Manage data as strategic asset
New business models, the Internet of Things (IoT) and other technological innovations generate a massive amount of data. The success of a company now depends more than ever on its ability to utilise the potential of data to generate information and insights about customers, products and operations.
The challenge however is to find the right data, analyse it and identify relevant patterns, and transform it into meaningful insights. The quantity and variety of data entering an organisation, together with the speed of data transmission, have led to a situation where traditional processes, systems and data governance models are no longer effective.
The Finance function, being traditionally the ‘owner of the one version of the truth’, in particular is faced with increasing data volumes, complexities of data structures and multiple data access options, in fulfilling its role of providing relevant, valuable and consistent information to decision makers across the company. There needs to be a structured company-wide data governance with applications for Big Data and analytics, to extract the full potential of what the data can offer.
The Finance function needs to define its role in this corporate data environment, and decide to what extent it intends to act as the company’s ‘data steward’.
Changing decision support
Increasing volumes and variety of data, together with new technology, create both opportunities and challenges for the Finance function, in its role as the key business partner for providing cross-functional decision support.
Data volumes are growing rapidly: The world creates 2.5 quintillion bytes of new data every day. The Internet of Things, integrated delivery concepts with partners and new business models, for example are creating massive amounts of new data. Some of this data, not only from internal sources, but also from external sources, has potential value to a business. Much of it, especially from external sources, is unstructured. A big challenge is to structure the data, and analyse it to provide meaningful insights for decision makers within the organisation. New requirements regarding information steering come up.
New information stacks for decision support are being created, on top of the existing ones, but with a different data profile. A powerful IT architecture is needed to manage and analyse all the data, both internally and externally sourced. New data can often only be processed using Big Data technology or in-memory computing, together with advanced analytics act to speed up the delivery of management information. Given the technology involved, digital enablers are required, and the current skill set of finance staff must be extended to include advanced digital skills.
Given the vast amounts of data, a huge challenge is to connect the various sources and give every user access to the data sources they need. There will no longer be a formal ‘reporting system’. Instead small focused apps will be available, with different functionalities for integrating data from several different sources. Users of these apps will be able to access data directly from each of these sources. The huge variety of apps can serve as an information platform for answering specific business questions. All those apps enable interactive as well as innovative solutions for the analysis of data used in various functions.
As a consequence of new business models, data and technical possibilities the decision support changes.
Future role of Finance
Finance needs to choose its future role in the changing decision support landscape.
Finance focusing on core functional activities:
- Finance sticks to the “business as usual”, focusing on key Finance topics such as IFRS, taxes, compliance
- Finance provides financial statements and is a user of analytics for its own purpose
- Finance eventually becomes a Center of Excellence, providing highly specialized expertise upon request from other business units
Finance acting as (company-wide) data steward:
- Finance in a strategic leadership role focusing on data stewardship and analytics as key priorities for Finance
- Finance provides statistical as well as business know-how and integrates analytical capabilities
- Finance is responsible for ensuring consistency in the decision and investment making processes across the company