Why CFOs must bust data silos to drive business growth

UK organisations have spent the past two years adapting to a very different business climate to the one they all knew pre-pandemic. It’s a new era characterised by unpredictability—one where speed and agility are essential pre-requisites to managing risk and driving growth. And not for the first time, at the centre of such efforts, sits the chief financial officer (CFO) and their finance team. Much like the wider business, they’re increasingly focused on using data to support better informed decision making.

The challenge is that finance teams are often toiling with outdated tools, ill-equipped to provide the holistic insight and rich functionality needed to make such decisions. But it doesn’t have to be like this. By making ostensibly small changes, like moving away from spreadsheets and considering more suitable platforms for planning and forecasting, significant strategic benefits can be realised.

Making sense of digital opportunity

According to Gartner, 82% of CFOs say their digital investments are accelerating—even exceeding investments in areas such as talent, supply chains, business services and fixed assets. But it’s not all plain sailing, as many are still “playing catchup” and working out how to turn these projects into wins. It’s a challenge echoed in new research from Workday, which reveals that although over three-quarters of finance teams are undergoing some form of digital transformation, that largest group (28%) are at the start of their journey. They’re followed closely by organisations with uneven adoption of digital finance tools.

In many cases, the pandemic has been a spur for such initiatives. The study finds that for half (49%) of global CFO respondents, their biggest challenge during the crisis was being decision-ready with accurate, timely data to support managers. It’s no surprise that data management and analysis are half of CFOs’ top priorities over the next three years. Yet with an estimated 79 zettabytes of data created worldwide last year alone, they need more effective ways to extract value from the data.

According to Workday, more than one-quarter (28%) of CFOs admit that not having the right data to make critical decisions has led to delayed product launches. A similar number (24%) have missed financial forecasts. Meanwhile, just under a fifth say they have misaligned resource investments or made poor cash flow decisions because of data quality issues. This matters, because even small variations in cash flow data can have a huge impact on a business—whether it’s about paying taxes, interest payments and wages or investing in growth initiatives.

The spreadsheet challenge

Without the right intelligent data platform to hand, finance teams often fall back on siloed data and manual processes. This is exemplified by a historic over-reliance on spreadsheets. Although these applications can be a useful tool in limited use cases, they are too often deployed beyond their capabilities. Using a spreadsheet as a de facto financial database is a recipe for disaster in today’s fast-moving and highly distributed business environment. Human error inevitably creeps in as remote team members end up working on different versions. And there’s no intelligent way to capture past and present business performance and run predictive scenarios.

Finance team members may be wedded to such tools at the moment. But give them an alternative which eliminates these risks and delivers real-time data-driven insight, and they’ll soon realise that time wasted on spreadsheets could be much more productively spent on more strategic tasks.

Facing the future with confidence

The good news is that global CFOs are already investing heavily in the kind of analytical tools which can deliver critical real-time insights into business performance. Half of those Workday spoke to last year said they were aiming to deliver an “intelligent data foundation”, which could provide a single source of truth for better informed decision making. Around a third said they are investing in a “change-ready culture” which will ensure that the use of such tools and new business processes can be optimised.

This is echoed by Gartner, which says CFOs in 2022 will be focused on enabling more flexible budgeting and forecasting, by elevating digital capabilities. By unlocking traditional silos with these intelligent platforms, finance leaders can replace backward-looking business reviews and static planning with agile decision-making, greater transparency and more adaptive budgeting. Nothing less will do given the macroeconomic and geopolitical headwinds facing today’s businesses.

In so doing, CFOs can also continue to redefine their own role in the organisation. Long gone may be the time when they were the “numbers guy” who delivered complex, long-winded reports to business leaders. But today’s CFOs are still finding their feet under a much broader mandate as strategists and value creators in their own right. Harnessing the power of enterprise data will be key to realising this vision.

Mark Bodger, director at ICit Business Intelligence