CFO Insights: Adam Meister of Clari Talks Balancing Growth and Profitability in Technology Spending
Shifting economic conditions are forcing companies to reevaluate their financial priorities. Many CFOs are looking at technology solutions with increased scrutiny, weighing the ROI and overall costs as compared to other vendors. Although cybersecurity spending is often shielded from significant budget cuts due to the greater risks involved, this does not guarantee immunity to cutbacks.
There are many factors to consider when evaluating overall profitability and internal budget. In order to gain more clarity in these areas, I spoke with a few key Chief Financial Officers in the industry. This blog is the second in a new series of articles in which I’ve interviewed industry-leading CFOs to gather their insights and advice about current macroeconomic conditions. After first speaking with Sam Wolff from Domestika, my second discussion was with Adam Meister, CFO at Clari.
Throughout our conversation, Meister provided his thoughts on the current macroeconomic environment, as well as key considerations for CISOs as they prepare budgets for their CFOs this year.
A “New Normal” Macroeconomic Environment
“I think a lot of companies are talking themselves into expecting a decreased demand environment. And so that's going to get codified in people's budgets for this year.”
One of the hardest things to disaggregate for many companies right now is not just the impact of the current deterioration of the macroeconomic environment, but also how inflated the market demand was in the two years preceding this. Companies are struggling to reconcile those contradicting variables and tease them apart in an effort to make a prediction for the next year and beyond.
Adam believes that most CFOs expect a recession, even if it's relatively shallow and hopefully relatively short-lived. Many companies are expecting a decrease in demand and subsequent sales as a result of the current conditions, and there will likely be a decrease in available budget across the organization as a result.
A Balanced Approach to Growth and Profitability
“Now is the time for organizations to really double click and inspect their go-to-market motions, the productivity of those motions, the benchmarks relevant to their industry, and start to push toward more long-term targets.”
In order to combat the current macroeconomic shifts, Adam emphasizes the importance of a balanced approach to growth and profitability and suggested implementing a longer horizon for organizational objectives. Separating go-to-market from everything else is an important aspect of this.
Previously, companies have prioritized taking as much market share as they can, as quickly as possible, and at any cost. This motion has spread companies thin in the current environment, and now shifts are being made to focus on reducing costs.
Some of the same logic applies outside of the go-to-market engine. Adam believes that now is the time to do necessary housekeeping and think about how the state of the organization today should shift to prepare for the next five years. If there are changes organizations need to make or new growth vectors to explore, now is an opportune time to do that.
More Scrutiny on Technology Spending
“I think the CFO's job is to create enough rigor to assess the bare requirements for the organization, and then create incentives for people to make the [necessary] trade-offs, independent of a budgetary hammer coming down.”
So how does this shifting macroeconomic environment affect technology spending? According to Adam, there is increased scrutiny on new vendor selections. He posits that most organizations are likely experiencing a digestion phase right now, stepping back and reconsidering their internal processes and determining which needs must be prioritized. Then, they are asking themselves which technologies are best able to support that process and where they can potentially consolidate or replace vendors.
Avoiding redundancy in solutions is becoming increasingly important. The finance team plays an important role in creating awareness across the organization and providing insight to where there might be overlapping solutions. Adam also sees a lot of companies shifting toward the cloud in a conscious effort to retire some of that historical spend. He says it's not just the solution itself, but it's also the people that are supporting all the solutions. Now more than ever before, it’s important to understand which tools are necessary and which are now outdated in order to meet business growth objectives, keep security top of mind, and reduce spend where possible.
Prioritizing Cybersecurity and Reducing Risk Tolerance
“You can't under-invest on what's going to keep your service up and running, available, and secure for your customers.”
Trust is critical to the consumer experience, regardless of industry. Adam insists that companies can’t afford to risk anything that could potentially create an outsized negative impact on demand, particularly in an environment when it's going to be that much harder to find new customers. That being said, CISOs must communicate the importance of investing in the right cybersecurity solution to their CFO in order to secure the necessary funding.
One way to do this is to outline a view of risk tolerance or risk acceptance. Connecting your budget to some big-picture scenarios that could potentially affect the organization and understanding the risk trade-off will help create a frame of reference for your CFO. Describe the vulnerabilities and what the outcome would be to the business if they were exploited. Communicate the probability of attacks and where your attack surfaces can be strengthened to prevent high-profile losses. Giving this context will hopefully allow there to be a level understanding of where and how much of your budget to invest in cybersecurity—and which parts of it are most important to your organization.
Advice for CISOs
“Create trust with your CFO and a security baseline, so that you can have that honest conversation about tolerance.”
Aligning with your CFO is crucial to prioritizing security technology and ensuring a prosperous financial future for your organization. With that in mind, Adam suggests a few best practices for communicating with your CFO:
Provide transparent benchmarks. Give examples of what security spending looks like for other companies of your size and in your industry and how that compares to your organization. Give your CFO the data he or she needs to make informed decisions.
Come equipped with a view of risk tolerance. Connect your budget with big-picture scenarios of risk tollers.
Outline your risk priorities. Highlight the top risk areas that require the most attention and how they can be remediated. Be prepared to rank priorities based on risk, knowing that a solution to every need may not be possible.
Offer clear distinctions between security solutions. One of the hardest things for CFOs and security teams is that there's so much overlap in security. You may need to explain why multiple tools are needed and if/how they can work together.
In the end, the outcome of this conversation comes down to how strong your relationship is with your CFO. There needs to be a degree of trust established in the budget conversations—not a tug-of-war to be won on either side.
Why CISOs are Choosing Abnormal
As the economy shifts and budgets tighten, it’s more important than ever to showcase the value of the security tools you use to protect your organization.
To help security leaders build the most impactful business case for email security investments in 2023, Abnormal commissioned Forrester Consulting to research the cost savings and ROI companies can achieve from implementing Abnormal. The Total Economic Impact of Abnormal tells the stories of four large, global organizations that deployed Abnormal to secure their number one attack vector: email.
Learn how investing in Abnormal Security can yield a 278% ROI within three years and help your organization avoid $4 million in losses from business email compromise. On top of that, Abnormal can save your SOC team 5,000 hours every year by automating email triage and investigation. You can read the full report here.
Interested in learning more about how Abnormal can protect your organization? Schedule a personalized demo today.
See the Abnormal Solution to the Email Security Problem
Protect your organization from the full spectrum of email attacks with Abnormal.