BI is a vital tool for finance executives supporting businesses with managing large data pools and measuring overall business performance. Todays’ chief financial officer needs to be more than just a finance executive. To really offer a strategic solution for businesses, today’s finance managers need to really embrace the benefits of applying data science to their business.
Business Intelligence provides companies with the organisational, analytical and technical capabilities to measure insightful data. In regards to finance, BI takes financial and operational information and transforms this data into integrated dashboards, KPIs and most importantly, business insights. Many industry experts believe BI could be a vital tool for CFO’s, creating a financial tool to generate automated data analytics and predictive insights for businesses.
How BI can support the challenges that face CFOs
Finance Operation and Reporting
The collection and consolidation of finance and operation data and transformation into eligible reports is time-consuming and can be difficult. The process can be tedious and require a significant resource, leaving little time and space to act on the findings and data generated.
Many CFOs are fixed in an Excel-focused system, involving manual reporting and the storage of large volumes of data and little time and resources to analyse any findings. BI can provide CFOs with the capabilities to measure data from a range of sources, making the entire process more effective and useful for a business. BI can create automated reporting streams and provide added value to supplementary Excel tools, adding more qualities to cover any potential limitations. In terms of a CFO, BI offers automated financial statement preparation and distribution, enable operational reporting, generate working capital analysis, calculate revenue recognition for complex revenue streams and provide predictive analysis benchmarking.
For private-equity backed CFOs, BI can support the navigation of transactions or reveal reasons to halt any transactive processes. BI tools can offer more detailed, granular information on costs using multiple transaction data sets. This level of detail can provide vital information or a business on target returns on investment and enable sales and operation teams to act accordingly. BI systems provide this added detail and quickly, enabling finance professionals to respond effectively. Aside from transaction targets and assessment, BI is a valuable tool for merger integration and divestiture management. BI provides a business with critical information and the necessary analysis and monitoring capabilities to deliver further growth and efficiency.
BI provides a range of optimisation scenarios and can really create a value-add enhancement for a business. BI can be an essential tool when a company is underperforming. BI can support CFOs within scenarios where excessive, confusing data pools that measuring the reasons for underperformance very challenging. BI tools are designed in a way to be responsive and capable of measuring in real-time, generating invaluable information to determine the underlying reasons for financial changes. BI can extend to other vital performance factors such as payroll trends, invoicing, inventories, customer contracts, procurement and spending patterns.
With so many clear benefits it would be assumed that more CFO’s are embracing BI. There are several recurring issues that are hindering the uptake of BI with CFOs.
Investment: The initial outlay of BI tools is expensive but the costs related to BI implementation may not be as high as perceived by CFOs and there are returns available from BI investment.
Knowledge: For many CFOs, BI is regarded as another complicated tool that challenges many finance professionals. In reality, BI supports large volumes of data, simplifying the entire process.
Concern: More technically-minded CFOs are still quite cautious about implementing BI due to expected challenges in terms of the timescale of implementation. In order for BI implementation to be successful, it requires a senior professional who completely supports data-driven decision making.