The role of finance has changed. The job is no longer to just produce financial information – these processes are being or should be automated by their ERP systems.
What CEO’s now demand are heads of finance that can actually provide analysis and insights – being a trusted business partner and adding value to the organisation, according to Jeremy Hurter, chief financial officer of Keyrus SA.
I believe that nowadays finance needs to take the lead in providing a platform that empowers all parts of the business to analyse their own costs in order to gain insights and turn these insights into value. We are seeing time and again that when users have clarity and transparency they immediately take action to make improvements.
And how do we actually obtain these insights that can be turned into real value? By using the right information for the right decisions of course – and that is called data. Good data is critical for making great decisions. The way I think about the data held in the organisation is that it is the organisational memory.
Every time a transaction is recorded or some piece of master data is recorded, it adds to this memory. So in effect, this data probably knows more about a business than anyone else. And, if you leverage this data with great business intelligence (BI), you can create another member of your executive committee or board who tells you things and shares insights with you in order make decisions that are based on facts.
Previously it was believed that we should transform data to insight, whereas now we say that we transform insight into value. You need to analyse the data, gain those insights and then take action in order to generate value from the data. But is the data that finance owns enough? Well, in my opinion it’s not.
In order to get great insights you need to enrich finance data with data from other areas. That means that finance departments no longer own all of the data.
Historically, finance has had access to the data in the ERP system. However, you need to consider the data that is not directly related to finance such as: desktops, server usage, memory usage, personnel and even who uses the infrastructure in the organization. Despite this obvious need to cast the net further than just the normal number crunching of ERP systems, there is still a strong trend of Finance wanting to own the numbers.
They create the reports used by the organisation and are very protective of these numbers. Finance needs to change from being guarded about the data, to being open to introducing new analytical tools that allow users in other parts of the business to answer their own questions.
Ultimately, the solution lies in letting the business perform their own analytics. This means that finance becomes a partner with the operational units within the organisation, which then assists everyone in fully understanding what drives costs.
My advice to anyone heading up a finance department is, to realize that data may not always be granular enough or clean enough, but that doesn’t mean you can’t use it. Don’t wait for data to be perfect.
Start with what you have now. As the process moves forward and people interact with the data the quality will improve. Following this, there will also be a move to ensure processes around capturing data improves.
So, stop waiting and get the right people in the right places. After all, data and analytics should be led by business. What needs to be analysed should not be defined by IT but rather by those business areas that need it. As Forester’s research shows, the best analytics implementations are those where business owns the strategy, goals and KPI’s, dashboard and report creation and actually uses the data.
Tech management (IT) should be responsible for providing the infrastructure and looking after the data, as well as ensuring technical standards are complied with. Too often the provision of analytics and BI is delegated to IT.
BI is proven to work best when it is driven by business. So it’s important for finance, and particularly CFO’s, to lead the charge with great data and analytics. They need to be open to sharing this data throughout the organization and allowing users to analyse their own information.
Once there are more people interacting with the data, then insights and value will flow back to the organization. Business leadership play a crucial role and need to be involved because, in the end, they are the decision makers and they need to ensure the company strategy is on track.