by Pat Hickey, P.Eng, Partner, Jump Analytics Inc. Pat was a recent guest on Coffee Break with Game-Changers radio with Rob Jenkins and David Den Boer. Listen to the replay.

CFOs are often the cobbler’s children without shoes when it comes to information.

CFOs are, in many ways, responsible for delivering information to an organization—however, the priorities with analytics are often with the operational and sales departments.  The finance team is left churning rearview-looking reports with Microsoft Excel and producing the “monthly reporting” package.

Forward looking CFO’s are trying to find ways to demonstrate their relevance to an organization beyond reporting the financials.   The CFO’s that “get it” see themselves as the “Architects of Business Value.”  You can only claim that title by having the right, empirical information to show the financial effect of performance of their organization.

There’s No Shortage of Data, but….

The fact is, there’s a lot of data available these days. Companies have invested billions in big expense items like enterprise resource planning (ERP), operational technology from plant equipment, point-of-service (POS) systems, and information services.  All this data doesn’t necessarily mean it’s put to good use.

I recently spoke with one customer (a large consumer products company in the food industry) and we were discussing how they plan their revenues as part of their financial forecast.  This customer’s sales leaders manually input the sales forecast based on their experience.  I questioned, “Is it accurate?”  Their response was, “Never. It’s usually 15-20% too high, so we have to apply a fudge factor.”

Now this is an organization with tons of data, full ERP, retailers providing them with daily POS dumps and yet they still rely more on a “gut feel” and fudge factor than data to help with a very important function for their business. The challenge for this company and many others like it is not the amount of data, but is it readily available as one source of truth in a platform they can easily draw from?

Strategic Planning Needs Strategic Technology  

To effectively plan and forecast, companies need the combination of access to that one source of data truth and a solution that can deliver on the best practices of enterprise financial performance management.  Trends now are to skip the annual budgeting process and plan with drivers dynamically on a rolling, go-forward basis.  Leading companies are also looking at predictive analytics and Big Data to forecast their financial future.

These best-in-class financial processes are no longer possible with just Microsoft Excel and a smart financial analyst. Solutions need the speed of in-memory processing to deal with Big Data and the business functionality to efficiently deliver these benefits.

Technology Needs Culture to Make It Work

Irrespective of how advanced a company’s analytics solutions are, these solutions can’t yield significant benefits unless they are deployed with the right people talent.  If all the finance team knows is counting the beans and preparing rear-view mirror Excel spreadsheets, then all they’ll do is automate those processes on newer technology—so why bother?

Finance leaders need to make a concentrated effort to develop, through training and mentorship, the skills around analytics and dynamic planning.  If the team doesn’t respond to this challenge, then obviously they will need to acquire this talent to find someone who does.

Secondly, companies must organize themselves around a culture of sharing information. I still see companies out there whose approach to information is the business sending a request to IT for a new report, then maybe, 6 months later, if they’re lucky, the business gets their report. Leading companies develop competency centres within the business, embrace self-service solutions, and own the information they need to run the business.

Bottom Line

For CFOs transitioning to become the Architect of Business Value, it’s less about the end game and more about the path to get there.  Technology, data strategy, and organizational culture all need consideration—and the most important thing is to start on the journey.

Learn More

  • Read this research paper to learn more about the advantages of dynamic planning.
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