Embracing big data and predictive analytics to keep a competitive edge
Recent research by Deloitte suggests that CFOs should be taking the lead in leveraging corporate data not only for their own decision-making but also to strengthen their impact beyond their core finance functions. This means CFOs can apply big data not only for financial plans such as budgeting and forecasting but also to increase their reach into other areas such as supply chain management and even customer interactions.
The Deloitte survey highlight who tends to be in charge of data analytics across various businesses. Over 20%, the business or divisional head was the leader of analytics and typically had control of the budgets assigned. CFO’s came a close second, at around 18% of businesses surveyed. Finance was considered as the most likely area to invest in analytics, and this was the case for nearly 80% of businesses involved in the study.
Keith Taylor, the CFO of digital infrastructure company Equinix explains that the pandemic has resulted in financial directors having to step up and play a wider role in shifting organisations from traditional working models to ones that provide access to real-time insights and allow for better decision-making.
During the pandemic, CFOs were forced to swift and decisive action to protect their business. They must now focus on the future and explore the most effective ways of delivering an environment that supports a quick recovery. A vital part of this recovery will be good access to real-time information regarding key performance indicators capable of supporting necessary decisions. Taylor highlights that while data generates insights, it also creates unnecessary details and so businesses must ensure their insights remain targeted and avoid any misinformation. CFOs will have to invest in data strategies to ensure they can manage and validate information to the highest standard.
Big data has become a vital part of the finance function, with senior members such as the CTO actively involved in this area. Global businesses today are multi-locational and work on multiple business units, and so it’s important to have a singular version of the truth, rather than managing data on a local or business level.
A CFO needs to be capable of understanding data on a global scale to ensure they can challenge all business areas. Centralising data into one area enables users to access the information via one common set of dashboards. This centralised approach means data can be explored at a global level by the CFO to understand each country’s performance. Team leaders and consultants can then drill into the same single data platform to access the most relevant data.
Analysts believe that businesses need to introduce more analytical processes and use raw data to generate business-focused information. Big data will only become more important as we progress forward. It’s important to actively explore all of the opportunities available by leveraging intelligence from data analytics.
Data science measures can determine important events in advance in order to allow preemptive action to create that all-important competitive edge. However, implementing the tools and technology capable of exploring this data effectively is important. Some progress has been made in this area but many businesses need to continue investing more in data science measures. For example, innovative analytical tools can predict customer churn within an organisation and how this may impact the business in supporting investment and planning decisions.
These tools would also allow CFOs to invest in the most suitable infrastructure, in the right areas of the business, to generate the best return on investment.