The last few years have been ones of great challenges and uncertainty. The fortunes of businesses everywhere are inextricably linked to fast-shifting global economics, geo/socio-political conditions, and even unpredictable weather.
The effects of change are also more immediate than ever. One only has to look at the wild fluctuations in oil prices over the past year, and the difficulty many organisations have had in managing this uncertainty, for evidence.
It may come as little surprise then that the majority (58 per cent) of finance leaders are more concerned about the impact of external factors on the business than internal ones, according to our recent 'Modern Finance: Driving Transformation from Within' survey. 44 per cent say macro-economic issues are a major external driver of risk, and 40 per cent cite increased competition.
Navigating volatile finance markets
With change increasingly outside the business’ control, companies are increasingly looking to the CFO and their teams to help them navigate a volatile market. Chief Executives expect CFOs to dive deeper into what is happening across the company and get the most out of the organisation's investment in technology and analytics.
In this age of Industry 4.0, which has seen data arguably become the business’ most important form of capital, the unique overview finance leaders have across the company’s operations makes them ideally placed to uncover new insights and opportunities from the data they collect.
The cost of doing business continues to rise, however, while the pool of skilled finance professionals is shrinking. This makes delivering on the boardroom’s expectations increasingly difficult and requires finance teams to apply their knowledge and skills in more innovative but less familiar ways.
The finance team does not – and quite frankly cannot – deliver all the answers alone. CFOs have been trawling through and reporting on company data for years. They have vast expertise in audit trailing, ensuring compliance and maintaining data security but beyond this their ability to manipulate large volumes of data is limited.
How to drive digital transformation
A business’ digital transformation requires greater levels of collaboration between every department in the organisation, from finance to marketing to HR. This begins with closer alignment among line-of-business leaders, whose approach to working together will ultimately trickle down to their teams. Finance teams are aware that a gap currently exists in this regard. Nearly one third admit that a lack of alignment between finance and the wider business is standing in the way of change.
In particular, there needs to be greater collaboration between finance and IT. In many organisations the task of extracting business insight from data falls to the CIO, who has a great deal to add from an IT strategy standpoint. Nearly three-quarters (73 per cent) of finance leaders agree closer CIO/CFO alignment has become important to achieving the company’s finance transformation.
Employing a CDO
The next step, and one that some organisations have already taken, is to bring a Chief Data Officer (CDO) into the fold. The truth is that the CIO’s competencies are largely about maximising technology’s impact on the business rather than understanding the importance of data itself. CDOs, on the other hand, often have a background in engineering or mathematics and are most inclined to take a strategic approach to their analysis. Importantly, they know which questions the business must ask of its data to get the answer it needs.
Much of a company’s most valuable data begins its life as unstructured, and what some might even call chaotic, pools of information. It ranges from concrete data on customer demographics to less quantifiable records of news events to weather conditions. Measuring, quantifying, and linking all these elements requires a different analysis than finance is used to.
This is where the CDO comes in. Each pocket of information is invaluable because it is unique. It can only be captured once. Bringing structure and pulling out insights from thousands, if not millions, of uniquely important data points is the Chief Data Officer’s primary objective.
Gartner estimates 90 per cent of large organisations will have a CDO by 2019. As the position grows in popularity, the CDO’s role will extend to educating other executives – particularly the CFO and CIO – about how they can get more out of their data and to working more closely with them so they can achieve this.
To unravel new opportunities in the information age, the company’s leaders need to be able to move nimbly together. The process of digital transformation isn’t a free-for-all; it requires a collective vision as well as buy-in from every department in the business.
When all key decision-makers have access to the data they need, there is greater opportunity for forward motion and clearer ownership of each route towards progress. The fact that the CFO, CIO, and CDO each have so much to add in terms of how the company uses its data and technology is an indication of how businesses are evolving, and in its position at the nerve centre of the organisation the finance department is instrumental in helping the boardroom achieve its vision for the future.
Miguel Vergara, Sales Development Manager at Oracle