The evolution of financial leadership in tech

Traditionally, the role of a CFO or financial leader was limited to bookkeeping, budgeting, investments, taxes, compliance, and a little forecasting—all of which came under the FP&A umbrella.

Today, financial leadership is much more than that. The professional journey of Josh Rappoport, VP of finance at Acumatica, is exemplary of his evolution. Josh started his career in investment banking, took a break to earn an MBA, worked at Yahoo and Microsoft in various finance—and non-finance—positions over the years, before he moved to the startup space.

His 25+ years in the business world is a remarkable journey. Recently, he spoke to TeamOhana’s Tushar Makhija about the evolution of financial leadership in tech. This blog post summarizes key lessons.

The traditional role of Finance in Tech

Finance leaders were long known as gatekeepers, focused on budgeting and cost control. Any planning and analysis they did revolved around historical data and interpreting the past. They held fort on compliance and kept the business on the right side of the law. Josh calls this “finance for the sake of finance.”

Today, this no longer stands. Fast-growing organizations, especially in tech, need to use the finance function as a strategic lever. They need CFOs and finance directors to fuel initiatives that grab exciting business opportunities.

To make this happen, finance leaders must know more than just finance. They must have a good grasp of tech, marketing, human resources, customer relationships, and more. With this understanding, they need to have the agility and strategic foresight to adapt to business needs.

In what he calls “fortuitous serendipity,” Josh gained these skills throughout his career. He began in venture capital, moving to core FP&A roles at Yahoo and then Microsoft. After four years in finance at Microsoft, he moved towards roles in business strategy, chief of staff, and product. 

This breadth of experience made it easier for him to land and flourish in finance leadership roles later in his career. 

Transition to strategic leadership

High-growth startups often have pendulum swings in response to the market winds. For instance, Josh says, “[Companies] were growing at all costs 18 months ago. Since then, we’re moderating a bit and focusing on profitability.” A finance leader in these scenarios needs to be agile and adaptable, reallocating budgets, collaborating more closely with department heads, and adjusting models for the future.

As companies test and launch new ideas, their understanding of the customer and competitive landscape evolves rapidly. As they scale, the tech they need and the money it costs can skyrocket. In a way, the plans made six months ago might no longer apply at all. 

A strategic finance leader anticipates these rapid changes and prepares for them.

“As business partners, spreadsheets are, of course, important. But the difference between good and great is the ability to proactively intuit what questions will be asked and know the answers,” says Josh.

At any tech company, one of the key questions that would be asked is about headcount.

Integration of headcount management

Headcount management is the process of ensuring that you have the right people in the right roles to meet your short and long-term goals. Easier said than done!

• Modern organizations are dynamic, with headcount needs evolving rapidly.
• Tech talent is scarce and expensive.
• Return on investment in talent is not easily quantifiable.
• People can take on different roles, get promoted, or change locations, all while in the same organization.

Headcount impacts financial strategy in profound ways. “Headcount is a flow of expenses. It is not a one-time spend that I pay for and have it. Hiring somebody is committing to paying someone in perpetuity. Moreover, when you hire somebody, the impact is not just on this year's budget, but on next year’s and forthcoming years’,” points out Josh. 

This means that headcount planning and budgeting need to be done with a long-term view of the individual’s career graph in mind. Any forecasting or modeling must consider the evolving nature of people’s roles. It must account for fair compensation, benefits, diversity, equity, and more.

As the largest expense in most organizations, headcount management is a critical pillar in strategic finance. As a finance leader, your superpower is balancing people investments with operational scalability and business outcomes.

This demands a new set of skills that stretch beyond finance.

Modern financial leadership skills

“As a modern CFO, your biggest capability and responsibility is to translate what your department leaders are doing from their language to the universal language of business, i.e., finance. For our functional partners, we need to be the Rosetta Stone.”

In Josh’s career, he gained the experience to empathize with marketing, sales, product, and strategy. However, that breadth of experience isn’t necessary to have empathy for functional teams and their work. Some of the skills that would help are:

Strategic thinking

Be a business partner. Think strategically. Collaborate proactively with functional teams to understand their pain points. Use finance as the powerful lever you have to solve these problems and help functional teams understand each other.

Communication

“Being a business partner is really about understanding, trust, and empathy,” says Josh. While finance teams used to respond to requests for specific reports—say, show me the cash flow this quarter or what’s our ARR –– modern finance leaders are expected to support decision-making.

Josh suggests “building an innate understanding of what information is going to be imperative for somebody to make a decision, and sharing in a narrative that's easy for them to process.” So, a modern finance leader needs business acumen, storytelling skills, narrative ability, and impeccable intuition.

Coaching

Josh has led 5000-member teams and built the entire finance function from scratch. “I realized that I'm not particularly great at finance. But I think my real strength lies in leading and helping to develop people,” says Josh.

This is the most critical role for a leader. Especially in evolving finance functions, leaders need to foster a culture of continuous learning. “I don’t want my teams to be mechanics. I want them to be engineers,” he adds.

Implications for future financial leaders

Financial leadership is being redefined. It’s no longer enough to be the best finance person in the room; you need to be a strategic partner to functional leaders. You need to be a number cruncher, translator, storyteller, and trusted advisorto the CEO. Here are a few pointers for aspiring leaders.

Gain cross-functional experience. This doesn’t have to be moving from one role to another. You can simply be curious, observe, ask questions, and learn from colleagues.

Focus on the why. Interpret and translate data/reports to explain what’s happening in the real world. 

Plan for the long term. Understand deeply expenses like headcount, which are long-term and continuously flowing. 

Welcome a challenge: “I've never been qualified to do any role I've been hired for. But those are exactly the roles I want because I want to grow. I'm delusional enough to feel confident that I can figure everything out,” says Josh.

In an HBR webinar many years ago, Deloitte’s Steven Ehrenhalt argued that the job of a CFO included four roles: steward, operator, strategist, and catalyst. Especially today, this is even more pertinent because finance leadersengage with stakeholders outside the organization, like investors, partners, and marquee customers.

Their influence has grown, and so have their responsibilities. 

As a finance leader, to take charge of this expanding scope, you also need an evolving skillset. You must understand the business and intuit larger implications of decisions. You need to wield finance as a tool to achieve business outcomes. You must participate more deeply in areas like headcount management, where finance can play an empowering role (instead of the traditionally limiting budgets).

To be successful, you need to evolve with the role, taking on new challenges and building anew.

To learn more, watch Josh’s podcast episode of The Headcount People.

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