Businesses are collecting more data than ever from their own operations, supply chains, production processes, employees, and customer interactions.
But information alone isn’t knowledge.
Data is nothing more than virtual garbage unless it can be translated into actionable insight and effective business outcomes.
CFOs and The Information Age
CFOs are the financial spokesperson of their organization, historically responsible for financial planning, record-keeping, and reporting. They’re role is to balance risk through budget management, cost benefit analysis, forecasting, and funding knowledge.
As purveyors of finance, these basic duties haven’t changed much.
But as data volume and variety increase, CFOs and financial professionals must leverage these new information streams to identify trends and incorporate analytics into the decision making process. When it comes to seeking out strategic advice, CEOs turn to CFOs 72 percent of the time.
To help shape the strategic direction of the company, CFOs not only have to interpret vast troves of data, but they have to do it faster and more accurately than the competition.
Business Intelligence for CFOs
A Video Guide to Business Intelligence
Companies that adopt a data-driven culture are the most successful. Seventy-six percent of executives from top-performing companies cite data collection as very important or essential, and data-driven companies are three times more likely to rate themselves as substantially ahead of their peers in financial performance.
CFOs have always used valuable information to identify growth opportunities either from existing or new customers, products, and markets. This task has become more complex however due to the amount of sales, operations, employee, website, and customer data that is now being generated across multiple channels.
To bring these disparate silos together and eliminate late nights hunched over reports (that are often out of date by the time they’re analyzed), CFOs need business intelligence and analytics tools. In fact, Gartner research revealed 78 percent of CFOs consider BI and analytics as a top technology initiative for the finance department — beating out even financial management applications.
Though many organizations consider data a priority, they’re still struggling to make progress with BI and analytics. In order to avoid this common problem, let’s examine how business intelligence software helps CFOs harness data and analytics to increase customer engagement and grow profits.
Capturing data is important, but using information to propel the business forward is more important. BI software alleviates the headache of collecting and consolidating profit and loss numbers from every department or business unit for comparison and analysis. By integrating various ERP, CRM, marketing, HR, and back-end data sources into a BI platform, all company data is compiled into one central location. This means no more tracking company performance from spreadsheets or waiting on IT to run complex reports.
BI software puts data at your fingertips through the use of dashboards, which present easy to analyze views of selected metrics. Dashboards help improve the BI user experience and make business intelligence approachable. They simplify complex data sets, reveal patterns, and provide you with a way to monitor business performance at a glance, which enables fact-based decision-making.
Head here for a mock CFO dashboard created with Tableau. This particular dashboard is used to view your business composition and monitor changes as they occur. Currently, the segment composition is calculated by net sales. By using the “Select Measure” filter in the top left, you can switch your measure to gross profit, operating income, or net profit. You can also use the rest of the filter panel or drill down by clicking anywhere in the visualization.
By aggregating important data, dashboards and self-service reporting tools help you identify hidden trends or missed opportunities. For example, rather than just a report that shows profits increased, BI lets you pinpoint why profits increased. To gain context, you can “drill down” to see exactly what is causing the spike in revenue. With a real-time financial view across the company, you can discover which efforts are suffering and which are exceeding, then allocate resources accordingly.
End-to-end business intelligence is critical. CFOs are already trained to discern patterns and implications, so visualization tools that save time and simplify processes are important. BI dashboards allow CFOs to build interactive reports that allow them to get fast answers to business questions such as “What’s driving sales growth?” or “Where are we spending resources?”
Business Intelligence and Analytics Software In Action
Data visualizations turn your financial key performance indicators (KPIs) into clear graphics, which help you track performance and assess risk. Visualization also helps quickly compare different pieces of data with auto-generated charts. These typically include: tables, pie charts, bar graphs, heat maps, scatter plots, and gauges. Our minds often respond better to pictures than to rows of numbers: business managers who use visual data discovery tools are 28 percent more likely to find timely information than peers who only use managed reporting and dashboards.
Descriptive analytics is when you use historical data to pinpoint the reason behind a success or failure. Business intelligence software now goes beyond this to help you shift from a historical perspective to a forward-looking perspective.
Predictive analytics uses technologies such as forecasting, data mining, and simulations to tell you what is likely to happen. For example, predictive analytics can identify sales fluctuations and product popularity, which can be used to forecast inventory needs at a particular retail store. It can also identify purchase behavior and demographic information about your most valuable clients, which can be used to determine how much money should be invested to gain business from them or similar prospects. Advanced prescriptive analytics goes ever further by recommending the best course of action based on the knowledge you currently have.
Business analytics software uses the data you already have to open up new ways of looking at business and operational information. CFOs can use this technology to scale performance, assess future risk, and hone their financial metrics.
Don’t let your data become virtual garbage.
The right business intelligence tools can help make data your company’s most valuable asset.