Exceptional Value Is In The Sum Of The Parts…

December 2nd, 2016 No comments

The original goal when I started my blog was to bring an insight into financial strategies and operational disciplines that often drive the actions of the Finance team and why they often wanted to be involved in so many other parts of the organization. More involvement than just reporting what was happening in the other functional areas we work with. Quite simply, exceptional value is almost always created and driven by the entire sum of the parts and not just the actions of a single individual, department, product concept, or operating division. It’s all about the sum of the parts…the team that has been assembled to execute on a commitment made to the Board, Executive team…or a commitment to employees.
My point of view isn’t just based on a single company or a single experience of corporate success, but the pattern I’ve seen played out over a number of companies. Whether it’s been most recently at Cylance, strong financial and brand performance at DC Shoes, or aggressive EBIT initiatives during my time with a division of Schneider Electric, the exceptional results could not have been accomplished without the strength and commitment of a competent team. It always started with defining the mission and breaking down that mission into a set of directives that would shared across the functional areas. It was NEVER about closed door initiatives, secret meetings, or selective transparency on key topics. It has to be about clear communication, transparency, and honesty with the team on the direction that everyone is moving and the expected outcome. Measured, achievable, and sustainable changes to the business. There’s no room for short term thinking or decision making that alienates key team members.
In the case of MGE UPS Systems (Schneider Electric division), we were moving into some key periods for the company and were starting to see compression in our margins, our operating metrics, and ultimately the results we were reporting to corporate in France. All this while we were seeing massive fluctuations in just about all of our raw material prices, which at that time were primarily copper, lead, and steel. As a larger Executive team, and under the direction of our Chairman, we identified approximately 15-20 initiatives that ranged from increasing Services utilization rates, to improving battery pricing, to improving revenues in underperforming segments, as well as headcount related metrics and expenses. Additional initiatives included balance sheet management for the improvement of A/P terms, improving DSO metrics, and bad debt expense. None of these in any sense were a smoking gun, but as a collective and through the commitments of all the teams involved, we’d be able to make some very material improvements to our EBIT results. This overall initiative spanned the course of approximately 9-months and we met on a monthly basis, with our Chairman in attendance, and reviewed the progress being made on all initiatives. The reviews were not done on a 1:1 basis, but as a collective in a larger conference room. It was the purest form of group accountability. While a significant grind during that period, it was amazing to see that the team not only achieved the originally targeted results, but exceeded the commitment made. Still an amazing accomplishment by that team in what was a very mature / static company that was not experiencing anything close to hyper growth. It was about absolute efficiency in execution.
Fast forward to DC Shoes and this was about a huge amount of uncertainty. I walked into a situation where there was a heavily entrenched culture that was operating under the Quiksilver corporate umbrella, but operating completely independently and in a different location than the rest of the organization. A truly independent team and company. The goal going in was to partner with the new President for DC, as well as the likely relocation of the company to Quik HQ since the DC lease was expiring. At this time, barring some selective improvements, DC was a high performing brand, had tremendous additional potential, and was highly accretive to the overall corporate results. Corporate results that were driven primarily by the Quiksilver brand, DC Shoes, Quiksilver Retail, Roxy, as well as a host of smaller brands. DC’s continued results were so strong that it was a near impossibility to sell the brand due to the deleveraging it would create in the corporate P&L for what would remain and the subsequent results that would be reported moving forward. There was also the development of a full 5-yr Plan that had the DC brand growing to almost $500M, which in the few years after the brand was moved to HQ, would have exceeded the market cap of the entire company. The unfortunate part for DC is that while the brand was performing exceptionally well and aggressively growing market share, the sum of the corporate parts were anything but a synchronized and collaborative team. There was infighting between brands, selective support from corporate oversight teams, key executives making decisions they weren’t qualified to make for other brands, and ultimately, a complete scarcity of financial resources after extended periods of poor spending decisions and declining results. We know the unfortunate position that Quiksilver found itself in.
Cylance…a completely clean slate. No baggage. A complete blue ocean scenario to chart a path as a team and to start executing. We had a CEO & Founder who had an incredible security vision after decades of being told it wasn’t possible. We had a Chief Scientist that is probably one of the most brilliant folks that could have been chosen to head up our Research team. We had a CTO that was a CISO for a top telecom and moved his family from Australia for the crazy dream. An SVP of Product that was laser focused on building out the entire product team, while also building the product! We had a CMO that had a strong pedigree in security and did whatever it took to get the Cylance name out there…and in brilliant fashion. An SVP of Business Development that delivered on whatever was asked…including the collaborative and successful closing of the Dell OEM agreement. We had a VP of Professional Services that started generating revenue in our first Quarter. We had a VP of Legal that kept us out of the courtroom and played a key role in our corporate foundation. We had an SVP of Global Sales that partnered with everyone on the team to deliver the first $1M order…$10M order…crazy sales growth every Quarter, domestic team expansion, and international expansion. We finally got our first CPO that in just one short year oversaw employee growth of over 500 employees. I can’t imagine Cylance experiencing the level of success we did without the team and their amazing contributions. I can’t imagine that the team would have been able to share in the extreme success we did absent any of these individuals. Would there have been success, absolutely…but at what moderated level? Truly exceptional team results…and in the case of Cylance, exceptional value was in the sum of the parts.
Thanks for reading…
Jeffrey Ishmael

“I Have This Idea I Want to Share…”

November 18th, 2016 No comments

While I am still only a few weeks detached after deciding to leave my position with Cylance, I’ve been getting an endless flood of inquiries about the trajectory we had been on as a team, how the company had achieved some of the major milestones it had, as well as whether there were any lessons that I was taking with me and would carry with me into the next chapter. It’s true that the pace had been insane from the very beginning and that the success we had achieved as a team may never be replicated…at least not without the synergies the team had realized early on. I also know that Cylance will not be easily replaced as the experience has been nothing short of amazing. It’s not about finding a job. It’s about reflecting on what has been a life changing 4.5yrs and the desire to reflect on that experience and share with those that have been asking. I’m not sure how many “chapters” there might be, but this is certainly my attempt to kick it off..
While Stuart and I had known each other for a handful of years prior to Cylance, we never knew the depth of each others professional capabilities. I knew he was involved in Security and he know my background was in Finance….end there. What we did know about each other was the relentless nature in our personalities and the ability to suffer for extended periods of time on a bike…think more than 12 hours. Think dehydration, severe cramping, horrible weather conditions, and perhaps all at once. Situations that truly test your personality and whether you have the vision and commitment to see it through. With that said, Stuart shared his idea of a new generation of security and one that he had a team committed to solving. This new initiative was not just about the tech, but about changing the way people thought of security. Fortunately, I had a mentor of almost two decades that came from the security space and he quickly validated Stuart’s knowledge of the space and where he was headed. Combine that with two investors who had prior interactions with Stuart and I know that this was not going to be any ordinary start-up.
Start-up. That characterization that seems daunting to some and terrifying to others. You’re not coming in and inheriting a team…or for that fact, even a company. You have to build it with the team. There’s no other way around it. We had found early on that there were a number of people that were just not capable of surviving in a start-up environment. Whether vision, discipline, experience, inability to build their own client book…or whatever the element might have been, some fell victim to an ongoing exercise in Darwinism. It was truly survival of the fittest. As I had started as employee #7, or for anyone starting in the first 50-100 people, there is no place to hide. You were either getting it done…and getting it done right…or you knew it was time to move on. There was no coddling, no hugs and “it’ll be ok..”…but a relentless push for achieving the results. As I had learned and practiced at so many other prior companies, you delivered on what you promised. Period.
However, at that time in the company, there was also a deliberate avoidance, and an absolute disdain, for politics and silos. We all recognized that if we didn’t have a sense of cohesion in place, a commitment to an end goal, and the support of our respective team members, then we were going to fail. Period. It was in these early days that the support was absolute. Whether someone was getting married, selling a house, establishing new households, moving across the globe…that these conditions were supported…to ensure that we were going to be successful and that everyone was going to be along for the ride. We knew we were going to be on the gas and the pace was going to be relentless. The pace was going to have to be relentless if we wanted to establish a billion dollar company inside of a 3-5 year window. Now keep in mind, while the term “Unicorn” now is common, if not overused, it was not in existence until being coined in 2013. So in 2012 for Stuart to say that in a handful of years he wanted to establish a commercially successful company with a billion dollar valuation…he was dead serious and it wasn’t going to be a walk in the park. His vision, while aggressive, was not part of a herd mentality of wanting to be in some hyped “Unicorn Club”. His view was not about creating a tech that would get sold on the hope of establishing commercial success…NO…he wanted to establish a truly disruptive technology that would turn the security space upside down. He wanted to see the team create a tech that would just eat the lunch of first generation AV vendors. Period.
After having done a number of turnarounds, the thought of a start-up certainly was not intimidating. Considering the quality of the team we had, the wealth of experience that each of them was bringing to the table, as well as the collaborative personalities that each one of them shared, I knew that we had a very high likelihood of success in the launch of this company. The most difficult balance we were going to have to achieve was being fiscally responsible to mitigate burn, continue hiring the right individuals, and ensure we had the resources in place that would allow Stuart and the product teams to stay laser focused on their obsession to disrupt the security space. The team that had been assembled would absolutely be able to do that. There would be a further challenge in determining what the necessary resources were that should be put in place. As an example, I had just finished an SAP implementation at my prior company and clearly that was not going to be our platform of choice, but it certainly wasn’t going to be Quickbooks or some other bottom tier platform. The challenge would be to find the Goldilocks solutions for the first 12-18 months. No reason to buy the F1 race car when you couldn’t afford the pit crew and the track hadn’t been built yet…
After a number of emails, a few phone calls, and finally settling on an offer letter, it didn’t take much convincing to join this new start-up. I saw the vision, I believed in the vision, I believed in the team, and I trusted the team at the table. With that, and a few weeks later, Stuart gave me my laptop, let me know it had Quickbooks on it, and if I could get the payroll done that day. With that, as well as a payroll processed that day, I knew we were off to the races… 🙂
Looking forward to the next chapter..
Jeffrey Ishmael

How Do You Summarize 4.5yrs of Hyper-growth?

November 3rd, 2016 No comments

For my friends & family who have been watching my pace over the last four years, that pace has been relentless, and for the most part, all consuming. The 4+ years that I have spent at Cylance where I started as employee #7 and working on fold up tables in a living room had progressed to over 700 employees. Cylance has grown from an idea our founder shared in a coffee shop to now a multi-national company with operations in 10 countries and billings in excess of 9-figures, while protecting some of the most recognized company names.
As with most chapters, there comes a time to turn the page and start a new one. I’m so incredibly proud of the team I have been able to work with, what has been accomplished, and what they will likely continue to accomplish. The next chapter is not about quickly finding a new opportunity, but reflecting on the incredible experiences & team that I had the privilege of helping to create.

I look look forward to sharing the experiences I collected at Cylance & the insane hypergrowth pace we found ourselves in. From the early stages of transient office spaces, to system decisions, preparation for modest growth levels, financing rounds, vendor relationships, as well as the cultural challenges created in such an extreme growth environment. I leave behind an amazing team and know our paths will likely cross again and will look forward to that possibility.

Thanks for reading…

Jeffrey Ishmael

Who Is Your Go To Mentor When You Don’t Have The Answer?

August 20th, 2016 No comments

One of the staples that I have had in my career has been a mentor. Fortunately for me I was able to meet this individual and strike a good relationship, and friendship, that has lasted the better part of 20-years. He’s been there in my early career transition days where I was moving from Operations and Product Planning into a more Finance-specific track. In fact, it was his prompt that really directed me towards the Finance path I am on today.

While he has been a staple through those years, I’ve also aligned myself with people that I very much enjoyed both working with…and for. Folks that challenged me individually and people that I was able to learn from as well. There were three CFO’s in particular that I was able to work for that really challenged me and gave me all the rope I ever wanted…with the challenge presented that it would only by my actions that would cause my hanging. Fortunately I always kept the rope pretty taut…

However, as you move higher on the climb, the challenges become more pronounced and quite often the experience you bring to the table may not be sufficient to get you through the next challenge. This is when both the strength of your mentor(s), as well as the strength of your network, need to be of sufficient levels to carry you through. Each individual’s challenges will be unique, but still a minefield that needs to be walked and navigated.

In particular at Cylance, there is nobody on our team that has been through the kind of growth that we are currently realizing. From the increase in our billings, to the increase in our headcount, or the international rollout and rapid formation of subsidies. We’ve never seen anything like it, and typically have only come across it in a B-school case study. We’re living the case study right now at Cylance…

  • How do you accurately forecast growth when you continue to blow out your numbers and nobody has seen similar growth in quite some time?
  • How do you ensure that you’re preserving the culture, intimacy, and execution in the coming years that you’ve seen over the last 4-years?
  • What are your key metrics to measure and how often will those metrics evolve as the company continues to mature?
  • What are the key areas of risk that you need to have on the radar and keep a focus on regardless of how well things are going?

For someone that measures every watt, pedal stroke, and heartbeat when I’m on the bike, these are the things that I completely geek out on when measuring the performance and health of the Cylance organization. This organization is an athlete that will be continually be subjected to fine tuning and unplanned shifts. Shifts that will be influenced by our employees, our executive team, our investors, and the mentors that we all should have in place to successfully navigate a race that is ours to lose…

Who is your go to mentor when the race stakes get high?

Thanks for reading…

Jeffrey Ishmael

Is Your Corporate Security Worth The Cost of a Monthly Latte?

February 18th, 2015 No comments

I’ve had the opportunity to work with some incredibly sharp Finance folks, many of whom are able to deliver on their budgeted results regardless of what curveballs are thrown at them. Some are able to effectively deal with shades of grey while exhibiting a focus on what is best for the company. Others are rigid, run the company with an iron fist, and if not budgeted….it’s not going to be spent…no matter what. It’s the latter approach that I have seen quite often recently and it leaves me scratching my head as to the flawed logic that drives their actions.

As you can imagine, I’ve had the opportunity to watch our team deal with some of the most serious breaches, which are usually reported across most newswires. Breaches that could have easily been prevented, but are now going to cost companies a significant amount to repair, as well as have to rebuild their reputational goodwill with customers…or in some cases, spend more to offset the loss of critical IP.  In the midst of these breaches, I’ve seen companies argue whose budget will carry the cost of the response because it wasn’t part of the original plan. They sit and quibble about the lack of Budget dollars in the face of a breach where millions of records have been released or critical IP has been compromised.

Let’s back up though to a point in time prior to the breach. The Cylance team goes in and walks through our technology and displays its absolute effectiveness to the prospective customer. It is all too clear that our solution crushes the traditional antivirus “solution” and would either protect them from malware that has hit their competitors, or in the most optimal display, would have prevented the breach that had just occurred. They’re also shown the efficiency in which our platform operates and places a CPU load in the low single digits, which again, is at the opposite end of the traditional antivirus spectrum that typically has the CPU redlined under an attack. Let’s not even talk about the additional cost of incident response that have to be carried in the event of a breach, which is often in the range of $400-500/hr depending on the seriousness. Don’t like paying legal fees for frivolous actions? Try paying those fees when you know they could have been avoided for the cost of a latte…

As simple as this sounds, it really does come down to the cost of a latte…and this is no joke. Companies cater business lunches for “working meetings”, companies tend to get a bit loose in the wallet for other “business events”, but there is also the retort of “we don’t have any open spend for this area…”. So let me rephrase what you just said:  Are you saying that you don’t have any open spend equivalent to the cost of a coffee for each endpoint in your enterprise to ensure the security of your employee records, customer records, and critical intellectual property?

While I certainly don’t like surprises or unplanned spend, we are certainly operating in different times and need to be able to adequately protect the data and prior investments we’ve been entrusted with. It used to be a failed ERP implementation that might cost a CFO or CIO their job, but now it will likely be ineffective security spend and ineffective deployment that will cost jobs. When the situation has the absolute ability to effect revenues and jeopardize key data…the CFO has to be involved and do what is best for the business. Perhaps that’s something to consider when you’re sipping that latte during your transitional networking meetings…

Thanks for reading.

Jeffrey Ishmael

When Processes & Systems Are Put To The Test…

January 21st, 2015 No comments

Part of the enjoyment that I get from working at a “start-up” is that we essentially have a blank canvas on which to build the company, configure our systems, and define processes. Processes that are both needed, as well as in the best interests of the company. Essentially the establishment of a back office configuration that will support increasing growth as opposed to legacy decisions that are still carried out within a larger enterprise that are simply no longer adding any value.

However, until you’re tested, how do you know the decisions you’ve been making will be positively affirmed and be of value to the organization? From an operational point of view we’ve had a number of touch points that have tested our systems. Whether it’s been the growth of our employee base, the successful completion of our Series-B fundraising, or our accounting audit….we’ve had multiple opportunities to test our systems.

From an operational point of view, I’ve chose to run headcount in a VERY lean manner and instead invest in systems that would support the highest level of efficiency. I’m probably working with the smallest Finance & HR team that I’ve had at any company, yet we’ve continued to successfully respond to due diligence and audit requests that typically involve the generation of hundreds of supporting documents to validate what we are reporting. While tedious, we have the systems and processes in place to respond to these requests.

We’ve also had to strike a very fine balance between implementing system enhancements and the need to run the day-to-day operations. We could have easily put Commission and Deferred Revenue modules in place earlier, but with a focus on cash management and time resources, we’ve waited on multiple implementations until it was right for the business…not for what was convenient or bragging rights of extra system horsepower that ultimately sat idle in the garage.

The challenge we’ll continue to embrace moving forward is how lean we can continue to run while providing top tier business intelligence to the rest of the team and responding to the needs of our outside vendors and partners. While we might be currently smaller in revenues than most of the other companies I’ve worked with, our trajectory is on plan and we have a great operational foundation in place to support it. The satisfaction I get from testing our systems and processes isn’t much different than the Sales Director who gets that purchase order…it feels like a win. It’s great to be working with a team that’s always focused on the test and ensuring that daily efforts put us in the strongest position possible.

Thanks for reading…

Jeffrey Ishmael

What Have You Done For Me Lately…?

November 24th, 2014 No comments

While I don’t think that I’ve ever used this line in any seriousness at any time, it’s also a line that I strive for in my pursuit of results and ensuring that I can assist others in any way I can. The difficult part for any Finance professional is qualifying the results that you deliver to a company and the value that you continue to build. I specifically say “qualify” as we are constantly quantifying company results in the form of Budget objectives, KPI’s, and every other indicator we use to determine of the company is financially healthy and moving in the right direction.

However, in order to get to the point that you are delivering healthy financial performance, you need to have the right team and the right infrastructure in place. For our Sales team, there is only one metric for performance and answering the question posed above….it’s the continual stream of purchase orders. You’re either successful in delivering….or you’re not. Pretty straightforward. From a Finance perspective, I’ve always been fortunate to have a strong relationship with the President and the rest of the Executive team. Based on my feedback from this circle I’ve always outlined the deliverables that I would be putting in place for the Quarter, which are always supportive of that team, and ultimately, the strengthening of the company and its underlying foundation. I solicit feedback to ensure if there are any other items that I might not have on the radar and if I need to tweak my Quarter objectives at all. Hopefully that is never the case, but it’s always a good exercise to adopt.

As I’ve been interviewing more candidates lately for our next hiring push, it’s given me a reminder of where we’ve come in the last 2.5 years and the foundation we have been able to put in place. I still laugh at coming fresh off an SAP implementation at Quiksilver only to be handed a laptop at Cylance on my first day and being told it already had Quikbooks installed. At that point I knew we had a lot of work to do. As I look at where we are now with what I believe is a very robust platform with seamless integration between platforms, it actually surpasses many of the systems I have had at previous companies. As we continue to grow, our needs become more complex to manage and we adapt. We’ve recently just finished the implementation of our Deferred Revenue module, and with barely a break, are now kicking off the Commission module to manage variable compensation at multiple levels. I’ve also recently completed a complex forecasting module that models out a multi-layer deferred revenue view. This is not an offline Excel model where you’re just updating a few cells, but taking into account all the critical aspects of the business and surgically forecasting proforma cash levels.

As we move into our next hiring phase, we’ve also put into place a very solid recruiting and onboarding process. Also an element of a previous Quarterly goals layout. With this in place we can effectively fill our open positions as we continue to operate in a lean environment, but also without having to rely on outside recruiters that are more than happy to deliver a five figure invoice for each position they’re able to fill.

What I strive for daily is the ability to close each Quarter, and like the salesman that totals out his POs, I can tally up the deliverables I qualified at the beginning of the Quarter and know that myself and the team have pushed the Company forward in a healthy way and have delivered a solid level of support to the broader organization. That the efforts of the team have not just been about staying busy the last 90-days, but have been strategic and surgical in their efforts to strengthen the company. Hopefully that’s what we’ve done for the company lately…

Thanks for reading…

Jeffrey Ishmael

Categories: CorpFin Cafe, Management Tags:

2-Years and Marking The Milestones…

July 25th, 2014 No comments

It really is hard to believe that two years have already passed since the company was started, as well as equally amazing to see what has been accomplished during those two years. Coming in as employee #8, I still laugh at my first day sitting down with our Founder over a fold-up table in his living room when he handed me a laptop, tells me it has Quickbooks installed and if I can get payroll entered the next day. Welcome to the start-up world!

Fortunately I had already done an honest self-assessment and knew the dedication it was going to take to play a role in the building of this company and the necessary pieces I would need to put in place to have a solid foundation. I knew that I was going to have to hire people that had an equal dedication and focus. While Stuart was going to need to keep a laser focus on the product side of the house and assemble his technical “A-Team”, I was going to need to focus on everything else that would support that mission. I also knew that I was going to have to modify my approach and decrease the level of rigidity in my operational approach since we would have a heavily dynamic environment that was likely going to be changing on a constant basis. However, there needed to be one basic premise that everyone would need to operate under….Deliver what you promise. It becomes apparent, and very quickly, that there is no place to hide in a start-up.

In order for people to deliver on what was necessary we needed to have the proper tools in place. Two years later, it’s very satisfying to reflect on the systems we’ve been able to implement and track the progression of our business and the contributions of individuals. In many respects, while not the grandiose scope of SAP (thankfully), we have an incredibly robust reporting and forecasting structure that started with the implementation of Salesforce.com. We then added additional platforms that have resulted in a seamless flow of information from identification of an opportunity to final invoicing. We’re in the process of implementing additional functionality with the addition of a revenue recognition module to track what is a rapidly growing product offering.

Systems and reporting aside, how can you not be motivated to deliver when other members of the team have developed a fantastic product that is not amazing in our own minds, but being recognized throughout the industry?!?!

  • Cylance was the runner up at the 2014 RSA Innovation Sandbox program. This was only 18-months into our existence as a company. Amazing!
  • Cylance has just been named one of CRN’s 2014 Hottest Emerging Technology vendors.

When I look at the customer base that we have assembled I see a virtual mirror of the customer base that I was servicing during my time with a Schneider division that supported a variety of customer ranging from SMB’s, to Large Enterprise, and Government. We had a $125 million Services & Product business that employed over 300. While we are still on the upward revenue trajectory, it took them decades to build a quality customer base…and we’re 2-years in. Really a fantastic accomplishment!

It’s all the base hits along the way, and the reflection of those, that really keep me motivated and excited about what lays ahead for Cylance.

  • The creation of a team that is intensely focused on delivering the Cylance mission.
  • The establishment of a successful and profitable Services business
  • The creation of a truly industry disruptive technology that is already being embraced by a notable customer base.
  • The continued development of relationships with key financial partners, as well as new partners brought in during a successful Series-B.
  • Establishment and collaboration with Board level committees adding additional oversight to the business.
  • Successful onboarding of a key accounting partner for additional oversight & auditing.
  • Successful onboarding of a new Director of Human Resources and the continual building of an already successful program.

It’s been a pretty darn fantastic ride over the last two years and I can only imagine where we’ll be in another two years with the team and partners we have in place. The only thing that will limit us moving forward will be the limitations we place on ourselves and our inability to properly plan for the success ahead.

Thanks for reading…

Jeffrey Ishmael

The Value Of The CFO As An Operational Partner…

June 11th, 2014 No comments

For those that have followed my posts over the years, I have always been a strong advocate of the CFO not just being the financial partner to other functional areas, but a true operational partner. It was great to see the recent article in CFO.com, “Double Duty”, outlining the trends of CFO’s assuming the role of COO.

http://ww2.cfo.com/leadership/2014/05/double-duty/

While some might view additional title as a bit of a “land grab”, it really comes down to the CFO’s desire to partner with the other stakeholders in the company and provide as many tools and insights, which are aimed at increasing the financial & operational performance of the company. One of the statistics mentioned in the article was the decline of the COO role at companies, which fell from 48% in 2000 to 35% in 2013. As one person interviewed mentioned, It was a layer of management that caused the CEO to be a step removed from the business at times”. While it will not always be the CFO that necessarily assumes the COO role, it will really depend on the type of company and the how specialized the underlying COO responsibilities are. However, as I have also mentioned in prior posts, it’s critical for the CFO to be involved in the daily operations of the company in order to quantify what the developments or strategy changes will mean to the Forecast and reported financial results. It’s about working with the broader team and ensuring that the deployment of resources are appropriate to support the mission at hand and that all areas are aligned in their execution. By being involved at the operational level it’s pretty easy to see where promises are being made to customers, timelines are being communicated, and expectations placed on internal resources, and if all the parties aren’t working together….then what that will mean to the actual achievement of the Forecast.

Whether my role has been at a mission critical IT infrastructure company, Retail and Apparel, or now Security, the focus has always been on ensuring that Finance is truly operating as a strategic business partner to the other functional areas. While there was always some level of resistance in the beginning, it ultimately developed into a great relationship and one that was valued on each side. In instances where that wasn’t the case, then it was usually due to underlying agendas and actions that weren’t ultimately in the best interest of the brand or company.

My involvement from an operational aspect has also been to achieve further clarity to all the inputs contributing to the achievement of the Forecast. The worst disservice a CFO can bring to an organization is to treat the forecasting process as simply a spreadsheet exercise driven by assumptions cells that are updated to provide the desired output and then push out the changes to the rest of the company. It’s about being involved and knowing if the assumptions are achievable, sustainable, and if not in the long-term, are there operational changes that can be made to ensure they are.

Part of the value I’ve always strived to bring to a company is the implementation of both financial and operational platforms that deliver sustainable results. Results that are not the product of short-term or one-time low quality deals or internal cuts, but platforms that create longer term relationships and financial results. In the end, happy customers that are properly supported by their chosen partner…us.

One of the closing points brought up in the article, and one I’ve also always tried to see realized, is the “CEO understands that the overall risk to the company will be diminished if the CFO has some direct involvement”. If you’re ultimately striving to operate in a “company first” environment, then it’s not just the CFO that can provide this value, but every member of the team.

Thanks for reading…

Jeffrey Ishmael

CFO’s & Cyber Risk: Protecting Your Performance…& Shareholders

May 2nd, 2014 No comments

As a CFO, I can’t help but be a bit shocked at the recent article on CFO.com “CFO’s Disregarding Cyber Risks”.  In my position, and more in relation to my past positions, my involvement with IT-related activities typically centered on the ongoing assessments of our ERP platforms, annual budgets, necessary capex, and the standard operational issues. I can honestly say that cyber risks were really not part of our ongoing concerns, nor was the topic ever tabled by the rest of the senior leadership team or the Board. We also weren’t planning in an environment where billion dollar breaches were being reported in the press.

Fast forward a few years and it’s hard not to take note, and initiate an elevated level of planning, in the face of the Target breach that occurred just prior to the Holiday shopping season. I don’t care what industry you work in, any CFO should take note of a company which, in a single Quarter, revises their earnings estimates down by 25%, or approximately $250 million. How about a revision in revenue estimates that takes the topline down by almost $1 billion….in a single Quarter! Even more importantly, at the time of the revisions, the company was unable to assess the potential impact of the breach beyond the current Quarter. That event by itself should have every CFO looking over their shoulder and considering the proverbial “what if”. Evidently not…

In the recent article on CFO.com, which drew 600 responses, CFO’s ranked data privacy only 12th on their list of corporate risks. In comparison, data privacy ranked 26th on their list in 2013. While the level of importance is rising, it’s still not being given the proper level of attention. At the top of their list was legal and regulatory shifts. In hindsight, I would love to have someone provide me an example where legal or regulatory changes resulted in an immediate and material revision to earnings or revenues. These are typically changes that are discussed over extended periods and phased in, thus allowing the company and shareholders to digest the resulting changes in how the company reports its results. This is in stark contrast to waking up and realizing you’ve just compromised the privacy for 70 million of your customers in the most critical shopping time of the year.

What was also concerning about the article is that 57% of the respondents weren’t analyzing whether they had enough cyber insurance coverage or weren’t undertaking additional key activities to sufficiently mitigate the risk of cyber risk. This was not only happening at the senior leadership level, but at the Board level as well. While the public and general investing community is aware of the breaches that are reported in the press, I know I have taken an entirely different approach to my personal cyber security as a result of the work I see our team doing across a wide spectrum of industries and with companies that are very recognizable to us all.

As a CFO, if you want to ensure that all of your costs saving initiatives and EBIT performance aren’t compromised, the investment in a security solution will pale in comparison if you do encounter a significant breach…

Thanks for reading…

Jeffrey Ishmael