Data Gems, Pearls of Wisdom, and the Single Source of Data Truth
For FP&A professionals seeking data, the world is filled with amazing gems. While each new data set undoubtedly houses new pearls of wisdom, the process of collecting and validating data leaves little time for polishing data insights to provide the highest level of strategic value to the organization. In fact, based on the results of a recent survey of FP&A leaders from companies of all sizes across the globe, most companies dedicate over 50% of their data analytics time to data collection and validation. However, according to the respondents, a staggering 88% of companies still struggle with data quality.
Yet the rough state of the data isn’t necessarily the most concerning aspect for finance organizations. The most challenging issue for 31% of the survey respondents is that there is no single source of data truth. In other words, too many of the data gems collected by FP&A team members are stored in their own personal collections and there is no centralized vault for the collective pearls of wisdom.
Overcoming Data Challenges: Finance Thought Leaders Weigh In
Is it really possible to have single source of truth? How much data does a finance organization really need? To help answer these questions, we collected insights from FP&A visionaries about ways that finance professionals can get closer to a single source of data truth.
Bringing It All Together[bctt tweet=”Very few finance organizations have a ‘single source of data truth.’ Instead, information is scattered between enterprise software systems – mainly the ERP system – and an uncounted mass of spreadsheets.” username=”prophix”]
Robert D. Kugel, CFA, SVP & Research Director of CFO and Business Research at Ventana Research, is very plugged into the challenges of finance organizations. One of these is the vast and disparate amount of data most have. “Very few finance organizations have a ‘single source of data truth,’” Kugel says. “Instead, information is scattered between enterprise software systems – mainly the ERP system – and an uncounted mass of spreadsheets.”
However, Kugel believes a “single source of truth” is essential to making well-informed business decisions. What might a single source of data truth look like? “Finance departments should have a data repository that contains reliably accurate and up-to-date data,” Kugel says. “This repository should be able to handle financial and non-financial data because departments need both types to analyze and report on their company’s performance. And, to ensure that data is accurate and up-to-date, it should avoid storing data in individual spreadsheets.”
Will ALL of the Single Sources of Truth Please Stand Up?[bctt tweet=”Executives searching for the holy grail of single-source data frequently are paralyzed by the fact that all data, regardless of source, will be inaccurate to some degree or another.” username=”prophix”]
Kenneth Fick, Senior Manager at MorganFranklin Consulting, believes there is no “one” single-source of data truth, particularly when it comes to operating and planning data. “Informed decision making requires the analysis of multiple sources of data from both internal and external sources,” he says. “Executives searching for the holy grail of single-source data frequently are paralyzed by the fact that all data, regardless of source, will be inaccurate to some degree or another.”
While Fick doesn’t believe in a universal single-source of truth, he says that, “The best way an organization can accomplish implementing a single source of data truth environment is to declare it in the areas where they know the limits of the data.” As an example, he cites using Google Analytics for website visits to make business decisions even though a percentage of the tracked traffic is likely due to SPAM bots. While the accuracy of the information has limits, it may be close enough for a company’s purposes. “An organization should work hard not to let the perfect be the enemy of the good when it comes to data.”
FP&A professionals, according to Fick, should be ever-vigilant in seeking data to help organizations get closer to a single source of data truth. “The single source of data truth is housed in various internal and external data sources, form data warehouses, accounting systems, Corporate Performance Management systems, external data providers and everywhere else data can be accumulated and stored,” he says. “Finance Pros should seek at all types of data, understand its limitations and then analyze it to aid decision makers in every facet of an organization.
Managing the Data Hoard
Data collection and validation currently monopolizes time spent on data analytics. In order for FP&A professionals to provide their organizations a higher level of strategic insights, there needs to be a shift in how data is collected, managed and shared.
Read the Defining the Evolution of FP&A: Benchmarks, Challenge & Opportunities survey to learn more about the most challenging planning and analytics issues that companies face as well as how companies spend their data analytics time.