The Changing Expectation Of Data In The Eyes Of The CFO

Gina McNamara

Since the dawn of commerce, accountants and their predecessors have been custodians of the most vital data describing the health of any organisation: its financial records. Over time their practices have developed a rigour and discipline that often leads CFOs holding the role of second-in-command of their overall organisation.

But in the new era of Big Data, the nature of data management within organisations has changed significantly. While the value of financial data has in no way diminished, other forms of data have risen in prominence, such as the audience data that marketers use to make decisions about how to best spend their budgets.

The digital era has stimulated interest in a plethora of new data sources, which can be gathered, interpreted, and acted upon using a new generation of data analytics tools.

As a result, CIOs now find themselves facing the question of what role they want to play in developing the analytics capabilities of their organisation, and how they can bring the same rigour and discipline built up over centuries in the accounting profession to other parts of the business.

In 2016 SAP gathered a group of top-performing CFOs to discuss the role they play in the digital transformation of their organisations. They talked at length about the challenges of understanding the role of analytics in their organisations and how the finance function can make an active contribution to its implementation.

Speed of decision-making

One of the key challenges facing CFOs in the digital new era is the acceleration of decision-making. Whereas once it was acceptable for the finance function to report on the health of the business weeks or months after it closed its books, more agile competitors are forcing the shortening of the reporting cycle, while business unit leaders want to respond to changing market conditions much more quickly.

It is a challenge that many professionals are grappling with, including the CFO of Jetstar Group, Race Strauss. He says that while the finance function remains responsible for providing business case assessments, the way they are being provided is changing.

“Everything’s got quicker and shorter, and we need to now take decisions where we haven’t actually got all the information,” he said. “But if you don’t adjust, then your competitors are going to move quicker than you. That’s one of the biggest changes I am seeing within the finance layer and managing disruption.”

This need for speed creates a significant conundrum for finance professionals, as they must continue to apply the strictest standards to the management of the accounts data they are responsible for, but do it in a faster way. Hence many are investing in modern analytics tools that are capable of drawing data directly from production systems, enabling them to uncover insights in real time to accelerate credible decision-making within the organisation.

In my own day-to-day at SAP, we are managing a faster transition to the cloud in Australia and New Zealand than the rest of the globe is. To do this, I’m relying on the speed of our customer relationship management (CRM) system to understand where we are at on any given day of the quarter. We rely on accurate and timely data to report to our regional headquarters. If we did not have this in place, we would not have any chance of meeting our revenue budget for 2017, let alone our 2020 aspirations.

The rise of the customer

Another challenge for CFOs is the need to work with new data sets that may be quite foreign to existing practices, particularly in relation to customers and their behaviour. While CFOs may have some history working with sales data and revenue, this data is historical by nature and describes only what the customer has already done in terms of spending. It may be used to divine trends, especially when compared longitudinally across different periods, but cannot give a sure indication of customers’ intentions.

This field of data-gathering, analysis, and action has tended to fall into the purview of the marketing function – a group which has developed its own strong skill set in data analysis through monitoring audience data and campaign response. But increasingly, CFOs such as Sensis’ Joanna Hands have been taking up the challenge of using their existing data management and analytics skill sets to build out a more robust capability across their organisations.

“I am very passionate about analytics. Where I look at my finance team and how we are influencing the organisation, the things we have done from a strategic perspective have really come in the last 12 to 18 months from using analytics in a very effective way,” she said. “We have built our whole sales and service model off the back of a segmentation model from which we are seeing significant results, and we weren’t using that data two or three years ago. So it is all about taking data and figuring out how to use it in a way that is going to drive the business. And all of a sudden finance has got a seat at the table where they may not have been in the past.”

Again, the response from many organisations is to invest in analytics technology that better monitors customer behaviour through online and other digital channels. The intention is that through better monitoring in real time, it becomes possible to create stronger predictions of customers might behave in response to a specific trigger, and use this knowledge to make offers to them based on this projected behaviour.

Democratising data

While modern analytics tools provide CFOs with the capabilities to both analyse new forms of data and perform all analysis tasks at a greater speed, there is yet another advantage that can have wide ramifications. Many organisations have tended to develop in silos, with each gathering and managing its own data sets. But modern analytics tools allow much freer access to data right across the organisation.

It is not always an easy challenge to overcome however, even for a relatively young organisation such as the online retailer, THE ICONIC. Its CFO Anna Lee says no organisation is ever built entirely the right way from the outset.

“Information and data is always readily available at THE ICONIC, because that’s the lifeblood of any successful business in the online space. But the challenges we have are the same, in terms of systems talking to each other and creating a single source of truth,” she said. “Optimising the way we analyse the information we have is certainly an area that we’re focusing on.”

Conclusion

So when it comes to developing a robust analytics strategy, CFOs face challenges on three fronts:

  • They must learn to work with new data sets that might previously have been the domain of other functions, or even be entirely new to the organisation.
  • They must learn to deliver insights at a much faster pace than they previously have been accustomed to.
  • They must do so across the entire organisation.

In the data-driven era, the winners will be those organisations that can deliver the right information to the place where it is needed at the appropriate speed. For the CFO, that means learning to adjust their skill sets and those of their staff, and invest in the analytics tool sets to enable them to meet that challenge.

To learn more about how you can enable your finance function to become forward-thinking in the data-driven era, join finance peers and innovators from across the region at the upcoming Art of the Possible roadshow in Australia and New Zealand.

For more information on finance transformation, click here.

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Gina McNamara

About Gina McNamara

Gina McNamara is the CFO for SAP Australia and New Zealand, leading a team of approximately 40 staff across core finance, legal and contracts, facilities, purchasing, and information technology. She has been with SAP since May 2007. Before taking on the CFO position, Gina worked in Commercial Finance Business Support for SAP Australia and New Zealand, where she supported sales and consulting teams with revenue recognition and deal support. Gina is a strong advocate for demonstrating how SAP runs SAP and technology to improve operations for the office of the CFO, particularly around moving from an on-premise environment to the cloud.