How the need for data contributes to the evolution of the CFO role
The role of the CFO has evolved in recent years from the person in control of the purse strings, to the trusted right hand of the CEO.
Their importance was further enhanced during the pandemic as they were often required to oversee changes in a matter of days or even hours that would normally have taken months or years to bring to fruition. They are no longer just the person in charge of the money, but a strategic planner whose insights and counsel inform some of the company’s biggest business decisions.
But although their role has evolved, the technology which helps them is still playing catch-up, with the lack of reliable analytics and data one of the biggest hurdles to progress.
A changing role and the need for data
The finance function has traditionally been known for its stability and process-based culture. But Covid brought about a need for quick-fire decisions, where the rule book had to be re-written overnight or thrown out completely. Data has always been central to agile business planning, forecasting and analysis – all tools which have become central to the modern CFO role. The pandemic sped up the need for this type of tech, yet many firms still lack these insights to do the job properly.
This level of data collection and insight requires the right technology. But in a survey of CFOs by Ernst and Young, eight out of 10 respondents said legacy technology and system complexity was one of their top three inhibitors to progress.
Data that tells ‘one truth’
Companies are awash with information, each different department has their own KPIs and methods of reporting. But what CFOs really need if they are to perform their modern role well is not just data, but to be able to connect the dots and gain an holistic view.
They need integrated financial insights on accounting and finances data, better traceability and operational reporting on things such as customer segmentation, products and revenue assurance.
Turning insights into action
Just one example of how this level of data insight has helped a firm was when a global retail company needed to modernize their analytics ecosystem. Their processes were manual and time consuming. Their spreadsheet-based model results couldn’t feed downstream models and analytics.
Crucially, a lack of trust in the model also meant analytics results had limited use to the business. The company worked with Teradata to create a finance-driven data foundational model. It provided in depth detail into things like revenue and costs from aggregate views of branches, products, vendors and customers.
This information enabled the financial justification for strategic business decisions. It’s this level of detail that can continue to enable CFOs to retain their position of trusted advisor to the CEO and an indispensable asset to the company.