Over the past few years, I’ve noticed a subtle change among my clients’ C-Suite meetings. The CFO is playing a much more active and vocal role in key decisions, particularly around growth and strategy. And why not? CFOs offer a single vision that no one else in the company can.
Think of the CFO as the copilot to the business, working side by side with the CEO to steer the organization smoothly and safely around potential hazards toward success. And our research backs up this notion. About 90 percent of finance leaders told us that identifying and targeting new value across the business is one of their main responsibilities. But I’m sure you would agree that finding a place to start can be challenging.
As a CFO, you have vast amounts of valuable data at your disposal. And you understand that finance is the only area with the cross-functional reach and muscle to pull all these sources together. But do you find connecting data sources and harnessing the insights that data yields challenging? There’s no shame—or surprise—if you answer “yes.”
Oceans of data can drown us
Today’s fundamental technology shift, particularly around big data, AI and automation, offers huge potential for CFOs to glean insights that can help pilot the business toward profitable and productive ground. Indeed, 81 percent of the CFOs we surveyed say they are best placed to deliver sophisticated insights through advanced analytics. At the same time, however, access to so much information presents a conundrum: Often CFOs find themselves amid oceans of data only to produce puddles of insights.
For CFOs who feel they’re drowning in data, I would offer two observations:
- The journey is not from San Francisco to San Jose; it is from the West Coast to the East Coast. Finance transformation is not a brief, one-time, wholesale, linear undertaking. It is a long, continuous process requiring time, effort and patience.
- Start small and stay focused on your topline goals. Often, looking across the enterprise to prioritize digital investments is a good place to begin. As CFO, one of your prerogatives is offering a rationale behind the company’s technology investments. As the chief data collector across the business, you have a unique vantage point, remarkably positioned to identify what’s broken and what may be improved.
Are you a victim of the watermelon effect?
Making broad assumptions based on oceans of data can lead to what I call “the watermelon effect.” Essentially, the data can look one way to the finance people who’ve analyzed it, as the outside of a watermelon appears green. But once you peer inside, your data can take on completely new meaning, appearing red like the watermelon cut open. Similarly, looking at financial data through a traditional matrix doesn’t always produce the big picture. Certain costs may not be factored in, and there are more KPIs—more colors to the watermelon—than meet the eye.
For example, I worked with a client whose quarterly logistics report offered mostly positive news—goods were being delivered on time and on budget. But the report declined to mention how sales had slumped in that quarter because certain KPIs were not adjusted properly. The report had missed certain crucial regional data—demand from certain segments, which had risen between quarters. So, the company was missing an opportunity to meet rising demand in various locations because it was relying on old data. Untapped potential can cost you dearly.
As your CFO role evolves, you’re likely finding it increasingly important to offer insights not only from the marketplace, but from inside your organization. And quickly. CFOs who understand this are looking beyond traditional boundaries across enterprise functions. You don’t see the business as a collection of separate departments, but rather a holistic picture of teams producing results. You’re not just looking at process, but at culture as well, helping bring about cross-functional transformation.
For example, in an effort to break down organizational silos, one of my clients requests that non-finance people specifically contribute to financial reports. “We’re convincing them that it’s beneficial to self-report, so finance people can spend their time enhancing other areas of the business,” the controller told me.
CFOs also tell me that success depends to a large degree on speed. You’ll find it hard to argue that today’s marketplace operates quickly. Today’s CFO must capture trends, forecast, react and plan accordingly. The finance function can no longer be a standalone silo that simply crunches numbers. It must be woven into the fabric of the whole business, integrated seamlessly as a regular, ongoing process, not a one-time, yearly, quarterly or monthly event. Finance culture today also requires solving a specific problem, designing analytics based on that finding, and going back to apply those analytics on an enterprise level.
Everyone is drowning in data, and managing that data is step one toward redefining your finance function. Step two? Slice that watermelon to reveal more layers of insights from your data. Look across your organization, and you’ll likely find pieces to the puzzle that can help you achieve greater overall performance.