Do We Really Need CFOs?

Tien Tzuo
3 min readJun 22, 2020

Let me begin this week’s newsletter by stating for the record that I think most CFOs are fine people. They are responsible and detail-oriented. Lots of times, they are way more friendly and outgoing than you might think.

But do we really need them?

As the guardian of the financial health of an organization, a CFO has a number of very important responsibilities: compliance and governance, budget allocations and audits, tax planning and forecasting.

These jobs are not just important, they are “jail-time important” — i.e., if you mess up, there’s a chance you might wind up in orange pajamas.

But let’s face it, you don’t need to pay a fancy CFO to do all that stuff. Just hire an accountant, or pick up a copy of QuickBooks. Financial health of an organization? There’s an app for that (several, in fact).

Besides, none of it is exactly rocket science. Double-entry bookkeeping has literally been around since the 15th century. Here’s the basic formula: your credits have to match your debits. Once the columns line up, then you close the books. That’s it.

Okay, you can probably see where this is headed, dear reader. You actually do need a CFO. Just not the kind that most people are probably thinking of when they think of a CFO.

Traditionally, 80% of a CFO’s job was to tell people what happened. To keep score. To track the budget. The other 20% was to interpret those numbers in order to direct resources, create forecasts, and manage strategy. To write the next part of the story.

Today, that ratio has flipped.

Today, CFOs are far more concerned with business models than budgets. Now, don’t get me wrong — compliance and governance are absolutely essential. But running a budget is fairly straightforward. It’s about handing out headcount and expense against assumed revenue. And most CFOs have good teams for that.

A business model, on the other hand, is a mix of strategy, insight and ideas that forms a quantitative but fluid framework. It both effects change, and reacts to it. And since customer-centric models are becoming the norm, business models are becoming more dynamic, and more strategic.

And you need someone to lead that business model. You wouldn’t buy a car with a driver’s seat facing the rear window. That’s why you should hire a CFO. (Here’s another way of looking at it: what’s the difference between a CFO and a COO? Good question!)

Over the next several weeks, I’m going to talk to some CFOs that I admire about the massive disruption happening in finance departments today. We’ll be discussing topics like:

  • Why the best companies drive the front office from the back office
  • Imperatives around the COVID-19 crisis
  • Why automation is easy, but automation with agility, that’s black magic
  • Why today’s CFO acts more like a COO
  • Why the “why” behind a business model is as important as the “how”
  • Why the new CFO needs to spend lots of time talking to customers

And I’ll be starting next week with a CFO who has somehow managed to find himself running the cloud divisions of large ERP providers three times in a row. Is this person a visionary ahead of his time, or just a glutton for punishment?

Stay tuned.

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Disclosure: These opinions expressed are mine, not those of the company. The companies mentioned in this newsletter are not necessarily Zuora customers.

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Tien Tzuo

Founder and CEO of @Zuora (NYSE: ZUO) and the author of “SUBSCRIBED: Why the Subscription Model Will be Your Company’s Future — and What to Do About It.”