While in control of their “traditional” tasks of accounting, controlling, and governance or finance operations, today’s chief financial officers (CFOs) are already stepping up their influence on corporate strategy. Yes – it’s the CFO and the supporting gang that will be the drivers of margins, the visionaries of operational processes, and the creator of vast increases in value contribution from a non-sales perspective.
Whenever you are in search of meaningful data these days, the magic guy or gal is always the controller, the finance guy, the lady in management reporting. There might be differences in the role of your personal “magician,” but they have something in common: an interest in transforming operational data into finance key performance indicators (KPIs). These are the keepers of the holy grail – those managing to get a hold of the relevant base data to create financial views of things going on within your company.
How can this translate into actionable insights? I mean: “analysis” is fine, but the differentiator to “analytics” is that actions are taken. What is it worth to hear “Houston, we have a problem,” if you’re unable to take the needed corrective action within seconds (or at least, a few hours for most modern-day and real-time companies)?
A do-it-yourself road map to the next version of “finance analytics”
First of all, the finance magician needs instant access to data. If the IT department doesn’t provide the connection to the respective data source, you might want to use what you already have. Know where I’m going with this? You got it! An Excel spreadsheet. (Way to go!)
But you want to include other departments’ information as well, right? Because you want to support other functions too. How do they most likely provide data? Awesome, you’re so right again – in Excel. But now finding the connecting dots in the data set makes your early dinner plans obsolete. Unless you have technological help to merge many sets (from HR, from Procurement/Purchasing/Merchandising etc. as well as sales orders, direct and indirect costs, organizational structures, you name it) into one meaningful keeper of the truth.
Bang! Now you have to leave Excel and do it in a sophisticated and purpose-build application. Does that mean you need to be as geeky as those guys you make jokes about? Not at all – new technology allows for managing data visualization with embedded tools all by yourself.
Manage and interpret advanced data visualizations
Next, you might want to bring things into perspective: where are profit generating areas (like customers, products/services, regions, sales reps.)? Don’t know yet? Well, create some advanced visualizations. If needed, loop in some experts from the aforementioned departments via social platforms that are connected to your new “controllers” tool. Share your findings and check for interpretation of their data, with questions like “Why is shipping in June more expensive than it was in May?”
If you really mean it, you can take it to the next level: forward-looking consultation. Leverage historical data to have a system help you statistically with the future. A plan is only as good as the personal intention of the planner – statistics never lie (ha ha, but you get what I’m saying). There’s a good chance that the plan is deviating from the statistical trend.
Collaborate with the plan owners and find explanations for the chasm or re-plan. Find correlations between internal (and given) data and externally available data like unemployment, S&P 500 indications, weather, or whatever seemingly influences your business. Help your colleagues (non-finance) with your wisdom “powered by predictive analysis” embedded in your domain. Eventually, you’ll become the only one able to see the company holistically and don’t have conflicting targets.
You might find the meaningful drivers for the business performance in the various areas your company deploys. There’s a reason why tech companies reinvent themselves in order to help the business people like you with excellent end-user tools that help you be the analyst that other departments have been looking for so desperately.
Data brings finance and intelligence together
In the near future, the CFO will become the “chief intelligence officer” as well, due to the “magic” I’ve described – you can believe me and praise me then. It’s of utmost importance that the finance function extends beyond the primary mission to support all other business functions within an organization.
Enterprises in all industries and regions can make it a differentiator when they see perceptive finance as a focus area. All stakeholders will appreciate a collaborative finance service organization.