In this special guest feature, Rob Hull, Founder and Chairman of Adaptive Insights, highlights the future of big data from the perspective of CFOs. Prior to founding Adaptive Insights, Rob served as CEO of ChemTracker and as CFO for a number of market-leading software companies, including LoopNet and Risk Management Solutions. Rob raised over $100M in equity and debt capital for his companies and has completed several successful M&A transactions. Rob has been an active part of SaaS-based companies for the nearly 15 years and is a frequent speaker on corporate performance management, entrepreneurship, and SaaS. Prior to his financial management roles, Rob was a consultant for Booz, Allen & Hamilton. Rob has a BA in Economics from Stanford University.
The most successful companies in the modern era are adept at managing and planning for uncertainty and constant change. Financial functions need to be able to quickly adapt to fast-changing circumstances in order to achieve long-term success, but are often held back by traditional processes not designed for agile course adjustments.
According to Adaptive Insights’ CFO Indicator, a series of quarterly surveys of global finance leaders, more and more CFOs are fighting that uncertainty with the power of data. While quintillions of bytes of data are already created every day1, the survey shows that one-third of CFOs expect the amount of data their teams manage to increase by 50% over the next five years. Finance leaders are taking steps and building teams to find actionable insights in never-before available data sets–over one-third of CFOs plan to add a data scientist to their finance teams in the next four years. In the meantime, as 2016 unfolds, CFOs are following three principles when tapping the power of data for their organizations: 1) finding a single source of truth, 2) focusing on sound data, and 3) maintaining the integrity of the data.
1) Searching for a Single Source of Truth
CFOs are juggling more data sources than ever: 21% manage data from five to 10 systems, and 8% currently manage data from 10 or more source systems. Meanwhile, a majority (69%) of CFOs cite keeping information siloed in departments as one of the top mistakes companies make. To combat that data divide, CFOs are increasingly taking a more collaborative approach to planning and analysis, partnering closely with the C-suite, operations and HR to deliver aggregate views of critical business information.
Organizations need to move toward smoother coordination of data among all departments and establishing a single source of truth. Finance can lead this change by establishing and managing a single repository for key corporate financial and operational data that is tightly integrated to the various departmental data systems. This will eliminate the proliferation of spreadsheets as a mechanism for data sharing and reporting, remove confusion as to which data is correct and accelerate decision-making by focusing more time on the decisions and less time wondering whether the data needed for the decision is accurate. While it’s promising that 38% of CFOs have achieved a single source of truth to centralize their data and guide business decisions, 45% are still in the process of making that transition.
2) Ensuring Sound Data for Sound Business Decisions
Analyzing data is a waste of resources if it is inconsistent or corrupted. Over 65% of CFOs cited data integrity and accuracy as the most or second most important characteristic needed for actionable reports and insights. Yet as many as 47% are still manually aggregating data, which can lead to accuracy and integrity issues. And with data volumes increasing, manual aggregation is clearly not sustainable for companies of any size. As data size and complexity increase, organizations that continue to rely on manual processes should consider automating the collection and consolidation of data in order to eliminate accuracy and integrity problems. Advances in data integration are enabling finance professionals to take an active role in creating automated integration to extract core financial and operational data from disparate systems without the need to rely on an army of IT resources.
3) Maintaining the Integrity of Your Data Across the Organization
Beyond integrating and verifying data is the governance of the data. Metadata management is key for finance leaders today, as the governance of the metadata is as important to the planning and forecasting function as governance of the data itself. Many organizations today have or are in the process of developing data dictionaries that define the sources of data and any of the calculations created. This ensures consistency across the organization, despite personnel changes, system changes, etc.
Key to metadata management is collaboration across the organization, which is why 70% of CFOs cite collaboration as their top initiative for 2016. By implementing these metadata and data management rules in concert with other parts of the organization, finance teams are assured that the data they manage has a governance framework that will yield consistent and repeatable data sets.
The Bottom Line
As CFOs take center stage as business strategists and major players in the executive landscape, they are tasked with the challenges of aggregating operational and finance data into a single view of the business. Sound data management practices, data integration strategies and collaboration will enable finance leaders to succeed and become the go-to source for business-critical performance data to guide business decisions.
Driving toward a single source of truth and collaboration with all parts of the business are increasingly universal goals for organizations, and we believe this will continue as CFOs at companies of all sizes lead business transformation across their organizations in an increasingly data-driven world.
1 IBM, http://www-01.ibm.com/software/data/bigdata/what-is-big-data.html
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