BI guru calls for enlightened FD approach
Gartner business intelligence (BI) expert Alan Duncan has called for finance managers to experiment more and take a more enlightened approach to analytics.
AccountingWEB caught up with Duncan to find out how analytics and BI can make a difference in finance and the overall business strategy.
Duncan said finance directors and CFOs need to get comfortable with a little bit of early ambiguity before applying a scientific method.
Finance teams and their chiefs have always been very numerate. “In that respect, they’re already a step ahead of other line of business functions, who many not have a data-driven way of operating,” he said.
“But I think the shift is in terms of helping the thinking process go beyond just the control aspect.”
Finance should make that step from scorekeeping to grab the opportunity to influence business strategy more, he added.
At controller level, the focus is on getting the numbers in and then putting the report out, and not necessarily about a decision-making process to steer business better.
According to Duncan the prevailing mentality remains ‘let’s lock down the money to make sure we’re spending as little as possible’ - an austerity-influenced view - rather than ‘how do we invest to build and grow?’.
There’s a tension here between lines of business who are saying, ‘We need investment opportunity to help us penetrate new markets and identify new customers’ and the finance department, which is saying ‘You need to show how this is going to turn into something good.’
Duncan explained: “One of the battles in the analytics space is where you test the hypothesis based on data, and you may find that there isn’t actually a return on investment. Where I see successful entrepreneurial businesses, is where they deploy fast and sell fast, and they’re willing to accept a level of experimentation, of innovation and learning, and then they say now what do we do next.”
“Where the finance officers are going to need to really have a shift if their businesses are going to exploit analytic capabilities effectively, they’re going to have to get comfortable with a little bit of ambiguity, a little bit of experimentation,” he said.
They could deploy a team to do an initial research-type analytics project to say, ‘We think there’s something here, but we need to collect the data and test the hypothesis.’
“Until you actually explore and validate it with data, and then synthesise an outcome you’re don’t know whether you’re onto something or not,” Duncan said.
FDs should run a pilot and actually test it, and if you only get a bit of learning out that says ‘we’re not going to do this’ then that’s of value too, Duncan said.
The finance community need to see the evidence before they invest and it almost becomes an “innovation killer”.
“These could be good ideas, things that might have value and are getting shut down at the business case level, because the answer to ‘Will this make us a billion dollars?’ is ‘We don’t know yet we need to do some experimenting to find out’.
“They say that’s going to cost money so we’re not going to do it. You get into a cycle of innovation shut down,” Duncan said. “We have the opportunity to do more experimenting, but we need to be more comfortable with ambiguity early on, and accept that every project you do isn’t going to turn into a leading idea. Learning what not to do can be just as valuable.”