The CFO Approves! What it Takes to Get a Yes From the CFO

In some minds, a successful business case is one that brings CFO approval for a funding request.  

CFO Success is What Matters


Understand what the CFO is looking for in your business case.

For many case builders, CFO approval is the very definition of business case success. However, participants in our Business Case seminars tell us that this kind of success can have a short life.

A business case that wins CFO approval is a case that will soon be put to the test. CFOs and others who decide funding requests know that they, themselves, will bear accountability for the actions they approve. For them, approving an action is not “success,” when predicted results do not arrive as promised.

CFO-IT Magazine recently asked 241 senior finance executives the following question:

“In the past year, have your IT expenditures produced the return on investment you expected?”

Of the finance executives who responded, fifty seven either said “no” or “unsure.” Only 9% said they had resolved the ROI debate by relying on one or more formal approaches to ROI for all or most IT expenditures. The rest are either using other decision criteria, or searching for other criteria.

Most financial specialists are now acutely aware that: “ROI” and “Business Case” are not interchangeable terms. Everyone knows that ROI only predicts what happens if things go as the proposal author hopes. This means that the ROI metric, by itself says nothing about the likelihood of seeing those returns. And, ROI by itself says nothing about what it takes to bring in returns or the risks they face. CFOs and other decision makers know this already. If you are bringing a funding request of your own into this climate, you probably also know already that high ROI figures alone will not win the “Yes” you want from the CFO. What else does it take?

Success is More than CFO Approval

Start by redefining “success” for the business case, this time from the CFO’s point of view. A successful business case:

These are precisely the areas where “ROI” has failed, so often, when used as the sole basis for funding decisions.

Bring Them What They Need

There is nothing wrong with the return on investment concept itself: It makes very good sense to compare projected costs to projected returns. But ROI is only one financial metric, and “making the case” in the mind of decision makers requires something more. Senior decision makers want concrete evidence and a credible rationale that shows convincingly that a proposed action represents the better business decision.

What Does A “CFO-friendly” Business Case Include?

Build your case to deliver what the CFO is looking for:

CFO Criterion 1: Important business objectives addressed by your proposal

Business objectives addressed by your case may go well beyond a good ROI. The value of business case benefits should represent the worth of tangible contributions to meeting business objectives.

CFO Criterion 2: Action scenarios compared fairly

The proof that your proposal is the better business decision is rests on a compelling scenario comparison. Each scenario in the case predicts business costs and benefits that should follow under one course of action. A scenario for implementing your proposal should compare favorably to alternate scenarios, including a “Business as usual” scenario.

CFO Criterion 3: Non financial benefits made tangible and valued

Your proposal may project contributions to meeting important non financial business objectives, by lowering risk or improving branding. And, it may help meet improve product quality or customer satisfaction. These outcomes are legitimate and important business case benefits and therefore should be valued in tangible terms.

CFO Criterion 4: Complete financial metrics for each scenario’s financial outcomes

Financial metrics such as return on investment (ROI), net present value (NPV), internal rate of return (IRR), and Payback period may serve as the primary decision criteria that your financial officers are looking for. Financial specialists often develop strong individual preferences for one or more of these metrics, based on their experience in the company and the industry. As a result, in pays to find out their individual views and preferences on financial metrics—before submitting your proposal.

CFO Criterion 5: A complete cost model for the case

Cost estimates in the case should apply a single cost model to all case scenarios. This is because decision makers need to assure themselves firstly hat all case scenarios that all scenarios were compared fairly with each other. Secondly, it also shows that all relevant costs are included and only relevant costs are included. And, thirdly, it also shows clearly that no unpleasant cost surprises are in store, later, as proposal implementation begins.

CFO Criterion 6: Thorough, credible risk and sensitivity analysis

The business case predicts the future, after all. Everyone knows that predictions are based on uncertainties and that actual results will differ somewhat from your predictions. You cannot eliminate all uncertainty from your predictions, of course, but you can minimize risk and measure what remains. For an introduction to business case risk and sensitivity analysis, please see Business Case Essentials.

CFO Criterion 7: Conclusions and recommendations point to business objectives

Impacts and outcomes from implementing your proposal have real value to the organization only if they contribute to meeting business objectives. As a result,  business benefits in your case have real value only if you establish and measure these contributions in concrete terms.

Failure on any point can sink the case

When a case fails to address one or more of these points, case credibility, practical value, and accuracy suffer—in the eyes of the CFO. For examples and guidance on all of these points, please see Business Case Essentials.

Deliver Accountability

CFOs and other high level managers know, increasingly, they may have to account tomorrow for decisions they make today. This does not mean that every decision has to bring a net gain or that stockholders and boards of directors have absolutely “zero tolerance” for errors. Accountability does mean, however, that CFOs must be able to  show they made a good decision, using information available at the time. Consequently a complete “CFO Friendly” business case delivers this kind of accountability. A single ROI estimate does not.

Take Action! Further Resources for Building Your Proposal

Learn and practice the premier approach to case building at a  Solution Matrix  Business Case Seminar. Learn more about case building and case design from the Business Case Guide, or the most frequently cited business case authority in print, Business Case Essentials.

By Marty Schmidt. Copyright © 2004-2017.
Published by Solution Matrix Limited.
Find us on  Linkedin   Google+   Facebook