In this difficult economic environment, what’s front-of-mind for CFOs when it comes to evaluating spend? And how can vendors help simplify that decision-making process? Sam Goh, SVP Finance at Onfido, shares his thoughts.
Hi 👋 who are you?
I’m Sam Goh, I'm Onfido’s SVP Finance.
Your colleagues have their eyes on a new solution - what happens next? Who else needs to be involved?
Ideally a procurement specialist also gets involved. They should have a list of internal tools, with all the functionality, so they can make sure there’s distinct value in the new tool when a new vendor is introduced into the mix.
The tools can have some overlap, but not too much - that’s a situation colleagues need to avoid. For example, if you’re looking to buy a sofa, and you like the blue option, but also the green option, buying both is not the best solution!
You need to decide what functionality or value is most important to you and your team.
The main green flag is that the tool is business critical and colleagues can’t do their jobs without it
What information is a priority for you when considering an approval request?
I would highlight three points:
- Is it business-critical?
- If it’s a ‘time-saving tool’, can we track productivity improvements?
- Is it possible to have the ‘core’ functionality and not pay extra for the added requirements?
For example, we had a tool to calculate the sales team’s commission, but adding on reporting would be an extra expense. We decided on a hybrid solution where we took the tool for the core functionality and manually handled reporting.
Have these considerations changed due to the economic climate?
Yes. Business-critical tools are the priority - we’re unlikely to approve other software spend unless there is a crystal clear value argument.
This is part of a broader range of measures to conserve cash burn across the business. We’ve also frozen headcount unless it’s critical to the top line.
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What are the ‘green flags’ that would lead you to approve a product or service?
The main green flag is that the tool is business critical and colleagues can’t do their jobs without it.
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What can vendors do to make the decision-making process easier?
Vendors can ensure they:
- Demonstrate a solid business case
- Have the necessary certification, whether that’s SOC2, ISO, or something else
- Offer favourable payment terms - for example, no upfront payment, or the option to pay quarterly instead of monthly
We’re spending only when necessary, so for vendors to thrive, they need to make sure the value they offer is crystal clear
What do vendors usually get wrong?
Vendors can sometimes forget to evaluate the entire value chain or involve key stakeholders earlier.
To be successful in their business case, vendors need to look at the investment from the perspective of cost per user, and make sure the trade-off is balanced.
It’s also useful to have options around whether it’s possible to agree to a longer term and have a lower unit cost.
Do you think that tech budgets will increase or decrease over the coming year?
Tech budgets are under scrutiny right now, and most businesses, Onfido included, have been advised by investors and peer groups to clamp down on all unnecessary spend unless it’s business critical.
We’re spending only when necessary, so for vendors to thrive in this challenging environment, they need to make sure the value they offer is crystal clear.
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