The Great Wall of China can’t be seen from space; goldfish don’t have bad memories (or a memory span of three seconds, for that matter); and peanuts aren’t even nuts. These are just some of life’s most commonly held misconceptions. What we think we know to be true often isn’t.
It’s the same scenario in our professional lives. For example, I speak with many customers and fellow CFOs who hold similar misconceptions about advanced analytics. And there are three, in particular, that seem to be making the rounds:
- Misconception No. 1 – Advanced analytics is expensive. Not so. Just because the benefits are huge doesn’t mean the price tag is, too. In fact, you’d be surprised how affordable predictive capabilities are.
- Misconception No. 2 – Advanced analytics takes a long time to deploy. The reality is that for most analytics tools, implementation is actually quite fast—a matter of weeks, in most cases—regardless of your existing IT landscape.
- Misconception No. 3 – Advanced analytics is complex. Again, not true. Just because the technology is sophisticated doesn’t mean you need a PhD or highly specialized skill set to leverage it. That would defeat the whole point of putting meaningful data at your fingertips.
If we’re told something enough times, we tend to believe it. That’s human nature. I don’t know how or where the above myths started, but believing them will hold back your company’s growth, and most likely your career. These myths are worrying because advanced analytics is becoming increasingly important for the finance function to operate both accurately and strategically. It is data that is shaping our role as CFOs to make better decisions, and it is data that will ultimately help to make us all better leaders.
A recent Oxford Economics study of 1,500 global CFOs looked at six traits that make a strong finance leader. Business performance analytics was paramount in the EMEA leaders group. That means not working in silos, but rather working holistically with an accurate window into all areas of the business. This type of corporate digital lens not only gives us valuable insights into current performance metrics, but also enables what-if scenario planning to evaluate financial implications and accelerate different plans of action.
One customer I spoke with calculated that before embracing advanced analytics, the company was spending more than 2,000 human working days per year preparing budget submissions for executive management! It’s hard to have any sort of credibility or influence when your numbers are out of date the moment you start analyzing them, and irrelevant by the time you’ve presented them.
The Oxford Economics research found that having a strong influence beyond the finance function and improving efficiency with automation were paramount in boosting CFO performance. Neither of these is possible without predictive data. While no one can look into the future, a smart CFO can use advanced analytics to understand the market and use that insight to generate growth. If you can’t do that, then gaining predictive analytics capabilities should be at the center of your priorities.
Oh, and in case you’re wondering about life’s common misconceptions I mentioned earlier: Apollo astronauts confirmed that you can’t see the Great Wall of China from the moon—just the white and blue marble of the earth. Goldfish actually have very good memories, for fish. They can be trained to respond in various ways to certain colors of light, different kinds of music, and other sensory cues. Peanuts, along with beans and peas, actually belong to the single plant family, Leguminosae. And predictive analytics isn’t expensive, doesn’t take a long time to implement, and isn’t difficult to operate.
A copy of the Oxford Economics Research, “How Finance Leadership Pays Off,” is available here.