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How CFOs are using data to take the strategic lead in business

By Mark Bodger, director at ICit Business Intelligence

The role of the Chief Financial Officer (CFO) is changing. After their experiences over the past two years, organisations are increasingly prioritising: insight, agility, and planning. And they’re turning to their finance chiefs and accountants to deliver. CFOs are shifting their previously considered “numbers” role to be more strategic, collaborative and data driven. Given the new priorities of the post-pandemic business, they’re looking for new opportunities and efficiencies across the organisation, acting as the trusted partner of the CEO.

Times are changing

The pandemic was a rude awakening for many businesses, in several ways. When organisations needed rapid insight into fast-changing market conditions to produce new business plans, many faced the equivalent of an information black hole. As one executive told McKinsey at the time: “How do we plan in this environment when we don’t know what is going to happen?”

From a finance perspective it shone a light on the inadequacies of their current set up. The tools they were using to help them were, far too often, woefully outdated – making fast access to data for planning an intensive drain on resource.

Spreadsheets are symptomatic of this technology malaise. Make no mistake – they’re still THE most utilised tool in the finance teams’ armoury. But if CFOs are to fulfil their new mission, they’ll need to complement traditional tooling with new intelligent platforms that turn real-time data into actionable business insight.

Turning data into insight

A 2021 study from Workday corroborates this view. It found that the biggest challenge at the start of the pandemic, cited by half of respondents, was “being decision-ready with accurate, timely data to help management assess, plan, and execute quickly in a rapidly changing environment.”

What emerged from the crisis was a new willingness on the part of business leaders to embrace digital transformation and data-driven insight to accelerate performance improvements and growth. The CFO is rightly seen as a natural ally in this endeavour. Their insight into the company’s financials, strategy and market conditions make them ideally placed to interpret the mountain of data churned out in ever greater quantities by the organisation. That means a shift in the CFO’s role, from something akin to a “Chief Accountant” to more like a “Chief Insights Officer” — a trusted advisor to executives from across the business.

A PWC study into CFOs’ top priorities for 2022 echoes this view. Topping the list are: establishing finance as a cross-enterprise business partner; building predictive models and scenario analysis capabilities for financial planning and forecasting; and driving intelligent automation. However, realising these goals demands tools that help CFOs to look forward with confidence rather than continue staring into the rear-view mirror.

The problem with legacy tools

Decades on, spreadsheets are still a key tool for many finance teams. That’s because users are familiar with them, and they’re good at the core job they were built for. The problem comes when teams try to deploy spreadsheets for more dynamic scenario planning. Spreadsheets are famously prone to human error and don’t align well with today’s hybrid workplace. When multiple team members try to collaborate, they inevitably hit problems with version control, and stale or inaccurate data.

It’s also time-consuming working this way. An important part of the CFO’s job is to make sure their team members are motivated, productive and engaged. Performing manual, error-prone processes ad nauseum via spreadsheets is not what most talent says attracted them to their current role. As the world moves from static planning and budgeting to something far more agile and collaborative, it’s clear a rethink is needed.

Tooling up for success

According to Workday, more than three-quarters of finance teams were undergoing some form of digital transformation last year. Although the largest number (28%) said they’re just starting out, it’s clear that such initiatives are fast gaining momentum. Half of CFOs reported having invested in an intelligent data foundation and advanced analytics to improve enterprise decision making. The figure could be much higher today.

But what kind of capabilities should they be looking out for? Among those cited most by respondents were:

  • access to data from multiple sources
  • the ability to reconcile that data
  • real-time scenario planning and
  • rapid reporting

It’s also important that any tools can scale as the business grows and data inevitably increases. It’s estimated that 97 zettabytes of data will be produced globally in 2022, but that this figure will almost double by 2025 to hit 181 zettabytes.

Adding value for the entire business

In short, data-driven decision making is increasingly critical to business success. Organisations that make do with stale, inaccurate information and best-guesses may miss financial forecasts, bungle product launches and even make misjudged investments. Yet with the right tools to hand to generate real-time insight and support dynamic scenario planning, CFOs can help to drive successful digital transformation and business resilience, even as conditions change.

In so doing, they will accelerate their own journey to becoming indispensable, strategic business advisors. And free up more of their staff to add value across the organisation.

By Mark Bodger, director at ICit Business Intelligence

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