As a society we create a vast amount of data. In fact, according to figures released by IBM, an astonishing 2.5 quintillion bytes of data are produced every day. In the finance world, however, CFOs and FDs often meet these statistics and the associated hype with a healthy dose of scepticism, unsure of how this data can immediately translate into business improvement. Perhaps this is understandable, after all, the traditional path of analysing and reporting financial data has worked for their organisations for some time already – but are they taking full advantage of new opportunities on the horizon? And would a well rounded CPM software solution help?
A number of forward-thinking finance departments have already sought to embrace the benefits that big data can offer to their business. Invaluable insights can be gained by bringing together data from different sources and analysing it in innovative ways. For the FD, this doesn’t necessarily mean intangible third-party data but making full sense of all the data that is already collected as part of normal business processes internally. With the recognised strengths of numeracy, accuracy, and discipline that a FD possesses, they can play a key role in measuring how a business is performing and are therefore best-placed to use big data to bring unique insights to the management team.
The opportunities are there for all to see, but managing a large amount of data also brings its challenges. The challenge is to create new approaches to producing actionable insights in risk management, revenue forecasting, indirect cost controls and compliance, which require more than just traditional number crunching skills. In these circumstances, we believe finance and HR must work closely together to seek out staff with a thorough knowledge of business issues and the ability to look beyond traditional statistical analysis.
A strategic and collaborative approach to big data
When opening the floodgates to a continuous stream of business data, it becomes more important than ever to ensure a structured approach to its management, which in turn will help to improve business performance. Gathering and analysing information is no longer the sole responsibility of marketing, sales or product development departments. Finance must take the lead in liaising with these functions and ensuring they are effectively collaborating to define best practice to discover new insights and enhance strategic decisions.
For those setting out on the big data journey, our advice is to set clear objectives, start small and identify an area of the business where data analysis will help to achieve the greatest impact, then build from this success. As the sheer volume of data available to organisations continues to increase, firms must invest in the resources and tools to help build data sets and fully analyse them. With data frequently relevant to a variety of business departments, it is clear that HR and finance must work in collaboration to make the most of it – a siloed approach may not be the most effective one.
Learn more about how data can benefit the finance department in Talentia’s whitepaper, Data Analytics: Is the finance function ready?