CFO interviewed Susan Parcells, director of finance transformation at Blackline, prior to the CFO Rising East event on March 7 and 8 in Boston. She answered questions about her background in finance, as well as her presentation, “The Risk and Opportunity of Spreadsheets.”
Can you tell us a bit about your background?
I started with Deloitte, one of the “Big Four,” and stayed there for five years. I transitioned to industry and spent time as an assistant controller and controller in construction, real estate, and software. After my time with Deloitte, I started working for Apollo Group, which is the parent company of the University of Phoenix. I was brought on to help get their processes under control as they were growing rapidly and expanding globally. As a part of that, I took them through that finance transformation — that’s how I came across BlackLine.
We implemented BlackLine at Apollo. I liked the company and product so much that I started talking to Therese Tucker, BlackLine’s CEO, and she invited me to go and work for them. I picked up, moved to California, and have been working with BlackLine since 2011. I’m not exclusively in California. I spend quite a bit of time traveling for work.
Is there anything that you do outside of the typical finance role?
When I was with Apollo Group, I was brought on from a strategic perspective to help get better control of their accounting close processes, to improve automation, and to set them up to be scalable. Apollo was doing an acquisition and they needed to be “transformed” from that perspective. The role I played there, one of strategy, was definitely outside the norm for the finance function.
When I present, I focus on making CFOs aware of other options for handling their processes that put their organizations in a better position to grow and scale at a distinct time, and drive more efficiency and effectiveness for the finance organization.
What are the risks of using spreadsheets?
The risks are twofold. First is the inherit risk around the possibility of errors. Studies have shown that 88% of spreadsheets have some type of error. Those include hard-coded formulas, hidden fonts, ranges that don’t include numbers that they should, circular references. When you get into complex calculations where you have multiple tabs and information coming in from somewhere else, you get information that’s manually entered, leaving opportunity for errors.
Organizations that have a high volume of data entry are at risk not only when that information is put into the system, but also afterward, when it is manipulated. Then, for the folks reviewing the data, more often than not they don’t have the time to click on every single formula, ensuring its accurate and that there are no hard-coded numbers. And, every month that the numbers are manipulated, the same potential for error arises.
The second part is that the process is manual. It takes a lot of time just keying in information and setting up formulas, like creating amortization schedules. I’ve seen situations where one month a budget has to be made from a “pennies perspective,” but the next month when the budget is no longer needed, the hard-coded numbers are not taken out.
The idea is: start thinking about different processes. Look at technologies that minimize and potentially alleviate the manual work spreadsheets rely heavily on. New technology allows users to do journal entries, account reconciliation, automatically calculate balances, etc., so there is very little manual entry — reducing the possibility of errors that comes with it. It also means that in many cases users can rely on technology to do things like matching between a general ledger and a sub-ledger. There’s an automation component that will reduce accountants’ workloads. Now, they’ll be able to focus more time on analysis and working with the business to help them understand the numbers.
So, new technologies are changing the accounting role?
Absolutely. The reality is that not only are companies still using spreadsheets at risk, but more importantly organizations that don’t embrace digital transformation are putting themselves at a competitive disadvantage. Instead of spending time on routine activities, accountants can now focus on actual analysis; they have the opportunity to work with business leaders and influence important strategic decisions with the best information available. This puts organizations that embrace digital transformation at an advantage because they have better intelligence, smarter people, and the ability to work as a cohesive unit with the leaders of the business. That cohesiveness is going to be a big shift.
What first steps can companies take to start the digital transformation?
After recognizing that there are inherit risks in using spreadsheets, they need to be open to looking at new ways to eliminate or reduce reliance on them, across the entire organization and in any process. BlackLine focuses primarily on financial close activities. But it also includes procure-to-pay, order-to-cash, budgeting, and forecasting. Companies must pick areas with the most risk. Personally, I think there’s the most risk around balance sheet reconciliation that a lot of organizations use to ensure the integrity of the balance sheet and financial statements. If there is risk there, they need to figure out how to minimize that, and continue to build from there.
What will CFO Rising East attendees take away from your presentation?
First, what is their risk and exposure from being so reliant on spreadsheets? Then, what are their accountants focusing on and what value are they bringing to the organization? Finally, how do you get everybody on board when the organization moves away from spreadsheets?
A resistance to change is natural, but digital transformation should be looked at as a positive opportunity. Accountants like me didn’t go to college, to study and sit through the CPA exam, just to do spreadsheets. We want to do analysis. We want to work with the business so that they understand the numbers aspect while we learn the business aspect. That’s the other thing attendees will take away, that digital transformation is a great opportunity to reciprocate a fuller understanding of the organization.