics came up. This is the bread and butter of decision making and where I expect to see cloud solutions score heavily because they should provide information at the right time. City Year runs near 40 profit and loss accounts so this is not a trivial part of the overall finance equation.
Time matters - primarily in forecasting and budgeting - because we ask managers to manage, not to just act as recipients of information that finance gives them.
In this case, City Year uses Adaptive Insights, a solution which we have covered in the past and which has scored well in cloud environments.
As we closed out our conversation, I asked Hatch to offer his top three action items for anyone choosing modern finance solutions. On the surface they sound obvious but when you look more closely, it is easy to see that these topics can only be adequately answered by cloud solutions.
People use the term partner loosely but if you're thoughtful and serious, your vendor is capable of filling the chair on the other side.
The organization needs to be oriented towards change and have the capacity for change in order to make meaningful use of SaaS.
Use UAT as training material and make sure the orientation is around how you work not how you use the system. When you do that, the adoption risk is much lower.
Great advice on which to close out our conversation. Who knew financials could be so interesting?