Data was supposed to solve everything. Once professionals figured out how to mine the data being generated by customers and business operations, the insights gained were supposed to instantly solve problems and streamline processes. And while data has greatly contributed to these types of transformations, it has also muddled the role of the CFO.
A new survey conducted by CFO Research revealed that many CFOs still struggle with managing the data of financial planning and analysis intended to help their companies. In a nearly even split, CFOs either complain about not having enough data (32%) or having too much (30%). This disparity shows how the value of data mining on the financial side of an organization has varied depending on the systems, the CFO, and the intent of analysis.
Regarding the future of data analysis, almost all CFOs (94%) agree that up-to-date and instant data is the only way forward. With this expectation creating more corporate pressure for actionable insights, CFOs need to find a way to collect the data they need, whether it’s more or less, and how to write a cohesive story with the results.
Knowing Where to Look
The biggest areas where CFOs are and should be using analytics include assessing customer risk and behavior, compliance and regulation, and evaluating the fluidity of their future operations. Many CFOs struggle with analytics, because they are using them to address all these different areas with a single set of data. The solution to centralizing how data is used is to apply only the appropriate data to the corresponding areas. Using customer behavior data to address compliance concerns would lead any CFO astray.
However, that is not to say these areas aren’t connected. Once the insights have been deduced, CFOs can draw a much clearer picture of how their efforts are influencing the company and how they can continue to do their part. “To navigate in today’s rapidly changing environment, finance professionals need to analyze different sources and connect the dots to truly understand the big picture,” writes William Fuessler, global financial strategy and transformation leader for IBM Global Business Services.
Knowing When to Act
As the area of business that most commonly invests in data analytics, with 79% of finance departments leveraging analytics, many CFOs begin their data mining by scrubbing financial transactions, looking for patterns or unusual activity. Starting small helps build the foundation for looking into this data further to identify fraud, potential room for improvement and more informed analysis of things like credit score or spending. These actions have some meaning on their own, but when combined for a larger goal, create the results most CFOs are looking for.
As Frank Friedman, CFO/COO of Deloitte LLP, told The Wall Street Journal, “The advanced analytics team cannot work in a vacuum. Each analysis must have a business purpose, and the question ‘What business responses should this trigger?’ must be repeatedly asked.” By simply reframing data mining with an overarching theme such as business impact, CFOs will be able to find the places where insights are lurking more readily. They can seek the data they need in the places they need to effect change. So instead of starting with too much or too little data, reverse engineer improvement. If you see a need, work backwards until the data reveals a solution.
Writing the Financial Data Conclusion
As data analysis becomes more sophisticated in the future —with expectations of real-time and instant insight—and CFOs overcome the challenges of making sense of their data, the story will become a transparent narrative of how to improve the business financially and otherwise. To find the ideal ending to the data story, CFOs need to know how to use data appropriately for different tasks and integrate the use of Big Data into their evolving role.