Part of building a strong, sustainable organization is knowing how to get the best use of (limited) resources — what is commonly known as “best bang for your buck.”
This is true of so much — can be as simple as having a good sense of your cash runway or understanding the sustainable differentiators of your business to your prospects / customers and vertical end markets.
Or it can be as difficult and uncertain as what the true ROI is of building a product or choosing the right employees and reporting structure to get your business from its current scale to its next phase of maturity.
When you reach a point of scale where both your sales team and accounting / finance team have specific needs that go beyond the barebones day-to-day, “keep the lights” on metrics (for sales — that’s pipeline and bookings; for accounting / finance, it’s cash, revenue, and profitability), getting the “best bang for your buck” can be difficult.
How do you allocate resources that helps optimize the next level metrics for your sales team and go-to-market approach, while also trying to tackle budgeting, planning, and resource allocation across the rest of your organization that’s often spearheaded by your FP&A function?
Generally speaking, many organizations are laggards when it comes to properly investing in both the finance and sales operations functions — mainly because they are viewed as “non-revenue” generating parts of the business. Just because these folks do not hold an official “bag” / quota, operators and investors alike prioritize these functions later (or frankly, never) in their business’ growth lifecycle.
It is important to avoid this level of thinking because these teams and resources will be the ones driving value creation through better lead quality, higher conversion rates, optimized pricing strategies, and proper alignment of your sales and marketing team to the right end markets and prospects.
But when (or if?) they finally do get to prioritize them, it often investing in one or the other vs. both. It does not have to be this way, but let’s try to unpack and unwind this way of thinking and view how these teams can and should co-exist while remaining autonomous in a growing organization.
Finding the “Sweet Spot” of FP&A and Sales Operations
When I was CFO of Venminder, I oversaw both our finance and accounting teams, as well as our sales operations function. We were generally a very lean, mean organization and had an embarrassment (in a good way) of data available at our fingertips to drive outcomes.
Just because both teams reported into me did not mean that there was a ton of organic cross-collaboration and pollination — there were still natural silos between the teams — for good reason in many cases.
But both teams had focus on a key area that matters most in all organization in my opinion — focus on data integrity and cleanliness of inputs to produce solid outputs.
The adage of “garbage in, garbage out” applies here — in order to use the data to drive tangible business outcomes and results, you have to trust (and ensure) the data is accurate and correct.
For accounting and finance teams, that’s typically engrained in the job description and daily responsibilities. You do not even have to do an audit to have this etched in your brain. Data integrity and accuracy is vital for everything you do in accounting and finance.
For sales ops teams, however, this is a learned trait that needs to be honed over time. Because sales operations teams sit in the middle of multiple functions (sales, operations, marketing, finance, etc.), they get pulled in many directions. They also many times are tasked with being system administrators for key tools, like CRMs (i.e., Salesforce, HubSpot) and the flows / machinations of these tools within the inner workings of an organizations sales processes. This naturally will cause working too fast and not always stopping to think about things like data integrity when the head of sales is asking for a new dashboard in the CRM system.
This factor alone is a big driver as to why it’s a good idea to have the sales / revenue operations team report directly into the finance organization / CFO — it helps create better data integrity and use of the data to deliver value.
But beyond this, it also creates organizational rigor around making the most of the (embarrassment, as I mentioned earlier) data and using it to improve gross retention, change pricing and sales strategies, and organize pipeline management — this helps companies drive profitable growth through monitoring and adjusting the metrics that fall out of these areas.
So while FP&A teams and sales operations teams do not directly have a quota, they are extremely impactful and essential in helping others that do have a quota attain and exceed it regularly.
In sum, there is a ton of overlap between what FP&A teams and sales operations teams do, and a lot of independent tasks that they have as well. But having them ultimately report into a single ultimate leader (like the CFO) helps to create that cross-collaboration and delivers what every business needs — trustworthy, actionable data to help increase ACVs, decrease churn, and improve pipeline velocity.
Keep These Easy to Remember Job Specs in Mind When Building Your Organizational Structure
Despite the notion of cross-collaboration between FP&A and Sales Operations, they are still independent functions and need to be treated as such. This is especially true when you are deciding to invest in each in your stage of growth.
Therefore, it’s helpful to understand some of their daily responsibilities so you can find ways to eventually integrate and mature them in your growing organization.
The easiest way to think about how they are separate, but together is that FP&A are often using data (many times from the Sales Operations team) to support a hypothesis or drive to a business decision. They are reliant on inputs to create useful, actionable outputs and summaries for teams.
This is where Sales Operations comes in — they are often the “masters” of sales data — many times in my experience in its “raw,” uninterpreted form. They are often in charge of the inputs, and even sometimes get drawn into the outputs and summaries (if time and capacity allow of course :)…)
For example, FP&A teams will be able to postulate what is driving the bookings growth with a hypothesis based on a cohort analysis or some next-level analysis, and therefore the sales team should invest in a certain vertical end market more than another for the same / better growth in the future.
Whereas in the same example, Sales Operations teams will give you all of the bookings data by rep and team, and even in many cases show you a nice visualization and summary of the bookings and bookings growth.
You can see where these teams could benefit (and overlap) from working together, but also why it is also a good internal control to keep them separate. After all, it serves as a next sanity check to have multiple teams handling data to again avoid “garbage in, garbage out” and improve data integrity and accuracy.
FP&A Tasks and Responsibilities
Use data / inputs to drive towards a business strategy / test and validate a business hypothesis
Common analyses / tasks include:
Financial modeling / budgeting / business planning
Rolling forecasts
Customer cohort / segmentation analyses
Customer unit economics analyses
Contribution margin / margin analyses
Development of sales commission plans
Financial reporting
Sales Operations Tasks and Responsibilities
Create / organizational sales data / inputs for use across organization, and often times including creation and management of outputs (i.e., dashboards)
Common analyses / tasks include:
Admins of key sales systems (i.e., CRM)
Sales workflow automation
Sales round robin / lead distribution management
Pipeline opportunity support / management
Dashboard / report creation
Sales territory planning
Account and prospect data management
So hopefully this leaves you with a better, thorough understanding of the key responsibilities of each and how they have differences and similarities. Try to find that “sweet spot” between the two because in my experience when you do, you will improve business results, outcomes, and save everyone a lot of time and headache.
Follow along for more interesting content, share this, and shoot me a note at rzacharia@rtdinsights.com if you have questions or need any help in your organization.
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