Peter Sondegaard of Gartner said, “Information is the oil of the 21st century – and analytics is the combustion engine.” It’s hard to disagree.
Technology has advanced at a dizzying pace over the past decade. And new, powerful tools – backed by predictive insight – are driving wholesale change in the operational decision-making processes of businesses of all sizes and in all sectors.
There’s no doubt that these changes bring powerful opportunities – but they aren’t without their challenges.
Simply put, having the data alone isn’t good enough – it’s all about how that data is exploited for competitive advantage. And it seems inevitable that the CFO will be right at the heart of this data revolution.
Increasing expectation to ‘lead’ on analytics
As the volume of big data has soared, there has been an ongoing discussion around which business function should really ‘take the lead’ when it comes to analytics. Surveys suggest that most businesses (23%) allocate this responsibility to a ‘business unit or division head.’
But the next most commonly cited analytics leader is the CFO, at 18%.
From retrospective to real-time
It’s a natural fit.
The role of the CFO has, after all, always been data-driven to a significant extent.
The difference is that, even as recently as a decade ago, CFO’s were primarily concerned with planning, budgeting and forecasting based on historic data.
In other words, driving a vehicle forward while looking solely in the rear-view mirror.
A predictive analytics model changes the game by combining real-time data, with smart analytics, to establish a single source of truth that can be used to inform day-to-day – even minute-to-minute – operational decision-making.
From number-crunching to strategising
If we accept that the ‘new’ CFO sits at the head of the table when it comes to data and analytics – and that data and analytics are the key drivers of modern business strategy – then we must also accept that the modern CFO must wear a number of hats: he or she is not just a number-cruncher, but a key strategist, too.
The CFO is rapidly evolving from a technical expert, to a commercial and business leader – someone closely involved in the day-to-day running of the business and all key business decisions.
For this reason, we’re seeing an increasingly close, and multi-faceted, working relationship between CFO’s and CEO’s in many businesses.
In simple terms, these changes dictate less time focusing solely on the numbers, and more time focusing on what they really mean.
Establishing a single source of truth
In order for their company data to provide accurate insights and actionable business transformation, CFO’s need to establish a single source of truth – a consistent, comprehensive and cross-departmental view of data in their organisation.
It goes without saying that this isn’t always easy, particularly in large businesses with complex organizations and disparate systems.
It is a constant race against time –businesses continue to change…technology plays catch up…and more and more time is spent with heads in spreadsheets.
Only once this clear consistent view is acquired can CFO’s make solid decisions and champion the value of data throughout the business to other managers and decision-makers. It’s a pressing priority.
Key components in a master data strategy
So what steps do you need to take in order to master big data? It comes in at such a phenomenal speed, volume and variety that only CFO’s with a clear strategy are likely to succeed. Here are a few essential steps:
– Success begins with a clear definition of your goals. What do you want to achieve using big data? Will you speed up existing process or identify new products or services? Clearly, you should focus your efforts on the activities that will provide most business value.
– There’s a reason it’s called big data – there’s a HUGE amount of data to work from. Gartner research predicts that big data is on course to grow by 650% over the next five years. For this reason, you need to be selective when identifying which data you need to capture, in order to support and achieve your business objectives.
– Roll out the data on an enterprise-basis – not just departmentally. As mentioned above, successful CFO’s are increasingly champions of data throughout the business. A single source of truth is required and this needs to be a focus throughout your whole enterprise.
– Hire the right people. We’re increasingly seeing enterprises recruit data scientists with business experience and insights, to help apply data analysis to specific challenges and opportunities.
– Despite the phenomenal growth in big data, I.T. expenditure still lags way behind. Clearly this isn’t great – so you need to invest in I.T. This involves standardizing your technology to support that ‘single view.’ It’s not just about processing new data but harnessing existing data, too – this is often the best starting point in order to achieve optimal short-term results.
As technology continues to become the key driver of competitive advantage, somebody in the organization must take ownership. And, if not the CFO then who?
The days of the CFO as book-keeper are gone. The new breed of CFO needs to be a steward and a strategist – operating at the intersection of financial services, technology and big data, to identify opportunities for growth, organize resources and ensure strong returns for investors.
The modern CFO is much less concerned with the numbers and more concerned with what they mean; much less concerned with analysing the past, and more concerned with the present and near-future.