Once merely, stewards of accounting and compliance, modern CFOs have reinvented themselves as visionary trailblazers, guiding organizations toward uncharted growth horizons. Today, they enable their leaders across the organization to make enlightened decisions, effectively transforming into the linchpin of future-forward business leadership. With the widespread implementation of finance automation, all parties are excited to see the added value CFOs can provide.
To shed light on this concept, Glenn Hopper, the esteemed author of Deep Finance: Corporate Finance in the Information Age, suggests that CFOs can transform themselves into Chief Data Officers (CDOs). According to him, CFOs can convert their departments into analytics powerhouses.
In this article, we will delve into why modern CFOs favor finance data management and analytics. Additionally, we explain the best practices for CFOs in managing analytics initiatives. Throughout the journey, you will discover:
- The evolving role of the CFO
- Best practices for CFOs driving analytics
- Why does finance data management matter to CFOs?
- Why could the CFO be the CDO?
- Helping CFOs become data leaders
Let’s get started.
The evolving role of the CFO
💡 “CFOs shouldn’t wait and react to trends as they mature,” says Richard Ries, VP, Advisory, Gartner. “They must proactively experiment with key data and analytics trends to respond to crises, innovate and rebuild.”
Let me take you through a timeline. Ages ago or initially, CFOs and finance teams focused on capturing and reporting financial data. Soon, with the advent of automation and integration of finance systems, they saw an uptick in data accuracy and efficiency.
In the next phase, they used data analytics for performance measurement and analysis. Here, they used financial metrics to decipher profitability. Forecasting and predictive analytics followed suit, enabling proactive decision-making based on historical patterns.
Moving some miles ahead, CFOs emphasized strategic financial planning. They used data insights to support long-term planning and capital allocation. And finally, today CFOs function as strategic business partners.
Today, successful CFOs offer their CEOs and board:
- Dynamic data storytelling
- Deeper dives into financial data
- On-demand drill-down business insights
To sum up, this seismic shift of the role of CFOs to data wizards demands new skills. They must fill the gap between strategic financial management and complex data analytics.
Best practices for CFOs driving analytics
💡 Findings from The Analytics Advantage, Deloitte’s annual survey on the state of analytics readiness reveal that 20% of respondents suggest CFOs lead the game and take control of data analytics.
Below, we have gathered strategies for financial leaders spearheading data & analytics initiatives. They include:
Data should be available to everyone in the company, not just the finance department. It should be made available as actionable insights that everyone can access. This is how data-driven companies operate.
The best part is that anyone, from the executive team to the front-line employees, can access the data, run tests, and find their answers. This is what business nirvana looks like.
Setting up tech systems in advance
Your business can benefit from collecting data. However, if you prioritize scaling your growth, you must think ahead and get the systems to support it. Here are a few reasons for doing so. It will:
- Frees up time for strategic activities
- Increases accuracy decisions
- Increases efficiency of the organization
- Aids you attract and retain customers
- Offers high ROI in the long run
Celebrating small wins
Small victories are a great way to start getting buy-in for data-driven decision-making. By focusing on small, measurable wins, you can show people the value of data and build momentum for change.
One way to do this is to build a guerilla team of individuals from sales, operations, and finance. These are folks interested in the intersection of data and finance. This team can then look for opportunities for small wins in their respective areas.
Why does finance data management matter to CFOs?
Finance data management is foundational to consistent and high-quality analytics. And every time, the most essential data for financial analysis is housed in platforms across the business. Whether it’s product code or chart of accounts, financial data goes by different names. So, it’s an uphill battle for finance leaders to find who holds the required data across CRM, HRIS, marketing, and finance system.
However, many CFOs are adopting modern finance data management (FDM) solutions to combat the same. These come with pre-built APIs that pull and pinpoint data from disparate systems.
To elaborate further, Canva is one such example. Damien Singh, CFO of Canva, needed a single source of truth for revenue data and wanted to integrate payment and billing systems. He deployed an FDM platform that offered him access to transaction-level data at all times and eased the month-end closing process. Precisely, it helped him:
- Leverage advanced cloud-based tools to manage and govern finance data centrally
- Offer self-service of data to finance and other business teams, nipping away the reliance on IT
- Create reliable and authoritative data about customers, products, suppliers, and finance data
- Uncover hidden insights and patterns through advanced analytics techniques
Why could the CFO be the CDO?
💡 According to a survey of senior financial executives conducted by CFO research, 49% of respondents agree that advances in technology will fundamentally alter the role of CFOs and get them closer to being data aficionados.
There is a growing case for more CFOs to take on data leadership. Many propose that financial expertise and strategic thinking help CFOs in this process.
On a similar line, Hopper iterates that the analytical skills that allow CFOs to succeed in their actual work also aid them to perform well in data analysis. He terms this amalgamation of the CFO-CDO role as The New-age CFO, who works well with AI, machine learning (ML), and big data.
Increasingly, for new-age CFOs, the task is to determine the value add their team brings to the business. Their skills-sets are amplified—they build predictive models that identify opportunities, risks, and trends.
Below, we give away the rationale behind why CFOs could be the new CDOs—
#1 Financial acumen meets data strategy
CFOs possess a deep understanding of financial data, analytics, and reporting. They are skilled in translating complex financial insights into actionable strategies. By integrating data strategy into their purview, CFOs can bridge the gap between financial management and data-driven decision-making.
#2 Enhancing decision-making
As the custodians of financial data, CFOs are responsible for providing insights to drive effective decision-making. By expanding their role to include data leadership, CFOs can enrich decision-making processes across the organization.
#3 Aligning data strategy with financial goals
CFOs are familiar with the financial goals and performance metrics of their organizations. By taking on the responsibilities of a CDO, CFOs can align data strategy with financial objectives. They can identify relevant key performance indicators (KPIs) to monitor the impact of data initiatives on financial performance.
#4 Driving innovation and transformation
As organizations increasingly recognize data as a strategic asset, CFOs are well-positioned to spearhead transformation efforts through data-driven initiatives. By assuming the role of a CDO, CFOs can promote a data-driven mindset.
Helping CFOs become data leaders
CEOs, the board of directors, and many internal customers demand CFOs to advance in data analytics. To pivot to this, they need robust finance observability solutions.
Bluecopa catalyzes this transformation, empowering CFOs and business teams with centralized access to multiple data sources and powerful financial dashboards. It helps them incorporate financial, nonfinancial, and external data into financial planning and forecasts and enables strategic and operational decision-making.
So, modern CFOs are adopters of FDMs and integral drivers of analytics. They own data & analytics to become data leaders. Have you championed the move yet? Get yourself a demo and see how Bluecopa helps you do the same.