Editor’s note: This article is part of
FM’s “A Year of Evolution: CFOs on 2021” series featuring insights from finance leaders across industries, and their COVID-19 lessons and 2021 plans. To receive weekly updates on this series, sign up for our
CGMA Advantage newsletter.
The economic and health impacts of the coronavirus pandemic have forced many businesses to address the way they manage uncertainty and risk.
To survive the impacts, which differed by geography and industry, businesses devised strategies based on what-if scenarios. Artificial intelligence, machine learning, and predictive models helped cut through the complexity, but the speed at which the impacts could be felt also required up-to-date data and predictive modeling that had to be repeated frequently.
That created opportunities for companies like Qlik, a US-based software company. Qlik helps customers around the world tackle complex problems through the use of data analytics. The digital tools produce insights into the data, which allow customers to transform their organizations, whether it's a business, a university, or a not-for-profit.
The pandemic also created obstacles to pursue these opportunities, said Dennis Johnson, CPA, the CFO of Qlik. FM
talked with Johnson about the limitations the pandemic imposed on the company’s global sales force at a time when demand for data analytics software is rising and how the company is overcoming the obstacles.
With no sign of the pandemic abating, what do you see as the main constraints for your business in 2021?
It comes back to the inability to travel. Air travel has been limited, and we expect it to be limited for at least the first quarter, probably the first half of next year.
Typically, we hold live events all across the globe, where we're hosting customers and partners. Almost all of that has shifted to virtual. Not being able to travel and people not being able to congregate in large groups is a limitation.
We've been working in a largely virtual environment since the beginning of March. Not being able to have salespeople on planes going to visit customers forced us to think differently about how we have those customer and prospect touchpoints in a virtual environment.
Also, we typically do a big sales kickoff at the beginning of the year to get our sales force fired up, get them all aligned on our objectives. We'll do it virtually, but again it's a little more challenging to coordinate that way. When you do a Zoom, it's very formal. Everybody is on the call together, and so whether it's a customer interaction or an internal meeting, you lose those informal interactions with people. You have to focus on putting more resources into it and really being thoughtful about how you plan the agenda to get that same result and impact from it.
How has productivity been affected? Team morale, how do you help build the mental strength of yourself and your team as the pandemic drags on?
We actually saw a bit of a surge in productivity at the beginning of the pandemic. People wanted to demonstrate we could make this work, that we were going to fight through this. It was almost a bit of an adrenaline rush.
The longer the pandemic played out, the more that was taxing on people. A lot of pressure on people whether it's parents who are home-schooling children or trying to deal with virtual school, hybrid school, whatever it might be in wherever they live, or taking care of family members who had caught the virus or who have some type of underlying condition and they have to be very careful about not catching the virus. So that was something that we really had to focus on, to really ramp up our communication cadence.
Our executive team did listening forums where we would get random employees in small groups and just hear them out about what's going well. What are we doing right? What's not going too well? Where could we give you some additional support? Functionally, really ramping up our communications, doing skip-level one-on-ones [employees meet with their manager’s manager], team meetings, functional town halls. The best thing to do was to stay close to people to make sure we understood how they were feeling.
Are there some things that you've started during the pandemic that you're considering keeping, even when people are coming back to the office?
We would do listening forums in the past, but I think we've seen the value of having an executive sit in a room with a cross-functional group of employees in a small setting and opening up the dialogue and encouraging people to be open. That's been very helpful in terms of us staying close to the organization, really understanding what's going on, not just hearing it from our direct reports up through the chain but getting close to people. That is definitely something we'll continue in more a regular cadence maybe than we have in the past.
What approach are you taking to budgeting and forecasting for 2021? Is it different from past years?
It's really not too much different. It's maybe slightly more cautious just in terms of trying to predict specifically when things will return back to relatively normal where people will be traveling. So maybe a little more cautious and just being able to pivot one way or the other if things break a certain way, the economy suffers a setback, or things really start to take off. We're watching the news on vaccines and what that means to the economy very closely.
How will the pandemic affect your finance function’s or your company's digital transformation journey? Any plans to accelerate or hold off initial plans?
We were a public company and went private in 2016. We had a task to really get down our cost to finance and cost to general and administrative expense as a percentage of revenue, which we've done. We've reduced it dramatically and really driven efficiencies and scale out of the organization. Technology was at the centre of that.
We used the world's best software platforms, whether it's NetSuite or Concur or Xactly for commissions and Salesforce for customer relationship management, but it all kind of starts with our own technology. We're using the Qlik products within finance to help scale our organization, drive insights into the business, and really get the most out of our organization from an efficiency standpoint.
That will continue to be part of our strategy going forward. If anything, we'll focus more on those types of projects next year to make sure we're remaining as efficient as possible and getting the most out of technology.
What is your most important priority going forward?
The primary focus is bookings growth. We want to continue to take market share and continue to disrupt the industry as we have for several years. The focus for us is really how we drive that bookings growth. Some of it is increasing productivity of our sales force to make sure that we're making them efficient and that we see productivity gains year over year.
When we see a particular market where we can add sales capacity and drive bookings, we're going to do that and despite the pandemic we've done that. We continue to hire very aggressively. We've retooled and re-prioritized as we've gone throughout the year, based on shifts in our market we've seen as a result of the pandemic. We do continue to invest in our organization and people, our products from a research and development standpoint, in our sales organization, and our customer success in order to continue to drive growth for the company.
We think that when the pandemic ends, we're going to come out of this on a really strong footing.
What are the biggest threats to your business now, and how are you managing them? What indicators are you tracking?
Aviation and hospitality are two industries that we continue to watch very closely.
We look at churn rate. We look at the renewal rates, maintenance, and subscription contracts that are up for renewal; what's happening within those sectors. And really what we try to do is help our customers through this. We've been a little more flexible for customers in industries that have been hit hard. We try to offer them ways to help them through this period of time and to stay loyal to them. Hopefully, they return that with loyalty to us.
Have your business strategies changed? Are they being reassessed?
What we've seen in the pandemic is more of a focus on cloud. It’s becoming top of the agenda for the CIOs we talk to. We are adapting accordingly and accelerating our cloud strategy, which was already underway. We have our pure SaaS-only offering in the market now. We're working with our customers in particular, to move them to the cloud and to help them manage their overall total cost of ownership.
The other thing we've seen is a move from what we would call "passive" to “active” intelligence. Customers are really looking to access and make decisions on data much more quickly in real time versus relying on static dashboards or reports. In the past you would get a report delivered to your inbox and then the evolution was to dashboards. We're looking to make that even more real time with alerting capabilities, which we now build into our product, and mobile capability.
What the pandemic also exposed and what we're responding to is filling in the gaps in the data pipeline, where the information comes from. Companies realized they had data silos or processes and technology gaps that slowed down their ability to access data and act on it. Creating a more robust data pipeline to manage the data process—accessing the data, transforming and preparing it, analyzing it—that’s really becoming a top priority.
Going back even maybe ten years where a business user would have a need for information, they would work with their IT department and they would say, "This is the information that I need. These are the time periods that I need, and I need it done for each month." It might take two weeks to get that data, a month to get that data, six weeks to get that data. By the time it would land on your desk or in your email inbox as a PDF report, it was already outdated. Then you start asking questions about, "Well, what about the last six weeks, and how quickly can I get that information to see what's happened?"
What we’re talking about now is having information on your phone. You get an alert on your phone that maybe there's sales data in a particular region available, and that sales data indicates there's been a drop-off in sales last week, or yesterday, or this morning, giving the person that's responsible for that business the ability to jump in and look at what's going on and talk to people and say, "What's happening? How do we respond to this?"
Rapid Fire Questions
What has been your biggest lesson from this pandemic?
Expect the unexpected. Nobody in the world as we came into 2020 expected that we would be dealing with what we're dealing with. Particularly as a finance leader, you just always need to be prepared, and there needs to be a plan that you can act on pretty quickly.
What one piece of technology is a must-have in your 2021 budget?
Our software, which empowers us to make better decisions every day and truly become a data-driven organization. We couldn't run our business without the power of our tools and the insights that we drive in our business. Then, of course, Zoom, because everybody is using Zoom as well.
Looking ahead, what is one skill you want to develop in your team?
Leadership. The pandemic has taught us the importance of solid leadership and staying close to people and really leading an organization through this.
This article originally appeared in FM Magazine, which is published by the AICPA.