1229: Finding the True Cost of Connectivity | with Sarah Taylor, CFO, MCNC

0:00Support for CFO Thought Leader comes from OneStream, Trusted Data, Faster Decisions, and Salesforce. Explore new research on the future of finance and AI at Salesforce.com slash CFO Report. Hello, this is Tom Steer, CFO of Soakin, and you are listening to the CFO Thought Leader podcast. This is episode 1229. The hard thing with five-year forecasts is they're really only accurate as of a point in time.

0:33Sarah Taylor: And I know this, but it gets a little challenging for my colleagues when they're looking at some of those out years and they think that, oh, we must absolutely stick to that. And there's a bit of an education that, hey, this is kind of a living, breathing document that we generally want to follow. You know, in our case with our five-year plan, the goal there is year-over-year improvements in our operating margin until we're functioning at a steady level. And so that's kind of the recurring theme that I try to re-communicate is, hey, it's not about this specific percentage target next year. It's are we doing better than last year?

1:13Sarah Taylor: Because that tells me that we are running the business better. We are being more efficient and optimizing the dollars that we have. Hi, it's Jack. On today's show, we speak with Sarah Taylor, CFO of NCNC. What happens when an organization has a mission everyone believes in, but not every investment supporting that mission makes financial sense? For CFOs, that's not always an easy conversation to have, particularly when the proposed investment promises to serve communities that could genuinely benefit. So how do you introduce greater financial discipline without appearing to challenge the mission itself?

1:59And how do you get colleagues to think differently about costs, returns, and the resources already available? These are questions that surfaced in my conversation with Sarah Taylor, CFO of MCNC, a non-profit telecommunications provider in North Carolina. You'll hear our talk after this.

2:26AI is changing the finance function, but how much business value is it actually delivering? According to new research from Salesforce, 90 % of finance leaders using AI report a positive return on investment. And as AI agents enter the picture, finance leaders are seeing opportunities to improve productivity, reduce costs, and strengthen forecasting. But there's another side to the story. CFOs are also confronting growing revenue complexity with more subscription, consumption-based, and hybrid business models to manage. And that raises an important question. How can finance leaders gain the visibility they need to make better decisions while putting AI to work?

3:16Salesforce explores these challenges and the opportunities ahead in its latest CFO research. Discover what finance leaders are saying about AI, revenue complexity, and the evolving CFO role. Visit salesforce.com slash CFO report. That's salesforce.com slash CFO report. Hello, CFO Sarah Taylor is with us. Sarah's career began in retail management before she moved into accounting and eventually spent more than a decade at Memorial Care. where her responsibilities expanded beyond finance into business intelligence and clinical operations. Today, as CFO of MCNC, she's bringing that broad operating perspective to financial planning, investment decisions, and organizational change, helping leadership connect financial insights with the long-term needs of the business.

4:16Sarah, welcome.

4:18Sarah Taylor: Hi, nice to meet you with you. Thank you for joining us. You started in retail management before moving into accounting. What prompted that change, really? I always wanted to be an accountant. Retail management was kind of just the job that I had when I was 16, and it carried me through college. But ultimately, sitting in one of my college classes, I learned about the field of accounting, and it piqued my interest. And here we are today. When you look back, what are the experiences that you feel best prepared you? To be CFO? um so when i was at a public accounting firm it was a small local firm there were lots of great opportunities to get into lots of different things so i was doing audits and reviews and i mean when there was downtime i was even doing bank reconciliations and helping the in-house bookkeeper with her check runs and so it gave me a really nice broad knowledge of lots of different industries lots of different things um one of my favorite skills i walked away with was how to respond to the dreaded IRS letter.

5:23Now, you led both finance and business intelligence teams during your career. How did that experience change your view of finance?

5:32Sarah Taylor: It broadened my perspective quite a bit. So the business intelligence team that I was on was actually part of enterprise IT. And so working with more of those technology-based folks and taking the opportunity to tap into their knowledge, really helped me to better understand things about data warehouse, data quality, data governance. And then I was able to bring all of that into finance because I was doing financial planning. And so to be able to build models, I need good data. And working in business intelligence gave me that foundational layer to understand how data really works. When you identified new opportunities for yourself, I guess I'm getting to, did you raise your hand?

6:17Were you one of those people who said, I'm interested?

6:19Sarah Taylor: I did. I did. So when I was at Memorial Care, I was kind of in like a controller-based role and had done kind of everything that I wanted to do with that. And then realized, based on the other individuals around me, the roles that were there, I needed to expand my knowledge. And so that's when the role in business intelligence opened up. And I felt like one of the areas where the business was lacking was the IT folks who were building all of the reports and the data. They didn't understand what the business was asking for. And the business didn't understand how to translate their needs into how IT folk were able to speak it.

7:02Sarah Taylor: And so I was able to bridge that gap. And it sounded really interesting and it really was. Did that sort of swing open the door for you as a leader? I mean, were you thought of yourself as a leader at that place in time or when you took on that role, perhaps that's when other people recognized? I already thought of myself as a leader. It did expose me to other people in the organization that I hadn't previously worked with. And so to be able to get in front of them, to build that rapport with them, definitely helped me professionally at that time. What about mentors? And they don't have to be finance leaders who influenced you, but others.

7:47Were there mentors along the way?

7:50Sarah Taylor: Yeah. So I had my one boss who was just incredibly supportive. And then a few other leaders at the organization that worked on the real estate side, that worked on the IT side, that they were great sounding boards, they offered great advice. I was able to see, you know, how did they navigate challenging situations with getting funding for certain projects and just leveraging their knowledge on how to navigate some complex situations. at mcnc you've pushed for stronger focus on project roi can you fill us in a little bit how did that approach uh impact the culture it well it's still impacting the culture but mcnc is a great company they've been around for a long time um and we're kind of at this inflection point where you know we really need to be taking a closer look at what does it really costs to deliver on those services.

8:51Sarah Taylor: And so just having the conversation, asking the questions of, hey, why do we do it this way? What is the value? If we're going to build this particular fiber segment, what's our goal with how much are we going to sell on that? Who are the customers that we're trying to sell to? How are we going to structure lookbacks? And forgive me, I should have asked you, but for listeners who are unfamiliar with MCNC, what does a company provide and whom does it serve? Yeah, so we're actually a non-profit, but we function in the telecommunications space. So what we do is we provide internet and connectivity services, as well as a variety of other technology services to K-12, higher education, healthcare, and government agencies.

9:38Sarah Taylor: We, in a nutshell, we own and operate a 5 ,000-mile fiber optic network that runs all throughout the state of North Carolina. Speaking of that, this infrastructure, this intensive infrastructure environment, how do you approach long-term investment decisions when resources are limited, let's say? Right. Tread very carefully. Again, I leverage a lot of data in any sort of presentation that I'm making. So, you know, with the understanding that, hey, we have a limited amount of funds that we can choose to do things with. And there's a number of projects where we can connect the more rural areas of the state and provide that innovative solution.

10:28Sarah Taylor: So we have lots of areas that we can choose from. And so a lot of my role is educating my colleagues on, you know, how do we evaluate between option A and option B, providing different data, talking about the variables that go into that. What would be some of the trade-offs you have to make, perhaps? You know, it might be going into a more rural area versus more of an urban area.

10:59Sarah Taylor: How many customers would potentially be on a particular, you know, fiber segment? And And so how many more potential customers could we connect? And a lot of those might be schools, community anchor institutions. And so choosing between, you know, do we go to an area that has a high need, but maybe only has a couple of community anchor institutions versus an area that maybe has a few more and maybe has a few more options with who they can get their Internet from. Um, help us understand MCNC's funding and revenue model and, you know, which sources of financial support are most important to its operations.

11:43Sarah Taylor: Yeah, so we're actually structured as a nonprofit. So we're generating all of our revenue from those technology and connectivity services that we're providing. Um, so we don't really function in the space of soliciting with donors. We do apply for grants when they fall in our space. That makes sense. And lost by train of thought there. But basically, so customer revenues is really the main source of our income. Now, I understand that you've introduced new financial reporting at MCNC, and I'm wondering which operating measures now give you the clearest picture of the company's performance. Yeah, great, great question.

12:28Sarah Taylor: So we will, right now we're focusing on operating margin, as well as just days cash on hand. As I've created different slices of reports, I mean, there's no limit to the options, but really trying to get our operational folks focused on that margin. How are we maximizing the infrastructure that we have? And operating margin is a good, clean way for us to be able to measure that. So I build that in all of the reports. In fact, we just changed the presentation that we're making to our board. So it's no longer a full set of financials. It's just a couple of metrics and really talking about those in depth.

13:10What can you see maybe today that wasn't visible before? How did it do? but actually anything to say deeper into it?

13:21Sarah Taylor: Well, we're definitely looking at costs. We need better visibility into the costs that it takes to run our business. I think before there was a lot of allocating costs in a lot of different ways that probably just don't make sense for the business that we're in today. And so right now we're kind of sifting through a lot of that complexity to really understand what does it cost to run the business? What does it cost to connect that new customer? I wanted to follow up on ROI with you. Is that all right? Sure. You've worked to strengthen the focus on Project ROI. Can you maybe walk us through an investment decision that illustrates the change?

14:08Sarah Taylor: um so there was a opportunity maybe about a year ago where we could build some additional fiber in a particular area of the state um and we were going to be on the hook for for putting in most of the investment there was also potentially some some state appropriations that would be available. And so as we looked at that, you know, we were trying to figure out, okay, what customers are we going to serve with us? What's the opportunity? And as we, as we dove into it, it just, it didn't pencil. And where that was different for my organization was before it would be, oh, somebody else is going to throw some money in.

14:55Sarah Taylor: Okay, well, we should just do it. but my approach to it was, well, hold on guys. Yes. Somebody else is putting some money in, but we're also putting a lot of our own money in and we're not going to make our money back on this. So it's not a good investment. And ultimately the rest of the leadership team agree. Wonderful. Thank you. I want to talk to you a little bit about AI given MCNC's technology mission, where do you see the greatest opportunity for AI to improve operations or service delivery yeah we with looking at cost reductions um you know leveraging ai to take over some of those duties of employees that are maybe maybe leaving um we never want to find ourselves in a place where employees feel so overloaded and getting burnt out and when employees depart for any number of reasons, I think it's crucial for us to first turn to AI and say, how can we leverage AI to maybe eliminate what that departing employee did or minimize, find efficiencies for what that departing employee did?

16:08Sarah Taylor: Because if we can not hire that employee, we can get significant savings compounded year over year by not replacing. And so I think there's a lot of opportunity there. Now, you've led, again, both finance and business intelligence teams. We wonder, where do you believe AI could most meaningfully improve financial planning or management decisions? I think there's a lot to be said with forecasting. I think there needs to be a little bit of data quality done up front. but you know if i can build out a model where i've identified a few key metrics then we can build something that then can be shared broadly with the organization so they're not necessarily relying on finance to update the forecast we just we have a you know a group model and everybody kind of pings it as they want hey tell me tell me what happens if you know we sell this additional route if we gain this many customers.

17:17Along the way, I understand you've introduced five-year forecasting, a stronger focus on long-term returns. What's maybe proving hardest about changing how investments are evaluated?

17:37Sarah Taylor: The hard thing with five-year forecasts is they're really only accurate as of a point in time. And I know this, but it gets a little challenging for my colleagues when they're looking at some of those out years and they think that, oh, we must absolutely stick to that. And there's a bit of an education that, hey, this is kind of a living, breathing document that we generally want to follow. In our case with our five-year plan, And the goal there is year-over-year improvements in our operating margin until we're functioning at a steady level. And so that's kind of the recurring theme that I try to re-communicate is, hey, it's not about this specific percentage target next year.

18:25Sarah Taylor: It's are we doing better than last year? Because that tells me that we are running the business better. We are being more efficient and optimizing the dollars that we have. at memorial care you eliminated i think more than 80 hours from the budgeting process and i'm wondering how you were able to bring that forward what did that experience teach you about making planning more valuable yeah so when i stepped into that financial planning role i i had been more on the receiving end of it because i was at one of the subsidiaries i was responsible for providing some of the schedules that rolled up into the financial planning team.

19:04Sarah Taylor: So I had seen it from that side. And so I knew what it felt like to, it was just this frenetic firing off of emails. And sometimes the data request that the financial planning team was requesting didn't even make sense. Like we hadn't even put that data together yet and we couldn't because we needed other decisions upstream first. So having been on that side and then moving to the financial planning team, I knew, okay, we need to just dissect this whole thing, basically blow it all up and put it all back together. And, you know, really try to be very methodical with identifying, all right, what are the prerequisites for that we need for this decision?

19:45Who are the

19:46Sarah Taylor: people that we need at this, at this table around, you know, global assumptions with inflation? so trying to get all the right people at the table and just keeping things really organized having lots of i don't want to say lots of checklists but just trying to keep things organized and make sense of all of it so we are up to what we like to refer to as our finance strategic moment and we're just looking for a moment of insight that you've experienced along your career, you've had many of these, might have been 10 years ago, might have been last week. What comes to mind when we ask for a finance strategic moment?

20:27Sarah Taylor: So I wouldn't even say it was necessarily one moment, but I think one thing that I have always done that has shaped who I am today is I have always been very curious. So every time that I am interacting with a peer, a vendor, whomever, you know, I want to better understand what are your goals? What are you trying to achieve? And it could be even something as simple as, you know, maybe I'm trying to put in for a expense reimbursement and I want to understand, well, why do I need to fill out this field on this form? And where does this go? And why does it go there? I did that a lot when I was with the business intelligence team.

21:05Sarah Taylor: And it was that curiosity that also helped to build a really strong rapport with my colleagues. And so now suddenly we have a positive working relationship, I can call on them maybe when I need a favor. If I forgot to put a form in on time, I can ask them for a favor. They can ask me. But also that curiosity helped me to better understand their role so that when I am maybe looking at a new process and that individual needs to be involved, I know what it is that they're looking for. So now I can have a more informed process that achieves everybody's goals.

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23:14We want to have you look back again for us. And we're really interested when you first were appointed CFO, that first 60 days, There was something unexpected about the role. There was something where someone told me. You can go back in time and give yourself this piece of advice. What would that be?

23:35Sarah Taylor: so as cfo a lot of my time is spent assessing risk and i live in kind of the this unknown space right i am i am regularly making decisions based on a whole bunch of different variables and you just have to be comfortable with that and everybody else around the table is looking to you to be that pillar of strength, to be stable. You are putting your stamp of approval on things and that weighs a lot on everybody around you. It's very important. We always like towards the end of the podcast to ask our guests to reflect a little on the personal side for us. We wonder if there's something your colleagues just don't know about you, something from your past, something, accomplishment, maybe a feat, maybe an interest that you had.

24:27Anything? Yeah.

24:29Sarah Taylor: So interestingly, a few years after I graduated from college, I actually went to be a house mom at a college sorority in the pursuit of saving money. Because as the house mom, you got to live in the sorority house for free, didn't have to pay utilities. You got to eat the food that was there. And so that was quite the experience. Kind of functioned like a property manager. So if a plumber had to come, you had to work with them. But what was interesting about the role was you had to do the grocery shopping for the 24 girls that lived in the house. So I was at Costco every Friday night with a cart and a flat and filled it up.

25:09And then also every Monday, we had to cook dinner for the entire chapter.

25:16Sarah Taylor: There was 100 girls in the chapter, but maybe 60 or 70 would actually show up. And so we cooked dinner every Monday night. There was room and board included. so yes so that was that was a year is it it was two years two years wow yes um we wonder if you would have a book you'd like to recommend it doesn't have to be a business book or a maybe it's a resource something streaming something you've relied on i don't yeah uh one book that i read several years ago was called never eat alone i think the author was keith ferrazi and the theme of the book was really around building and nurturing your professional relationships and so one of the big takeaways from that was even within your professional relationships it's not just when you get laid off and you need a job what i have found to be most helpful with the relationships is in a finance role you're often sharing hard messages whether it's verbal or it's written.

26:18Sarah Taylor: And when you have a rapport with the people that are receiving that message, they hear your tone. They know what your intentions are. They know where you're coming from because you've talked with them. They know kind of who you are. And oftentimes it might not soften the message, but it helps them to better understand where you're coming from when you as the finance leader have to share that. Wonderful. Thank you for that. we're up to our final question. This is where we ask you to look forward finally. And what we want to know are your priorities for the coming 12 months as a CFO. What would those be?

26:54Sarah Taylor: Yep. So biggest thing for us is better visibility into the cost of running the business. So right now what we're working on is actually re-implementing NetSuite, overhauling our chart of accounts, the departments, all of the things that enable us to dissect our business, really tell us how much does it cost to run this? What are our indirect costs? And it's going to be quite a lift, but overall, I think it'll lend us a lot of value over the next five years, at least. Sarah Taylor, thank you for joining us on CFO Thought Leader. Thank you.

27:45Hello, we're benchmarking the CFO path. Join 500 finance leaders helping define how today's CFOs rise and lead. If you're a CFO or senior finance executive, contribute your experience. It takes just a few minutes and you'll receive early access to the findings. visit cfothoughtleader.com slash benchmarking.