Recent research from McKinsey shows that finance leaders spent 19% more time on value-added (versus transaction-processing) activities than a typical finance department did.
The reason? Increased efficiency, a bigger role in data management and reporting, better-informed decision making, and generally reimaging the finance function. These are just some of the benefits associated with finance transformation, whereby financial operations are overhauled to better align with an organisation’s overarching goals and objectives.
However, developing, implementing and running an effective finance transformation strategy is a monumental task that will impact most people in the business on some level. Not only are processes, systems, technology, and operations completely redeveloped, but the underlying culture and mindset of the business also have to shift, to adopt a more holistic approach to the finance function.
There are a whole host of reasons why a business endeavours to journey down the finance transformation route, one of them being inefficient data usage, management and reporting.
The role of data
Global organisations in every sector have innumerable volumes of data, from both internal and external sources. Customer data, employee data, and sales and marketing data are just some of the sources and data points that a business gathers as part of day-to-day operations – this creates a huge pool of useful information.
Every department within a business needs to leverage this data in some shape or form and at some point in time. For example, sales will leverage data from the finance team as part of the procure-to-pay process, which integrates purchasing and accounts payable systems to create greater efficiencies and transparency amongst departments. Another example is the HR department, which uses financial data such as payroll and expenses.
The problem is, that not all organisations know how to extract meaningful data from the right source in order to facilitate important financial business decisions.
The data challenge
The conventional role of the finance function has evolved drastically since the days of simple expense reporting and account balancing. Changes in business requirements, buyer behaviour and global trends all combine to create what is now considered the modern finance operation. Within this newly-developed finance department, the role of the CFO needs to be a data-driven decision centre.
Given that, on average, people create 1.7 MB of data every second, it’s plausible that businesses have enough data to make better-informed decisions regarding finance. However, research shows that between 60 and 73% of company data goes unused. The reason? The majority of businesses still don’t know what to do with raw data once it’s collected, even though they do know that it will inevitably provide a bigger and better picture of the finance department and the business as a whole.
There are a few different reasons why businesses aren’t making the most of their data.
These challenges arise because data and reporting are not mature within the majority of organisations. However, other factors influence how, why and when a business accesses data.
Remote working as a result of the global pandemic has not only meant that it’s no longer always easy to get answers to financial questions quickly, due to dispersed teams and different timezones, but the security risk has exploded in tandem. Enabling employees to access data via personal laptops and computers and often via insecure networks has placed immense stress upon the shoulders of business’ IT security teams. Regulations are also in overdrive internationally, financial institutions everywhere have had to build risk-related data control capabilities as a result of ever-changing regulatory demands. The problem is, that the development of these capabilities wildly outstrips the adoption of them. Many organisations still struggle with significant deficiencies, particularly when it comes to data architecture and technology.
Resource constraints are another challenge. Finding and retaining the right talent to make use of all the financial data a business has to offer is no small feat. What makes this even trickier is that competition for data and finance talent is fierce. In simple terms, recruiting new talent and retaining the existing talent needed to run an effective finance team is an ongoing battle for businesses.
Combined, these challenges create a difficult, laborious and increasingly manual data job to be performed, and one that fewer and fewer people want or can do unless they have the right tools to make the job easier.
Technology holds the key
Deploying a unified system that creates a single source of truth for all data is a certified way to provide finance teams with what they need from a data transformation perspective and others – read more about some of the other challenges that organisations are facing, and why they’re choosing finance transformation, here. A system that pulls data from all departments, places it into one centralised data lake and then pushes relevant data back out to specific departments considerably lightens the load of the finance team, saving time, cost and resources on manual tasks. It also provides the means in which to greater inform the decision-making process, with little to no manual intervention required.
This is where finance can play a leading role in the decision-making process. CFOs and their departments can leverage data analytics to both track and tell the story of where the organisation is, where it should be going and how various variables – from a strategic level – could impact the business’ financial performance. By using analytics to provide insight, finance leaders can showcase the evidence associated with the functions’ true value and demonstrate that it’s an essential part of any strategic discussion.
An intelligent automation platform like Niico, can build out data reports into a dashboard and automate the publication of them to arm finance teams with the evidence they need to influence better decision making. Data can be moved between different systems without the need for large APIs or specific technical projects to be undertaken. This means that employees’ time and resources are freed up, enabling them to provide greater business value.
Book a platform demo to learn how Niico can transform data reporting and management for your finance department without undergoing any major changes to existing programs or systems.
Share this article