CFO INSIGHTS ON

ENTERPRISE INNOVATION:
FINANCE’S ROLE
2 I CFO INSIGHTS ON ENTERPRISE INNOVATION: FINANCE’S ROLE

IF YOU’RE LIKE MOST CFOs, you’re playing an ever-increasing role in driving enterprise innovation, but
you and your finance team still need to evolve in this role. Innovation is essential for company survival,
and CFOs are essential for innovation done right. The CFOs we spoke to for this report told us again
and again how important it is for senior finance executives and their finance teams to make innovation
a priority. As one CFO put it: “We either innovate or we become irrelevant.” Without CFOs providing
the right leadership and direction, enterprise innovation initiatives will inevitably fall flat or the wrong
initiatives will divert precious resources away from worthy innovation projects.
For this report, CFO Research examined the role of finance in enterprise innovation through an online
survey of 236 CFOs and other senior finance executives, as well as interviews with seven CFOs of
publicly traded, mid-cap companies:

• S
 hawn Duffy of Viasat Inc., a global communications company and satellite operator in
Carlsbad, California

• J
 effrey Farber of The Hanover Insurance Group Inc., a national property and casualty
insurance firm in Worchester, Massachusetts

• O
 livier Leonetti of Zebra Technologies Corp., a Lincolnshire, Illinois-based global provider
of hardware and software solutions, including mobile computing, scanning, printing and
internet-of-things offerings

• Dennis
 McGonigle of SEI, an investment technology and asset management company
headquartered in Oaks, Pennsylvania

• Brian Miller of Tyler Technologies, a public-sector-focused software company in Plano, Texas

• Eddie Northen of Rollins Inc., a pest control services company in Atlanta, Georgia

• Aldo Pagliari of Snap-on Inc. tools in Kenosha, Wisconsin

KEY POINTS FROM THE RESEARCH

• CFOs fall short when it comes to applying advanced analytics and creating finance
teams to support innovation

• CFOs recognize they and their finance teams need to evolve to better support
innovation decisions

• Some CFOs are creating dedicated teams within finance or embedding finance team
members to better focus on enterprise innovation

• CFOs say diverse skills and experiences on their finance teams, along with analytical
skills, are critical to better support innovation

• S
 enior finance executives increasingly play a key role shaping growth and innovation
strategies

• CFOs need to make sure that innovation is strongly tied to strategic business objectives
3 I CFO INSIGHTS ON ENTERPRISE INNOVATION: FINANCE’S ROLE
THE NEED TO DO BETTER
When it comes to enterprise innovation, the
finance function is falling short in making sure that
decision-makers have the information that they
need, according to the survey of CFOs and other
senior finance executives. At the same time, CFOs
are recognizing that they must change their finance
teams and themselves to better support innovation,
and they believe that they have the relationship
skills and leadership skills to do so.
CFOs and other senior finance executives were
polled about how finance supports innovation at
their companies. Only slightly more than half of the
surveyed executives, 55%, say they apply advanced
analytics to enterprise innovation decisions. Only
57% have a strategy for defining and creating
a high-value finance team that can support
innovation initiatives.
The CFO survey also revealed strong support
for change, as did the CFOs we interviewed
individually. Nearly nine out of ten of the finance
executives in the survey say their finance teams’
skill sets must evolve to support an innovation
agenda. More than three-quarters (78%) of
respondents feel they must update their personal
skill set over the next year to support decision-
making regarding innovation. Two-thirds (67%) of
the respondents feel they need to change finance
function hiring and training processes over the
next year to meet evolving requirements, and
85% of CFOs have expanded and strengthened
relationships with business leaders across the
enterprise over the last two years.
“YOU CAN COMPLETELY REINVENT
A PROCESS; YOU CAN ELIMINATE A
PROCESS BY COMING UP WITH A NEW
APPROACH. OR YOU CAN HELP FEED
AND FUEL NEW INITIATIVES FOR THE
FIRM — EITHER PRODUCTS, SERVICES,
OR MARKET INITIATIVES.”
—DENNIS MCGONIGLE, CFO, SEI
To achieve better support of companywide
innovation, several of the CFOs we interviewed
have divided their finance staffs into specialty
teams in recent years.
ZEBRA TECHNOLOGIES
At Zebra Technologies, the finance function was
divided into two parts about two years ago: One
team is focused on transactional work and managing
the classic finance functions, while another group of
teams is dedicated to driving business performance,
says Olivier Leonetti, Zebra’s CFO. The duties of
the latter include shaping strategy and operational
performance, and providing analytical support.
Those finance teams help both the research and
development and sales and marketing functions, and
they are trained to be experts in the functions that
they are helping. “You go to meetings here today,
and you don’t know who’s the finance person and
who is the business person,” Leonetti says.
Zebra decided to split finance team members
into transactional and innovation roles to improve
their focus. “We are segregating the two activities
because we believe it is difficult to run a process
and innovate at the same time,” Leonetti says. And
4 I CFO INSIGHTS ON ENTERPRISE INNOVATION: FINANCE’S ROLE
innovation is critical. “We are a tech company;
we know that what we do today will be done by
another technology in the next two years. So, we
either innovate or we become irrelevant.”
The good news is: “It’s two years down the road,
and we have time and the resources and the
commitment from all of us to keep innovating,”
Leonetti says.
Other CFOs we interviewed described their
companies shifting focus in recent years to better
support innovation.
THE NEED TO DO BETTER
When it comes to enterprise innovation, the
finance function is falling short in making sure that
decision-makers have the information that they
need, according to the survey of CFOs and other
senior finance executives. At the same time, CFOs
are recognizing that they must change their finance
teams and themselves to better support innovation,
and they believe that they have the relationship
skills and leadership skills to do so.
CFOs and other senior finance executives were
polled about how finance supports innovation
at their companies. Only slightly more than half
of the surveyed executives, 55%, say they apply
advanced analytics to enterprise innovation
decisions. Only 57% have a strategy for defining
and creating a high-value finance team that can
support innovation initiatives.
The CFO survey also revealed strong support
for change, as did the CFOs we interviewed
individually. Nearly nine out of ten of the finance
executives in the survey say their finance teams’
skill sets must evolve to support an innovation
agenda. More than three-quarters (78%) of
respondents feel they must update their personal
skill set over the next year to support decision-
making regarding innovation. Two-thirds (67%) of
the respondents feel they need to change finance
function hiring and training processes over the
next year to meet evolving requirements, and
85% of CFOs have expanded and strengthened
relationships with business leaders across the
enterprise over the last two years.
To achieve better support of companywide
innovation, several of the CFOs we interviewed
have divided their finance staffs into specialty
teams in recent years.
ZEBRA TECHNOLOGIES
At Zebra Technologies, the finance function was
divided into two parts about two years ago:
One team is focused on transactional work and
managing the classic finance functions, while
another group of teams is dedicated to driving
business performance, says Olivier Leonetti,
Zebra’s CFO. The duties of the latter include
shaping strategy and operational performance, and
providing analytical support. Those finance teams
help both the research and development and sales
and marketing functions, and they are trained to be
experts in the functions that they are helping. “You
go to meetings here today, and you don’t know
who’s the finance person and who is the business
person,” Leonetti says.
Zebra decided to split finance team members
into transactional and innovation roles to improve
their focus. “We are segregating the two activities
because we believe it is difficult to run a process
and innovate at the same time,” Leonetti says. And
innovation is critical. “We are a tech company;
we know that what we do today will be done by
another technology in the next two years. So, we
either innovate or we become irrelevant.”
The good news is: “It’s two years down the road,
and we have time and the resources and the
commitment from all of us to keep innovating,”
Leonetti says.
Other CFOs we interviewed described their
companies shifting focus in recent years to better
support innovation.
5 I CFO INSIGHTS ON ENTERPRISE INNOVATION: FINANCE’S ROLE
SEI
About four years ago, all 3,200 employees at
SEI went through a reorientation to encourage
innovation, says Dennis McGonigle, CFO for the
investment technology and asset management
company. The message: No matter what your job is,
there are always opportunities to innovate. “You can
completely reinvent a process; you can eliminate
a process by coming up with a new approach.
Or you can help feed and fuel new initiatives for
the firm — either products, services, or market
initiatives,” McGonigle says. The company’s priority
is developing businesses and services that are high-
recurring-revenue generators and don’t require a lot
of capital to operate.
SEI’s finance team members are quickly
embedded into any project teams formed for
new initiatives, products, services, or activities.
The finance representative on a team will help
with things like the business model, market sizing,
pricing methodologies and pricing scenarios,
cost to deliver, and, ultimately, a P&L assessment,
and then scaling and modeling. Depending on
the project, those teams also include people
from other sections of the company, such as
market-facing staff, technology representatives,
operations, and marketing, McGonigle says.
Finance team members are also embedded
in each of the major units at SEI, including
market-facing units as well as technology and
operations groups. They report back to the
central, corporatewide finance function. “We
also have direct engagement in all of our major
business units,” McGonigle says.
The goal with both types of embedding is to
push the finance function as close to where the
business is happening as possible: close to the
customer and close to the market. Another goal
is to widen the breadth of experience for each
finance team member, who may shift to a new
project with a new team in a different part of
“WE HAVE A CULTURE IN FINANCE,
AND FOR THE FIRM OVERALL, OF
INTELLECTUAL CURIOSITY. SO, PEOPLE
ARE ASKING QUESTIONS: WHY DO WE
DO IT THIS WAY? IS THERE A BETTER
WAY TO DO IT?”
— JEFFREY FARBER, CFO, HANOVER
the company once a project wraps up. Or, they
may shift from a project role into a new business
initiative or move back to a day-to-day financial
function. Breadth of experience helps diversify
thinking for innovation projects and makes the
finance team more flexible and available for
supporting multiple innovation projects at once.
HIRING TO SUPPORT INNOVATION
Establishing a strong company culture that
supports innovation is another important factor,
according to the interviewed CFOs.
Hanover Insurance strives to build a culture of
inclusiveness and diversity by bringing in diverse
opinions and points of view with people from
different backgrounds and different firms, says
Jeffrey Farber, the company’s CFO. “We have
a culture in finance, and for the firm overall, of
intellectual curiosity. So, people are asking questions:
Why do we do it this way? Is there a better way to
do it?” he says. “As a firm, for the last two years,
we have been particularly focused on inclusion
and diversity, with the thought that if you want an
innovative culture, one of the breeding grounds for
that is an inclusive and diverse environment.”
Team leaders at Hanover are empowered to
make changes, and to experiment and try new
things. For larger decisions, finance leadership
gets involved with applying a business case, cost/
benefit analysis, and trials. “If you want to innovate,
and you want to get to the next level, sometimes
you have to take a chance and think about things a
little bit differently,” Farber says.
6 I CFO INSIGHTS ON ENTERPRISE INNOVATION: FINANCE’S ROLE
To support that culture on the finance team
— in addition to seeking diverse backgrounds,
intellectual curiosity and strong team skills
— Farber says he looks for people who are
technologically savvy with data management and
predictive modeling skills, strong financial skills,
performance management experience, and soft
skills in business partnering and leadership.
TYLER TECHNOLOGIES
Tyler Technologies has sought to better support
innovation by hiring for finance team members with
strong analytical skills and diverse experiences, says
Brian Miller, CFO for the software company.
Miller says that as Tyler has grown organically
and through acquisitions, it has added talent
to the finance team and broadened the team’s
skill set, gaining deeper experience in analytics.
When considering the qualifications of finance
team job candidates, Miller says that strong
critical thinking and analytical skills are at the
top of his list, even above their accounting
background or more traditional finance skills that
may have been the priority in the past.
Most importantly, the finance team has added more
diversity of experience as it has grown, Miller says.
“That’s been valuable to us, not only that we’re
able to promote people internally and have people
grow into bigger jobs, but that with growth, we’re
able to bring in people with diverse experiences
from outside of Tyler,” he says. “We’ve got a good
mix of people that are long-term Tyler employees
who know the company really well and people
who have had broader experience outside. That
diversity of experience and different ways of
looking at things has strengthened our team.”
Tyler also added a project management officer
this year to drive innovation in the finance function
and examine processes that the finance team can
improve. With a project management officer in
place, the other team members will be free to focus
“WE ARE HYPER-FOCUSED ON KEEPING
PRODUCTS CURRENT, THINKING AHEAD
OF WHAT NEEDS CUSTOMERS HAVE,
AND MAKING ONGOING IMPROVEMENTS
TO OUR SOFTWARE TO KEEP OUR IT
CURRENT.”
— BRIAN MILLER, CFO, TYLER TECHNOLOGIES
on their primary duties and not have to worry about
figuring out process improvements, Miller says.
TAKING ON KEY ROLES
Both the CFO Research survey and the interviews
with individual CFOs found that the CFO is
increasingly a key driver in determining and
supporting enterprise innovation and growth
strategies. More than nine out of ten (93%) of the
surveyed senior finance executives have a seat at
the table where growth and innovation strategy
are discussed. And more than eight of ten (83%) of
the surveyed executives are prepared to play key
roles in both determining and executing enterprise
innovation strategies. Also, eight of ten (80%) of
the surveyed executives say that choosing and
managing funding mechanisms for innovation is a
critical responsibility, and 86% say that CFOs play
a very active role in managing the enterprise risk
that accompanies growth and innovation.
According to the interviewed CFOs, a key part of
the finance team’s role in supporting innovation is
through its work with the research and development
or technology departments at their companies.
Three years ago, Zebra shifted to place a greater
emphasis on innovation, says Leonetti, the
technology company’s CFO. Three years ago, about
90% of the company’s research and development
budget was dedicated to its core businesses. Today,
the same dollar amount is devoted to core R&D,
but core businesses represent only 60% of the total
R&D budget, with 40% dedicated to new ideas.
For the CFO, that translates to a shift in how the
7 I CFO INSIGHTS ON ENTERPRISE INNOVATION: FINANCE’S ROLE

FIGURE 1. EXTENT TO WHICH FUNCTIONAL AREAS WITHIN FINANCE FUNCTION REGULARLY

INFORM THE CFO’S POINT-OF-VIEW ON INNOVATION AND GROWTH DECISIONS
(on a scale from 1-5, where 1=No contribution and 5=strong contribution.)

Financial Planning & Analysis

Budgeting and Forecasting
Financial Reporting and Control
Corporate Development / Strategic Planning
Risk Management
Treasury/Working Capital Management
Tax and Compliance
Accounts Payable/Receivable

company invests in venture capital funds, M&A,
and other capital allocations to drive innovation.
Today, Leonetti says, he spends much more time
on shaping strategy, operational performance, and
productivity to drive innovation.
Part of the CFO’s role is to be an evangelist for
innovation, and Leonetti’s vocabulary is intended to
convey that evangelism and a change in intensity
by employing words like “agility,” “paranoia,” and
“irrelevance,” he says. Leonetti sums up Zebra’s
general innovation strategy in four “P’s”: Innovation
is a priority at the company, there’s a plan for it,
there’s the people dimension for it and there’s a
process driving it. As a priority, Zebra’s employees
— both in finance and across the company —
dedicate about 60% of their time to innovating
and 40% to the nuts and bolts of their jobs. At the
weekly, monthly, and quarterly finance meetings,
60% of the time is spent on innovation.
At Tyler, the software company, about 1,500 of
the company’s 5,000 employees are software
developers, devoted to R&D. “We are hyper-
focused on keeping products current, thinking
ahead of what needs customers have, and making
ongoing improvements to our software to keep
our IT current,” Miller says. Over the past two
years, Tyler has ramped up its R&D spending
considerably — a 34% increase in 2018 and a 30%
increase in 2019. Much of the company’s product
development investment is in its core product, but
part of the influx of spending has come through
acquisitions, including 7 in the last 16 months.
Finance’s role is to support the decision-making
and to help determine the spending priorities
among competing alternatives and multiple
business units, Miller says. The finance team
provides the financial analysis and data to support
allocation decisions by creating models, and then
testing the assumptions and how they will affect
revenues and cash flows from new products.
DATA ANALYTICS COMFORT ZONE
CFOs are generally comfortable with analyzing
information about innovation and growth, as well as
taking on tasks to support innovation and growth,
according to the CFO Research survey and the
CFO interviews. According to the survey, within the
finance function, CFOs relied the most on financial
planning and analysis and budgeting and forecasting
to inform their views on innovation. (See Figure 1.)
Outside of the finance team, the CFOs relied the
most on strategic planning and senior executives.
(See Figure 2.)
The survey also confirmed that more than three-
quarters of CFOs are at least somewhat comfortable
with a long list of innovation-related tasks. The
roles that CFOs are most comfortable playing:
sharing data and analysis, and basing innovation
recommendations on advanced data analysis. Their
8 I CFO INSIGHTS ON ENTERPRISE INNOVATION: FINANCE’S ROLE
FIGURE 2. EXTENT TO WHICH FUNCTIONAL AREAS OUTSIDE FINANCE FUNCTION REGULARLY
INFORM THE CFO’S POINT-OF-VIEW ON INNOVATION AND GROWTH DECISIONS
(on a scale from 1-5, where 1=No contribution and 5=strong contribution.)
Strategic Senior Risk Operations
planning executives/ management management
C-suite
least comfortable roles were engaging C-suite peers
on innovation decisions and taking an outside-in
view of the enterprise, according to the survey.
The CFOs and other senior finance executives who
were surveyed also expressed a high degree of
confidence in their skills to support an innovation
strategy, with 85% believing they have change
management and communication skills needed to
do the job.
The interviewed CFOs were similarly confident,
and all were comfortable with employing data
analytics in support of innovation. At Rollins Inc.,
a pest control service company, data analytics has
changed how finance works with other groups in
the company, says Eddie Northen, CFO. Finance
always worked with operations to solve problems,
but those discussions have evolved in recent years
as data has become more readily available, he says.
Before, finance focused on making process
solutions like billing easier for operations. With
data analytics, finance asks about what problems
operations needs to solve and how finance can
help. If the data is available, finance can take
an analytical approach to a problem, without
preconceived notions, and test 20 or 50 variables
to find out what truly drives the problem before
figuring out the solution. “Now we’ve moved to
the next level — to what and how we can help
make an operation more efficient, and how
IT/Technology Data/ Sales HR management Marketing Change Communications Logistics
management information management management management management management
management
we can make things better from a customer-
experience perspective,” Northen says.
Rollins set up a finance data analytics group to
help support business decision-making about
three years ago. That group supports existing
business unit finance leaders, and as newer finance
leaders are brought on board, the company looks
for individuals who have data analytics experience
and training, in addition to finance and accounting
skills, Northen says. The business unit finance
leaders are responsible for analyzing costs or other
issues that affect the P&L for their businesses and,
often, other business units. The data analytics
group helps operations with problems like
customer retention, operations effectiveness and
efficiency, and locating new operations.
When hiring for the data analytics group, the
company looked for individuals with people skills
in addition to a proficiency with data analytics and
coding. The data analytics team members need to
be able to talk with the operations team to learn
their problems, and then to translate the analytics
into operational solutions. “We don’t say, ‘Hey,
Data Analytics: Go and run the numbers,’ and then
hand it off to someone else,” Northen says. “We
have our data analytics folks — after they run the
numbers and after they’ve put all of it together —
go through and work with the end user to build
and implement the changes.”
9 I CFO INSIGHTS ON ENTERPRISE INNOVATION: FINANCE’S ROLE

CONCLUSION
CFOs play an ever important role in the overall success of the organization. What can you do as a CFO to
drive innovation, both within the finance function and enterprise-wide? The CFOs we spoke with offered a
range of ideas that fell largely into three main areas: People, Critical Thinking, and Creating Efficiency.

To spur critical thinking:

Widen the breadth of experience for each finance team member to help diversify thinking for
innovation projects and make finance more flexible. Consider splitting your finance team into
transactional and innovation roles to improve finance’s focus on innovation. Embed your finance team
members into project teams as they are formed for new initiatives so they can help with modeling,
pricing and P&L assessment. Embed finance team members in technology, operations and market-
facing units as well to push the finance function as close as possible to the customer and the market.

People as an asset:
Promote a culture of innovation by seeking people for your finance team with diverse backgrounds,
intellectual curiosity, technology know-how, data management and predictive modeling skills, strong
financial skills, performance management experience, and soft skills in business partnering and
leadership. Assign a project management officer to focus on finance process innovation to free up
other finance team members for their primary duties. Be an evangelist for innovation, and back up
your words by dedicating more than half of your and your finance team’s time to driving innovation.

Creating efficiencies:
Help lead a shift in how the company’s capital is allocated, devoting more to innovation. Create
product roadmaps by applying financial modeling to new ideas from the business side, and
evaluate those new ideas 2 to 10 years into the future. And help your company’s business side
understand that successful innovation is about focusing on the right initiatives as determined by a
broad strategic view, not just being first to market.

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