Becoming An Analytics-driven CFO

Working on analytics-driven insights and giving credit where credit is due will hasten the organisation’s cultural transformation.

The CFO’s role continues to evolve in Asia-Pacific as the demands from the business shift and change. CFOs need to think beyond their traditional transactional responsibilities and step up to help forecast and shape the future by leveraging data and advanced analytics.

For the CFO and finance team to become truly empowered by analytics, they will need to undergo transformation. Simply aligning the finance team’s capabilities to the new agenda and ensuring the business can generate analytics insights with the right technologies are not enough. The new analytics-driven CFO will need to shine a light on both culture and operations in order to succeed.

Realign Strategically

Making data and analytics a strategic imperative, and articulating the role that analytics can play in value creation, will reshape not only the CFO’s role but the future of the organisation as a whole. An EY-Forbes Insights survey of 564 global executives, Analytics: Don’t forget the human element, saw only 12% of the respondents describe their analytics maturity as leading. There is plenty of room for improvement.

The new finance strategy should look to lead the business with value-added insights and services. Shifting the focus to what the business needs to succeed and eliminating any services that do not fit into that picture, will realign the finance function by default.

CFOs need to consider how much “white noise” exists in their environment and realign the finance function’s priorities accordingly. For example, outsourcing “non-core” activities such as time and expense management will free up the team’s time to concentrate on predictive analytics. Imagine if CFOs could make fine-grained predictions about what is likely to happen next to their balance sheet or tax position, they could intervene to improve the outcome.

“CFOs need to consider how much “white noise” exists in their environment and realign the finance function’s priorities accordingly."

Build A Fact-based Culture

While the potential value of analytics is exciting, how does the CFO execute this vision? Success is most likely when everyone from the frontline up uses analytic insights to inform action. Yet this is almost always a challenge. A staggering 89% of executives in the same survey said that they continued to struggle with change management issues in delivering analytics-driven results.

This is where there is a huge opportunity for CFOs to take the driver’s seat in transforming an organisation’s culture to one that operates in a fact-based decision-making environment. CFOs who step up to drive this transformation will be valued as strategic heavy-weights in the boardroom.

To that end, engaging internal stakeholders is fundamental. Understanding how analytics can create value for the organisation and knowing who cares about specific issues are essential to engage the business in an analytical fact-based conversation. Identifying where the real value lies and involving the people who will more actively effect the change – or be affected by the change - will be critical. If they feel a sense of involvement and ownership, there will be a better chance that they will change something about what they do.

Supporting changes that are based on analytics-driven insights and rewarding people for executing those changes will rapidly reshape the way the organisation operates. In addition, helping to embed analytics leaders throughout the business across business lines and levels will help drive the transformation agenda.

Just like wine … the organisation’s level of analytics maturity will be repeatedly and increasingly assessed, to determine its overall capabilities. 

Look To micro-insights For The Biggest Wins

Analytics insight and action are not just for the C-suite or boardroom; they must be embedded at all levels within the organisation to improve the benefit. Embedding an analytics mindset across an organisation helps to reduce inherent human decision-making bias and also enables business people to become better analytics consumers.

Micro insights shared with the frontline often has the greatest impact. For instance, being able to run big data text analysis of transaction descriptions can show up any discrepancies and allow the staff member at the time of text entry to know how best to record that particular transaction. This is a micro-prediction that could have a huge impact on efficiency, effective record-keeping and accuracy of data by reducing the need to fix data entry errors after the fact.

“Embedding an analytics mindset across an organisation helps to reduce inherent human decision-making bias and also enables business people to become better analytics consumers."

Prioritize Assets And Technology

CFOs need to treat their data with the respect it deserves; it’s likely to be the organisation’s most valuable asset over the coming years. Privacy, security and sovereignty are important considerations.

Historically, anything technical has fallen into the domain of the CIO but this is no longer the case. 78% of executives in the same survey agreed that data and analytics are changing the nature of competitive advantage, where an organisation’s level of analytics maturity will become increasingly valued.

Therefore, proper data treatment is now a C-suite problem – where the finance team will need to work hand-in-glove with the CIO to build solutions that will help them undertake actionable insights to shape sound business decisions.

Instead of fearing new technologies and approaches associated with data and analytics, CFOs should embrace them, test them and showcase the results – both the good and the bad. Being innovative may not always be seen as a quality of traditional CFOs, but this needs to change – and can be changed.

In the future of finance, CFOs will rely on big data and analytics to support the human judgment that they bring to everyday decision-making and business processes. Finance teams will have analytics as a core competency in order for business decisions to be informed by data. The focus will be on “what’s coming next”, rather than on “what’s already been”.

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The author is Vittorio Furlan, a Director in the data and analytics practice of Ernst & Young Advisory Services Sdn Bhd.

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organisation or its member firms.