While CEOs and CMOs are grappling with the possibilities of big data, a third member of the C- suite has been frequently overlooked in the big data discussion. Big data provides an opportunity for the CFO to use his or expertise, data, to play a greater strategic role within companies to boost the bottom line.
While CEOs and CMOs are grappling with the possibilities of big data, a third member of the C- suite has been frequently overlooked in the big data discussion. Big data provides an opportunity for the CFO to use his or expertise, data, to play a greater strategic role within companies to boost the bottom line. In fact, the CFO may be the best equipped to start using big data analytics to make a big difference quickly. Here’s why.
Accountants are Used to Communicating with Numbers
While the marketing department may be wary of taking new direction based on what data analysis tells them, and CEOs may prefer relying on their intuition when making decisions, accountants have always relied on numbers to give them direction, and other departments are used to trusting those decisions. This makes adopting big data analysis much easier for the CFO because he or she doesn’t have as big of a cultural barrier to overcome as the other departments.
Finance Executives are Seeking Better Data
According to an Accenture survey, 28 percent of senior finance executives had little to no information to help them predict the financial performance of their company. 54 percent of finance executives said they only had half the information they needed in order to visualize performance. In other words, financial executives need and want more and better data in order to make key decisions about the future of their companies. Big data and the analytics tools that come with it can provide those additional insights CFO’s have been craving.
Provide Greater Business Value
Accountants have traditionally held three roles within a company. The first role is that of a steward or controller. This involves the internal reporting, bookkeeping and transaction processing. The second role involves external reporting to meet Sarbanes-Oxley and GAAP requirements. The third role is for those accountants with a particular expertise in a specific industry or function. Big data analytics provides a fourth role for accountants, which is to make them more of a business advisor who can help provide insights in how to improve financial outcomes and the overall direction of the company.
Some specific examples of insights CFOs could pull from big data include:
- Better Fraud Detection: Financial firms aren’t the only ones who can benefit from better fraud detection by using big data. By being able to sift through every transaction, accountants can better detect the signs that something is amiss.
- Budgeting and Forecasting: Better data can also help accountants determine need when budgeting, and thus eliminate areas of waste. It can also help in creating rolling forecasts and future plans.
- Advanced Analytics: Access to more data can help with determining the cause of budget variances.
- Optimization of Profitability Modeling: Big data can provide better cost analysis, analyse the profitability of particular customers and products, and help determine where resources should be distributed.
- Holistic View of Financial Strategy: Data visualization provides a holistic view of the company’s finances and can help CFO’s to spot trends that were previously difficult to detect.
- Customer Retention: Spotting trends can also help CFOs notice patterns of when customers tend to leave the company, and develop strategies to promote retention.
With so much potential, it would be foolish to overlook the CFO when it comes to data analytics. Whether the CFO works with the in-house IT team to start big data analysis, or turns to big data services, the role of the CFO is changing to encompass a much broader scope in business.
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