Why BI tools cannot automate Finance Operations

Raghavendra Reddy
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Why can you not get the most out of your BI tools?
October 26, 2022

Let's kick off this conversation with a "thought experiment." Imagine yourself, a CFO at leading e-commerce, in your office, looking to explain WHY you missed the quarterly sales target to your investors. You get reports from different departments(FP&A, distribution, marketing, sales, you name it..) explaining the various factors affecting your overall performance in tens of reports. But none of this helps you any better with telling a holistic story – from a change in consumer behavior to bottlenecks in your sales distribution.

Replace the "Sales Target miss" example with any other business scenario – and if you think your current reporting does not cater to your specific issues – You are not alone. Frustration due to data unavailability, siloed analysis, and lack of real-time reporting are commonplace in all organizations – large and small. But, this issue is particularly prominent for large data-driven digital companies (marketplaces, online sellers, Logistics, Finance services etc.)

But we have invested in great BI tools – why aren't those paying off?

Taking our thought experiment a bit further, remember how those BI tools were positioned as a panacea to all your reporting and analytics problems by the vendors – promising lower decision-making costs and enhanced reporting flexibility? What really happened?

The chief reason is quite simple – Around 80% of your analytics needs as a leader are ad-hoc in nature! You deal with a constantly changing business environment – requiring you to consume, analyze and understand data across departments. The BI tools generally used, though useful for the balance of 20% structured reporting, totally fail when it comes to specific questions requiring "intelligence."

We often see this burning issue with most finance organizations – more effort is needed to train and operate the employees on new tools while continuously struggling to adapt to create new reports. Data models are still maintained on spreadsheets (alas, the tools do not help much!), exacerbating the challenge.

CFO Speak – We surveyed 25 CFOs from leading e-commerce and digital businesses to understand the underperformance of recently implemented BI tools in their companies. The results were unanimous!

88% of the CFOs we surveyed highlighted the below challenges their organizations face while working with BI tools :

  • Drill down to transaction level: Data in companies is never full proof, so Finance teams would need to assess anomalies and deviations at transaction level for all kinds of analysis. BI tools have a major limitation in this aspect
  • Report what exists, not what is needed – I touched upon this point at the beginning of this blog about how BI tools fail to serve 80% of your business needs. Furthermore, most BI tools also do not tailor reports based on role requirements. BI tools do not let users create and analyze reports on the fly – for any small analysis needed, users, need to reach out to the data team, not do it themselves. BI Tools do not offer an "Intelligent" way to create reports, after all
  • No forward looking insights: Most BI tools (even enterprise tools) can transform data tables into visual charts. Nothing beyond that. While dashboards are helpful in visualizing what has happened in the past, they do not provide any forward-looking view necessary for critical business decisions. Most BI tools lack the data modeling and scenario-building abilities necessary for intelligent business decisions. For example, forward-looking Working Capital projections require data modeling across O2C and P2P inputs – which might not be possible with your current BI tool
  • Limited Data Capabilities – Traditional BI tools can be significantly limited in the variety and quantity of data they can support. This can significantly affect organizations using small bolt-on tools across departments generating tons of data across formats.
  • Collaboration – True intelligence lies not just in making insightful decisions but also tracking and governing the progress of those decisions. While some BI tools like Tableau provide a real-time commenting and messaging mechanism, most other tools do not support such functionality. This, along with a versioning feature, can be a game-changer, especially in fast-moving environments requiring faster collaborations.

As the Finance leader's role has evolved from a custodian and controller to now a business partner and strategic thinker, this change has required them to don the garb of the Transformation catalyst for the whole organization. This puts data intelligence at the center of every CFO's growth strategy and makes harnessing data across the organization imperative.