The chief financial officer has always played an important part in business, but the impacts of the pandemic have heightened the importance of this position in an organisation.
While technology and new developments have enabled businesses to adapt and innovate, many businesses continue to use traditional methods to collect and store their data. As a result, this can create a level of disconnection and lead to potential inconsistencies with information. With the significant pressure, competition and rising challenges associated with the pandemic, it has become even more critical for all members of a business to show their value and the potential for CFOs to add even further value is still there. Business leaders are expecting more from a CFO, expecting individuals to provide more insights, advice and strategies for their business. This is exactly why the role of a CFO is perfectly positioned to take full advantage of the data business intelligence can provide.
BI first really emerged back in the 60s as a method of information sharing within a business, but the rise of new technology completely transformed this sector. The rise of big data has enhanced industries even further and today’s BI industry encompasses a much more comprehensive list of markets, including data mining, reporting, preparations and statistical analysis.
No matter what industry or what service you provide, a business will generate some form of data. BI generates a detailed understanding of data within a business and harnesses this information to create opportunities to implement changes that improve efficiency and business success.
How finance can drive change
The finance section of a business can drive significant change in an organisation. The combination of a CFO with business intelligence creates an ideal match for enhancing and taking a business to a higher level.
As a CFO, business intelligence provides a way of increasing value by generating quality data and understanding how to apply this to your business. A strong relationship between BI and finance enables a CFO to implement effective data collection and elevate their position beyond a conventional CFO to more of a strategic advisor.
How Business Intelligence can enhance the position of the CFO
A BI team isn’t focused simply on data analysis or data interpretation. Instead, the primary aim is on gathering as much data as possible in a completely impartial manner. The unbiased approach towards data collection is vital to an organisation.
If data is collected by an individual with their motivations it can result in generating findings that support a concept they were trying to highlight. This can happen subconsciously through what is regarded as confirmation bias.
When the CFO accepts the data, this presents added credibility to this information. Approval by the CFO creates a positive sign of reliability to the organisation and assurance to other business leaders. The information generated with business intelligence is impartial, scientific and fact-based.
By enabling a BI team to gather the data, the finance department can then spend its energy on data analysis, rather than data collection. Uninfluenced by certain goals and motivations, the BI department can present the information to the business in a completely transparent manner.
Gathering more data
Having a wider understanding and more data available is very important when making business decisions. The challenge for businesses, however, is that more data generally presents more confusion and can be quite overwhelming to manage. A dedicated BI team will collect data from a range of sources and bring it together to make it more manageable. If the CFO works with BI, it enables a clearer understanding of how data can be used in the finance department and an insight into the value of this information.
This process enables businesses to explore combining data from other sources to support further decision making and so instead of having several separate data sources, all sources can be combined and used together. Without the support of BI specialists, it can be challenging to manage and understand this volume of data types and often result in the business missing vital insights.
Clear data definition
When the BI team defines the data, it is identifying that the data means to allow the information to be used more effectively. Without implementing these definitions, that data can lack real meaning and can result in various teams interpreting the details in their way, leading to many confusions.
It is critical for definitions to be consistent throughout the business and for there to be a singular voice of truth. Without really understanding what the data means, it is difficult to use it effectively and if individual teams create their interpretations then it can lead to several misunderstandings within a business.
Once this has been solved, a business is in a stronger position to implement a company-wide definition of the core KPIs and the data can be used effectively for decision-making, planning and budgeting.
Enable informed decisions in a business
One of the most important roles of BI is creating information and context, enabling a CFO to generate intelligent and informed decisions. Without this level of detail, the plans used to run a business are no more than guesses. If for example, a business is trying to determine whether to invest in additional marketing resources to retain existing customers or to put the money towards marketing to new customers. This is a scenario that requires clear data and cannot be determined on general assumptions. If the business operates in the SaaS market there are several things to consider: how to define the data that relates to your vital customer metrics, how much it costs to market to existing clients and retrigger activity, how much will it cost to bring a new customer onboard and how much does a typical existing customer spend in comparison to a new customer?
This level of detail provides a good context for the final decision. These findings are based on facts and numbers, rather than adopting an approach based on an inclination or a method that has been done repeatedly within a business.
Identifying potential weaknesses in a business
Taking a step back and assessing information from a wider perspective enables BI teams to identify potential issues that may be overlooked internally.
There is a possibility there are weaknesses in a business that may not be visible from the existing reporting structure. The accurate and comprehensive data collected by BI professionals enables the opportunity to identify missing, incomplete and inconsistent data and can allow a business to explore potential weaknesses in certain controls and processes.
An efficient CFO will look beyond previous data trends. They will explore and make predictions about future trends and make the necessary preparations. Instead of applying tried and tested approaches to forecasting, data BI will enable CFOs to use intelligent techniques to make predictions for the future of a business and deliver clear plans.
With the right data in place, a business can make intelligent informed decisions and be ahead of the curve. Many businesses rely on a reactive approach and as a result, lose their competitive edge. BI professionals enable a business to maintain momentum with new developments and monitor market changes and their impact on customer demands.
Equipped with the necessary information, decision-makers can act effectively and in a manner to enhance business success.