Business Intelligence Tools: The Future for CFOs
Ask any CFO if his or her role is becoming more difficult and you’ll probably get an enthusiastic, “Absolutely!” Most CFOs today are expected to be more than just finance executives — they’re also expected to be business advisors and strategic partners alongside other members of the executive management team.
Beyond the traditional finance role, the responsibilities of modern CFOs include managing digital disruption, adapting to innovation and handling the digitization that has become ever-present in most organizations, regardless of the industry. One way to effectively address these modalities is to incorporate business intelligence tools into your analytical toolbox.
What is Business Intelligence?
A recent CFO.com article discusses what business intelligence is. BI is the key technology that allows businesses to organize, analyze and contextualize automated data analytics gathered from historical, current and predictive assessments of corporate operations. It uses financial and operational data to create key performance indicators (KPIs) that are used to populate integrated dashboards and thus glean valuable business insights.1
Using BI, CFOs can generate automated data analytics that provide current, historical and predictive views of all aspects of business operations. A cloud-based business intelligence system can serve a proactive role in financial operations and reporting and assist in navigating a targeted transaction or optimizing performance insight.
The article also explains how business intelligence tools can be used to assist CFOs in three specific areas:
1. Finance Operations & Reporting
Collecting and consolidating operational and financial data across business units and creating reports is a time-consuming and labor-intensive process that leaves little time for analysis and collaboration. Using BI can help CFOs gather and consolidate siloed data and automate reporting while serving as a supplemental tool to Excel and enterprise resource planning.1
2. Transaction Execution
Using transaction data sets, BI tools can provide analysis of synergy and stranded costs to help determine whether transactions produced the desired level of ROI. BI can also help CFOs improve merger integration and divestiture management, thus creating more value for the organization.1
3. Performance Improvement
When their companies are under-performing, BI can help CFOs identify the causes of underperformance by providing targeted reports in real time. As such, BI can help CFOs understand the numerous variables that can negatively affect performance — whether they involve receivables collections, invoicing, pricing, inventory management, procurement or other factors.1
Integrating Financial & Operational Data
The challenge for CFOs who want to use business intelligence tools to embrace an advisory role is to integrate financial and operational data produced by various dashboards and KPIs in order to be proactive pursuing critical insights across business units. There are several negative impacts that can result from failure to accomplish this, such as:
Dealing with the analytical limitations of siloed information.
Exposure to underperformance with disparate systems.
Misinterpreted data (both internal and external) presented in legacy systems.
An unresolved version of truth.
Investing in BI or a cloud-based BI system is one of the best ways to avoid these negative impacts and better understand comprehensive performance insight. However, BI needs a practical framework that creates a blueprint for success by integrating trusted information and strategically aligning people, processes and technologies.
BI will help improve how your company interoperates, prioritizes, analyzes and executes data. Senior executives should advocate BI in order to foster a data-driven, decision-making culture. You should also ensure that BI has full connectivity and interface capability with standard apps like Excel, SQL database engines and the like.
Your business could realize positive outcomes by investing in business intelligence tools or a cloud business intelligence system. The article1 also notes benefits such as adding manageability and cohesiveness to big data and better highlighting the root causes of financial abnormalities. Also, BI tools are responsive and provide real-time measurements. In addition, you could gain improved insight into trends in payroll, pricing impact, cost-to-serve, R&D, ROI and more. Finally, you may realize added value in the form of customer satisfaction and operating governance.
Most CFOs today are expected to be more than just finance executives — they’re also expected to be strategic partners alongside other members of the executive management team. Beyond the traditional finance role, the responsibilities of modern CFOs include managing digital disruption, adapting to innovation and handling the digitization that has become ever-present in most organizations. One way to effectively address these modalities is to utilize business intelligence tools, and an on-demand CFO acting in the role of a project CFO or part-time CFO can help you incorporate BI into your analytical toolbox.
1 Business Intelligence: A Life Hack for Today’s CFO; Srin Subra & Kristen Contreras; CFO.com; May 14, 2019
John W. Braine, Partner, CFO Edge, LLC