The CFO has an important role to play in monetizing data, and supporting advanced innovation and business agility with cloud, AI and analytics
Recent Accenture research found a direct correlation between high performance and becoming what we call a “data driven enterprise”—cloud-enabled companies that can maximize the value of data and treat it as an asset differentiated by its completeness, lineage, and quality.[i] Such companies use data as the basis for business agility and critical business decision-making through advanced technologies such as artificial intelligence and analytics.
But who should be steering the data-driven enterprise so it stays on course?
That task has traditionally fallen to technology leaders. However, in a recent paper from Campbell Abbey, “The CFO as the catalyst for the data-driven agenda,” we argue that CEOs and boards are increasingly relying on Chief Financial Officers (CFOs) to manage the data-driven journey, working with the IT function as it moves the organization to the cloud, and as it implements advanced technologies such as AI, analytics, and automation.
Why the CFO?
Why is this so? Several reasons:
- Managing the discipline of assigning economic value to data: Finance executives understand the discipline of assigning economic value to data. With the advent of digital and cloud, data has now become one of the most critical sources of new business value. Cloud-enabled data requires a new foundational framework for business to manage, measure, and monetize information as an actual asset.
- Digitizing finance and harnessing the power of data: CFOs continue to automate routine accounting, control, and compliance tasks. They are increasing their focus on value creation as cloud-based, digital technology empowers them to shape strategy through data.
- Leading digitalization efforts: CFOs play a critical role in the digitalization of their enterprises, with most starting in their own departments. In a virtuous cycle, the data capabilities CFOs develop can help them make decisions about investing in cloud and digital technologies across the enterprise based on economic value, which in turn empowers them to generate and combine even more useful data.
- Synthesizing complex data sets: CFOs’ ability to synthesize rich and complex data sets, and develop rigorous analyses of potential investments while managing risk, lets them assess plans and strategies more objectively. These capabilities are making CFOs even more popular as appropriate managers and coordinators of data and insights.
- Monetizing data: Finance executives are optimally positioned to facilitate the means for their organization to consume cloud-enabled data as the primary methods for generating profits in the digital era. These methods can range from indirectly monetizing data’s economic value to directly monetizing data which may include, for example, the opportunity to sell data to drive a new revenue stream. CFOs should play the role of the custodian of digital information as the business becomes ever more dependent on deriving monetizable insights from data—as Accenture research has shown (see Figure 1). [ii]
Shape the data-driven agenda
How can the CFO help shape the data-driven agenda? Here are a few things to bear in mind:
- Indirectly monetize your data: Finance teams should look to identify simple operational processes from existing revenue streams. By working with data in a cloud environment to drive insights into those revenue streams, the technology and finance organizations can work collaboratively to improve existing operating efficiencies.
- Enable data as a strategic asset: Once finance executives have established how to leverage data to drive efficiencies, an important step in monetizing an organization’s data is modeling the true value of data to the enterprise so that data can be treated appropriately as a strategic asset. This step involves defining the accounting practices and principles that can help speed the adoption of cloud and data-driven insights.
- Expand on the notion of indirectly monetizing data: Once the proper accounting principles are in place, finance executives can then prioritize the backlog of data opportunities in their business. Cloud-based, predictive analytics can uncover untapped revenue and new business opportunities, but only if the financial processes have been established and companies have a clear understanding of the value of their data as a strategic asset.
- Explore opportunities to directly monetize your data: As finance teams mature with cloud technologies, and as the economic value of their company’s data is quantifiably understood, then expanding beyond indirect data monetization should be explored. Some options to investigate include prioritizing direct sales channels, and determining how best to use data to service other organizations as a new, direct revenue stream.
Turning to the CFO
The ability to use cloud, AI, and analytics to capture, structure, and improve the use of data and data insights to increase profitability is an important source of a CFO’s innovation and business value. The importance of being a data-driven enterprise will only intensify as more organizations adopt better cloud-based data insights to improve their competitive advantage and drive growth. To be successful, CEOs and boards will increasingly turn to the CFO to help drive the organization’s data agenda.
[i]Accenture, “From Bottom Line to Front Line,” 2018.