Why finance teams should embrace data to drive new business insights
Mar 22, 2021
Outdated reporting technology and systems together with unstructured, unreliable data will hold back your finance department. They will prevent it from developing into a true strategic business partner that offers predictive insight and data-driven recommendations to improve performance or uncover new opportunities.
Our report ‘Finance insights - reimagined’, conducted with the ACCA, shows that finance-led insights are about to undergo a revolution. With almost three-quarters (74%) of respondents claiming that finance business partners already focus on both historical and future performance, we’re seeing finance teams transition from a historic approach to a more strategic and forward-thinking one.
It can be difficult to keep up with the current pace of technological change and clinging to familiar ways of working is tempting. But the future of finance will be underpinned by a transformation in the way we access and use data to deliver forward-looking insights across the business. Increasingly, the most successful finance functions will be those who can drive real business impact through creative analysis of multiple data sets. These datasets are outside the traditional finance dataset and many are external to the organisation. They include HR, market and competitor, and customer behaviour data, and many were not previously accessible or even considered relevant to finance.
Data must become the heart of the business
Clean and accurate data is essential for generating useful and reliable insight. It needs appropriate governance and must be collected from a wide range of relevant sources (including external) to allow organisations to measure their value beyond purely financial goals. Data integrity - financial and non-financial - together with ease of access, is essential. It’s needed to enable insight generation and proactive decision-making across the six capitals of integrated reporting: financial, manufactured, intellectual, human, social and natural.
However, many organisations currently struggle to aggregate, format and harness the power of existing data. This then limits their ability to ‘see’ trends and make informed, quantitative decisions.
And yet a key lesson from the pandemic during the first half of 2020 is that businesses must be able to think on their feet and respond rapidly to fast-moving events that impact supply chains, production and customer demand.
Those sorts of scenarios, which might involve finance-based decision-making on everything from sourcing raw materials, redeploying workers and amending delivery dates for other products, cannot be made without access to up-to-the-minute, accurate data. According to Claus Thorne Madsen, Partner, PwC Denmark, “Data is the rocket-fuel of good decision-making in finance.”
The data-driven future role of finance professionals
As explored in our previous blogs on technology-led transformation and mitigating risk, the emerging automation of day-to-day transactional processes can improve accuracy and efficiency, while AI and machine learning can be used to better predict and mitigate risk.
Elsewhere, cloud-based enterprise resource planning (ERP) systems and connected data lakes enable finance teams to generate more robust forecasts and provide deeper real-time business insights. This data can then be pulled into an enterprise risk platform for compliance monitoring, while dashboards and reports are hosted in a central place for review and analysis. For example, controllers can then stitch together datasets within a data lake and share the insights with the finance team and stakeholders from one central place.
Embracing these new opportunities
The digital revolution offers a chance to shift the focus from reporting on historical data to giving proactive solutions based on predictive data.
Finance is best placed to drive these transformations, by constructing and exploiting the digital core which contains and maintains both finance and wider business data. Increasingly the insight businesses need is derived from bringing different data sets together with traditional finance data and looking at this holistic picture through a finance and business lens.
This often demands a skillset shift in finance and a cultural change to operate in a more data-centric manner but by connecting ERP systems and enterprise performance management tools, data lakes and self-service reporting, supported by advanced analytics and AI, finance can translate insights into action and help drive business performance.
Download ‘Finance insights - reimagined’ for more in-depth analysis of the development of the future data-driven role of finance.