What does a data-driven finance function mean to you?
"The future of finance will be data-driven." Deloitte is talking about it; EY is talking about it; basically, most thought leaders and market leaders are talking about it. But are you talking about it, and what does it mean to you?
It is not a simple process to move from the traditional finance function towards a successful data-driven one. You have to go through all existing processes and create new workflows. But if you arm yourself with the right tools, you can create a more robust finance department than before. It all depends on your team's willingness to embrace change, as well as an investment in training, data, tools, and mindset.
However, the end goal that should keep you motivated is to: Eliminate guesswork in your and your management's decision-making.
WHAT DOES IT TAKE TO BECOME A DATA-DRIVEN FINANCE FUNCTION?
Deloitte defines a data-driven finance function as one that: "… recognizes the full potential of granular data, managing data as a strategic asset." To state it frankly, it means:
You need to move away from the traditional finance function and change how you work.
It is this answer that results in too many post-pone the change. On top of that, some companies argue that the finance function always has been data-driven. Of course, data is what drives the finance function in the company. However, there is a difference between using data and being data-driven. And this is where we need to leave the traditional finance function behind and build a new foundation. At this foundation, we can combine data from all departments and make informed decision-making on all strategic decisions.
In a digital world, we cannot become truly data-driven without digital tools and processes.
WHERE DO YOU START?
Some companies create a dedicated data team of analysts, others invest in the right tech and consultants, and others combine it in a digital strategy. It would always be to prefer building your company upon a framework of digital processes, but this is rarely the case the bigger your company is. Because of the simple reason, the more complex your processes are, the less initiative to start. So instead of waiting for everyone to fall in line, start by looking at your team's need to deliver results. The most basic start is to jut down your current data processes, and you can quickly begin these three ways:
- Look at the strategy KPIs. If you had to give insight into one of these – what information flow would you need from the organization all around. Is the data you have right now enough, or do you need more from different departments, areas, or angles?
- Data processes and automation. Get an idea of areas you need to automate and systems you need to look at, like ERP, cloud applications, consolidation software, e.g., Konsolidator. How much of the data is flowing automatically? Where does the flow start, and where does it stop? Do your sources integrate well, which affects the time you use on sorting? Are there questions you can't answer because you cannot get ahold of that data?
- Digital culture. How many in your team understands the digital processes and have a common understanding of words like cloud, cloud security, integration, machine learning, robotics, etc.? If your team is stuck on manual processes, it isn't easy to convince people to become more digital if they do not see the value.
Challenging the guesswork in the decision-making is a daring and ongoing task, which you tackle best with a transparent approach. If you still use guesswork, start to look at these three steps. Today, everything depends on how quickly organizations set up data management systems that ensure transparency, including organization structure and decision-making practices. More importantly, the infrastructure of this set-up. Do not become left behind your competitors because you delay the digitalization of your finance function.
At Konsolidator, we are experts in financial consolidation and reporting. Thus, we created consolidation software to solve finance professionals' shared challenges. Our team consists of state-authorized accountants, auditors, and former CFOs, who have many years of experience in the finance landscape.
We have a strong passion for sharing our knowledge about the latest finance trends and, more importantly, how you can improve and optimize your finance department to live up to its full potential.
View our solution here.