The amount of data we face every day can be overwhelming. Whether emails, company reports or columns of transactions, no one can escape the relentless outpouring of digital data that requires our attention.
IBM estimates that the world creates 2.5 quintillion bytes of new data each day, while global IT company CSC is forecasting a 4,300 per cent increase in annual data generation by 2020. Much of which will be produced through business activity.
CFOs have a lot of data at their fingertips provided by different managers in their organisation, including accounts payable, accounts receivable, manufacturing data, cost of goods sold, and assorted vendor records.
The challenge for CFOs is to find meaningful patterns of opportunity in this sea of data.
CFOs need clarity on where growth will come from and where to allocate enterprise capital, but they can’t do this unless they get their hands on the right data.
Most businesses appear to be struggling to turn growing volumes of data into valuable business insights. Two years ago, a joint American Institute of Certified Public Accountants (AICPA) and Chartered Institute of Management Accountants survey found that only 14 per cent of businesses were managing this dilemma positively.
But the outlook is improving, as more CFOs champion the use of data analytics across the whole organisation. In Australia, big data and analytics is considered one of the top three innovations for the next five years.
Ashok Noah, vice president of external relations for management accounting at AICPA, detects a change in the current role of the CFO, which is moving from being very transactional to more analytical. In his view, CFOs should spend only ten per cent of their time on transactional work, and the rest on analytics.
“The more time you spend on analytics the more you help the business and enable effective business partnering. The CFO of the future will be a true business partner who will provide these insights,” he says.
William Buck’s audit team uses data analytics as an auditing tool for corporate governance purposes. By running the tool over volumes of routine data, it can test for fraudulent transactions to meet the audit requirements of a company’s board. Managing data in this way is contributing to the changing role of the CFO.
“Once they were a numbers person but now their role is as 2IC to the CEO and that involves providing useful information without getting overwhelmed by the amount of it,” said Michele Nevill, a director in William Buck’s audit practice.
A recent study by a global recruitment firm to identify the attributes of a successful big data user noted that they think through the issue, consider the data that might be available and then analyse it to give just enough, and just the right amount, of information at the right time to allow the business to act and secure a benefit.
“There is little value in over-analysing data simply because it was there and analysis was possible,” the study warned.
According to IT research and advisory firm, Gartner, organisations typically have multiple goals for big data initiatives, such as enhancing the customer experience, streamlining existing processes, achieving more targeted marketing and reducing costs.
This year organisations are overwhelmingly targeting enhanced customer experiences as the primary goal of big data projects (64 per cent). Process efficiency and more-targeted marketing are now tied at 47 per cent. As data breaches continue to make headlines, enhanced security capabilities reported the largest increase, from 15 per cent to 23 per cent.
Certainly more people are becoming alert to the pace and volume that data is being captured. According to Nick Heudecker, an analyst and the co-author of a recent Gartner survey, big data projects are increasingly originating from financial, marketing and other business unit leaders, who are pressuring chief information officers to collaborate with them to make sure the technology aligns with the company’s strategy.
“People are becoming aware of the value of data, not just in IT but overall,” says Mr Heudecker, “They’re creating data and using it as a competitive advantage.”
For CFOs, the biggest challenge in this area will be understanding that they are no longer processors but have to be interpreters and broad thinkers. Says Ms Nevill:
“CFOs will be the glue for all areas of the business, particularly in terms of managing data.” she said.
“They will be responsible for interpreting and dispersing that information to managers so they can make the considered and informed decisions.”
Which technologies do you think have a big future in the next five years?
Source: Harvey Nash 2015 Technology Survey