The world of data has firmly supplanted itself within business, with data being generated every single day that companies can use to gain a competitive advantage over their competitors. In fact, this has become such an essential part of this role that 55% of CFOs strongly agreed that using digital tools helps put them on the right track towards success.
While data is an invaluable resource for Chief Financial Officers, it also comes with a multitude of challenges that make it difficult to manage. Without the right tools, strategies, and approaches in place, CFOs are often left in the dark when it comes to their companies’ data.
Due to the large range of possible sources that could simultaneously be producing data within a business, it’s often the case that data silos, inconsistencies, and gaps in quality begin to form. When mismanaged in this format, data becomes misconstrued and significantly more difficult to use effectively.
In this article, we’ll be taking a look at how data has become essential in the world of CFOs, looking at the best data practices to ensure they smash their KPIs.
How do CFOs store and collect data?
While businesses do have some internal processes in place to store and collect data, the sheer quantity of data produced in the modern age is forcing CFOs to turn to external sources. As the quantity of data increases, so does the possibility of human error, the time it takes to file all the data, and the likelihood of different statistics or measurements being miscalculated.
Due to this, many CFOs are turning to cloud data warehouses. A cloud data warehouse acts as a huge database, collecting all of the data sent to it and compiling it. From there, users can then more easily conduct analysis, ensuring that they have data-driven insights on hand whenever they want to make a decision.
Not only do data warehouses allow for faster analysis, but they’re also fantastic at storing large quantities of data in one single location. The additional fact that they’re stored on the cloud means that CFOs don’t have to allocate any budget to physical storage space. Equally, as their business operations begin to grow, CFOs can also then scale the amount of cloud storage they use in order to accommodate for that growth.
In short, cloud data warehouses are the perfect solution for CFOs looking for a location to store all of their data.
Why do CFOs need to rely on data?
Companies are currently producing an unprecedented amount of data, with every customer interaction, business exchange, and company decision creating a backlog of information.
While this presents a challenge in collecting, regulating, and storing the data, the innovative systems in place are allowing CFOs to make better use of their data than ever before.
Data Gives Further Detail
Data analysis opens up your business to a range of exact statistics that reflect certain aspects of your company. For example, you’ll be able to use your data collection and analysis to look directly at customer-driven metrics. Touching on average lifetime value, customer churn, and cost of acquisition can give CFOs an insight into how their business is running.
Once a CFO has these statistics, they’re then able to make smarter decisions about how other teams can adjust their strategies. By narrowing these data metrics, they can make data-driven decisions too.
Equally, due to the diversity of information included within a data warehouse, CFOs can compare their company to public data released by other companies, gauging where they fall in terms of industry averages. If they’re particularly above or below average in a category, they are then able to begin to plan a strategy that will change that.
Data Drives Progress Across the Company
One of the main roles of a CFO is to tame this data beast, ensuring that everyone in their company has live access to the data that they need to do the best possible job.
By structuring the data and ensuring that it is not in a data silo, CFOs will arm their businesses with the tools that they need to make better decisions. Maintaining these data elevators, pipes, and pathways allows everyone in the business to use data-driven knowledge to make better decisions.
As data is embraced into the company, every single metric and KPI that is tracked can be more purposefully honed. There is nothing more important than creating this availability for CFOs. While they can shape their own KPIs, they also have the power to ensure that everyone - despite their role in the company - has the tools they need for success.
How Can Data Help CFOs Hit Their KPIs?
While a lot of productive work can be achieved when it comes to simply collecting and analyzing data, this doesn’t necessarily bring a CFO any closer to their own KPIs. Part of a CFOs role should be aligning their KPIs, using data to boost their own progress.
Typically, a CFO has the following KPIs:
● Increase Monthly Revenue
● Deliver Insights
● Capture Data for Others
Let’s take a look at how data can help boost a CFO along the pathway to meeting these goals.
Increase Monthly Revenue
From customer acquisition to streamlining the supply chain, having stable data sets that reflect each process of the business will also reveal where money could be saved or where it is better used. This even expands to cost allocations within labor, which is often cited as the most concerning area of business for CFOs.
As a CFO analyzes large datasets on different aspects of their business, it will quickly become apparent where their focus should be. After revealing this, a CFO has a clear plan towards refining their business strategy, further developing their profit margins, and ensuring the extended success of their business.
Whether they see a part of the supply chain that could be optimized or a profit margin that’s no longer worth it for a particular product, data will reveal the path they should take. From there, all they have to do is take it! Due to this, data effectively outlines the correct choice for the CFO, making hitting this KPI a matter of selecting the correct pathway.
Deliver Insights
As a CFO, much of the role revolves around reading figures, collecting numbers, and ensuring that data is continually flowing within the company. If one of your KPIs is to do with the delivery of insights, then the most effective way that you can use data is by scaling the input into your data warehouses.
Due to the ample pool of data that you could now pull upon, this is easier than ever. By ensuring that several different data sets feed into your overall pool - no matter if they’re industry data, competitor data, or your own historical data - you’ll get a more rounded image of the field before you.
By delivering a more comprehensive data pool to your company, you’ll be increasing the effectiveness of the data that you provide to your team members. As the data pool size increases, so does the stability of the data and the certainty of the insights you can provide.
Capture Data for Others
Within any business, if the quality of data that is being analyzed is defunct, unspecific, or low-quality, then the insights that will be drawn from them will also be. As a CFO, one KPI that you can review is the relative quality of data that you’re feeding your company.
By prioritizing different projects and data streams for different departments, you’ll be able to deliver more accurate data sets to each department. This starts with changing your data capture approach. One way to ensure that data sets are compiled effectively and as useful as can be is to start incorporating AI into your processes.
Artificial intelligence and data analysis go hand in hand, with the incorporation of AI tools allowing you to further screen the quality of your data. Instead of spending hours checking datasets yourself, you’ll be able to simply have your AI move through the data for you. Not only does this allow you to smash this KPI, but it ensures that the data you supply is of much higher quality, allowing for further use by the teams it’s going to.
Final Thoughts
Data analysis is one of the most important roles that a CFO has in their day-to-day functions. The world of data analysis and the expanding toolbox of data platforms that are currently accessible have led to a rapidly changing world. When seeking to smash KPIs as a CFO, the most straightforward route is to use the power of data to a higher degree.
As increasing amounts of data are continually produced within business, it’s now more important than ever to use every tool possible. From cloud data warehouses to analytical tools, a CFO needs to accept data into their world if they want to thrive.
