In a 2017 survey, finance professionals reported spending 51% of their time on data collection and validation.1 This is a particularly troublesome statistic, as the FP&A function is undergoing a transition from a back-office function to a strategic partner within many organizations.
These results suggest that the FP&A infrastructure at many companies is not ready for the challenges of the 21st century. With the increasing proliferation of data, the Office of Finance can become quickly overwhelmed with the amount of data to synthesize and analyze.
In fact, companies that do have the available resources to synthesize large amounts of data stand to gain a competitive advantage. Access to large volumes of data makes it possible to identify trends and casual relationships, spot risks, and recognize historical patterns – but only if the organization can first compile the necessary information.
The inability to harness the power of data has the potential to impact the core finance processes of an organization such as budgeting, forecasting, and consolidation – ultimately affecting progress.
In this blog, we will examine how to harness the power of your data and invest in your company’s success.
The Role of the CFO
In recent years, the role of FP&A leaders has shifted from a back-office function to a trusted advisor for both strategic and operational decisions.
This shift marks a renewed focus on the power of data and how its insights can support CFOs who now have a more strategic, customer-facing, disruptive role.
For CFOs, the key to supporting the FP&A function is investing in tools and resources to support analytical maturity.
A 2017 survey revealed that in companies with developing state of analytical maturity and little to no FP&A infrastructure, finance professionals spend upwards of 47% of their time on low-value activities.
Many companies are wasting valuable analytical talent on low-value adding activities such as data reconciliation, data cleansing, reports reconciliations, etc. This is the result of having only basic or very basic reporting and analytic tools that require manual intervention and IT support – thus limiting their ability to unlock the power of their data.
Adopting finance software, such as a Corporate Performance Management (CPM) solution, can help automate tedious and manually-intensive finance processes, such as data entry and validation.
By investing in CPM software, FP&A professionals can shift their focus to high-value activities, benefitting both the CFO and the organization at large with better results and informed data analysis.
Nonetheless, before adopting innovative finance software organizations must first undergo fundamental changes. Accenture suggests that “to increase big data gains, financial services firms should consider making the transition to a data-driven enterprise.” They offer the following steps to facilitate the transition:
- Build a new data operating model that puts big data at the center of the decision-making processes.
- Adopt a leading-edge architecture that includes advanced technologies and flexible structures.
- Drive a cultural change that emphasizes an innovative mindset and establishes new business roles.
However, improved data analysis is not possible if your data exists in silos – separate and disconnected from each other.
This is especially important as the industry will soon necessitate instant answers to database queries in order to stay productive and keep pace with today’s businesses. A focus needs to be on “turning data silos into a connected storehouse of powerful information.”
It’s worth noting then that improved analysis is one of the primary benefits of CPM software – an integrated infrastructure that allows unprecedented access to company data. The necessity for integrated software systems is closely related to the concept of a “single source of data truth,” wherein the finance teams are able to centralize their data in a single location.
Yet, restructuring existing FP&A infrastructure can involve tremendous changes: complex outdated models need to be simplified and re-written, modern planning systems need to be implemented, people educated and processes re-thought, but the benefits are countless.
To unlock the power of data, organizations must first change their mindset about and approach to finance innovation. For the CFO, this may involve investing in tools and resources to support their FP&A teams, such as Corporate Performance Management (CPM) software.
Eliminating data silos is also of importance. Organizations with a “connected storehouse of powerful information” are poised to synthesize and analyze big data and are more likely to identify trends, spot risks, and recognize historical patterns – allowing them to use their data to inform strategic and operational decision-making.