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Finance and accounting has a major role in building a marketing-driving company

October 2nd, 2013 by Carrie Huckeby

 

By Todd Crandall, CFO of Telecom Management Services (TMS). This article originally appeared in NTCA’s Rural Telecom Magazine.

Much has been written about the changes taking place in the telecommunications industry. As we address this issue, we often talk about the importance of forming partnerships as a strategy for overcoming the market forces and regulatory pressures we are all facing. Indeed, from regional networks to joint purchasing agreements, the partnership concept has proven effective in positioning companies for success.

The next step — and an absolutely necessary one, I believe — is for telcos to bring the idea of partnering in-house. If we are to be successful in the new industry reality, it’s critical that we start forming partnerships between the various functions within our own organizations. Telcos have traditionally operated with a system of silos wherein the marketing, operations, engineering and finance and accounting departments all act like islands unto themselves. That philosophy may well prove disastrous in the new environment we’re all facing.

How many times have you seen this happen? Engineering buys some equipment and deploys a new service into a community. Then it’s up to marketing to figure out how to sell the service in that area while finance and accounting calculates when — or if — it can be done profitably. In the meantime, engineering goes off and starts another project, with no knowledge of how it fits into the company’s overall marketing or financial strategies.

Now imagine a scenario wherein all departments look at that next capital expenditure in a holistic, cross-functional way. The questions become:

  • “Engineering, what new technology is available, what neighborhoods could we take it into and how soon could you have it built?”
  • “Marketing, what are the demographics, what products can you sell into these areas at what price points and what is the competition doing?”
  • “Operations, what capacity do you have for new installs and how long will it take to get new customers connected?”
  • “Finance and accounting, what makes the most financial sense and keeps us in line with the company’s overall goals?”

The result of this approach is that no one department is making decisions in a vacuum, while leaving marketing to “now go sell it” and finance and accounting to “make the numbers work.” This certainly does not mean that “finance and accounting just wants to tell everyone else what to do.” Rather, it represents a new model for working together — providing every department in the company the information it needs to make decisions based on real information.

I must stress that, while the input of every department is absolutely important, the strongest working relationship in this new industry reality should be between the finance and accounting department and the marketing group. They must work closely together, even be strong advocates for one another. Why? Because at the end of the day we must all become marketing-driven companies. That is, we must be selling a product or service for which there is a demand, that is competitive in the marketplace and is priced where we can make money. Marketing is the function that provides the data, while finance and accounting provides the numbers. Everything else must support that.

If we’re going to build a marketing-driven company, we must shift our focus to:

  • what our customers need now;
  • what technologies they are going to demand in the future;
  • how we differentiate ourselves from the competition; and
  • how we position ourselves in the marketplace.

When we become customer-focused, action-oriented and financially disciplined — and align the rest of the organization in the same manner — then we can truly say we are driven by the marketing function.

But to make all this happen, finance and accounting really has to reinvent itself. We must be in the business of educating marketing and all other departments, of providing them with the information they need to come together and collectively make decisions about the business. To become a true partner with the other functional areas, finance and accounting must move beyond its traditional role of simply being a transactional based, historical looking function, and move toward a more forward-looking perspective (all the while maintaining excellence in transactional processing and historical reporting, of course). Only then can we provide other departments with the timely information they need to help our companies get ahead of the curve and make decisions in real time.

How do we make that happen, in a practical sense, within our organizations? Here are some thoughts:

  1. Be patient. Silos weren’t built in a day, and neither were mindsets. It will take time to change the way people think about doing business, so don’t get discouraged when it doesn’t happen overnight.
  2. Build teams. Assign every department a “go-to partner” from the finance and accounting team. This person can help departments with the budgeting process and other issues, and be there to answer questions that may arise in the course of daily business.
  3. Get together. It may sound simple, but having regular meetings involving all department leaders allows everyone to get a clear picture of how their function impacts the entire operation. If you only gather as a group during budget season, the terms “marketing-drive” and “forward-looking” will mean nothing.
  4. Practice accountability. It’s always easy to fall back into the old way of doing things — even when we know that “old way” is not going to work moving forward. Hold one another accountable for doing business the new way, every day.

As rural telcos, we are about more than the numbers. But as we focus on providing reliable technology to our customers, and doing so with the best, most people-focused customer service in the business, we have to make sure that all departments agree on what the numbers will be and align ourselves to make those numbers happen. That will be the only way to survive in the industry reality that lies ahead.

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