Three Analytics Insights for CFOs Seeking a New Approach to Data

  • Michael Ingemann, Director of CFO Services – International at Teradata

  • 04.04.2016 08:45 am
  • data

Business intelligence and analytics are topping the list for CIOs when it comes to deciding which technologies to invest in. With CFOs holding the rubber stamp for these big purchases, it’s clear that the heads in finance see how essential technology is for remaining competitive and for efficiently managing businesses. Among more forward-thinking CFOs, their interest in analytics and business intelligence solutions go beyond a general benefit for the company as a whole – these technologies can have a major impact on the functions these CFOs manage directly, including balancing the demands of financial and risk management, which can be achieved through a number of analytical tasks informed by the use and reuse of data.

The knowledge achieved through these analytical tasks can be absolutely crucial in an often volatile business environment, though many finance executives are still wondering why conventional technologies, such as ERP platforms, are unable to produce the right level of insight, or if an integrated finance foundation is really needed. While the conceptual value of taking this new approach to data analytics has already been discussed, there are still some insights that are unclear to many financial leaders:

What are the leaders doing?

A study by The Hackett Group showed that world-class companies have a higher level of standardisation, but they use 10.2 fewer finance applications per $1 billion USD in revenue than other companies. The same study also showed that world-class companies produce 781 fewer business performance reports per $1 billion USD in revenue than other companies.

The study proved that, while complexity does impede standardisation efforts, most complexity is actually self-imposed. High quality, targeted information leads to more efficient and effective decision making. This is just one of many data points indicating that leading companies are already embracing an integrated finance foundation to stand out from the crowd.

What are the challenges of building a finance foundation?

Despite the potential benefits, it can be difficult to move to a data-driven, multi-dimensional finance model thanks to:

·         Rapidly increasing volumes of stored data with no common definitions

·         Lack of industry standards

·         Changes in business software

·         Difficulty deciding which BI tools and data marts should be decommissioned or revamped

·         Poor data quality that prolongs time-to-value

To overcome these and other analytic barriers, make sure to plan in advance how you and all relevant stakeholders – from finance, IT, BI, and line of business management groups – will overcome them. Read up on comparable size companies who have tackled similar challenges and consult with your counterparts there.

How do we get started?

First, ask peers who have already travelled the path to point you toward potential technology and services partners with the ability and experience to overcome these challenges and help you best utilise and understand all of your data. Success also requires a very strong CFO department that can spell out and follow a set of guiding principles including simplification, standardisation and consolidation.

Equipped with such expertise and focus, you will be well equipped to perform these key initial steps:

·         Define how you want to view and analyse profitability

·         Identify who’s asking for profitability analyses, and how they are using them

·         Document and validate business requirements

·         Create a functional definition of the profitability model

·         Conduct a detailed data assessment

·         Develop and prioritise a roadmap

·         Approve the roadmap and start small

·         Create a logical data model

·         Develop calculations and business rules

An effort that is sometimes viewed as too all-encompassing to be practical becomes much more feasible when it’s broken down into a clear list of steps such as these. By following the proven path toward establishment of a fully integrated finance analytic foundation, including the related multi-dimensional insight into your company’s profitability, finance and IT organisations can team to provide analytic capabilities that empower the C-suite and make a measurable contribution to improved company performance.

Related Blogs

Other Blogs