If you’ve got an extra $28,000 burning a hole in your pocket and can get away from the office for a couple of weeks next year, the Graduate School of Business at Stanford is offering a program called “The Emerging CFO: Strategic Financial Leadership Program.”
According to the syllabus, today’s global CFOs require more than just financial expertise—so the program combines finance with strategic thinking, leadership skills, and coaching on how to effect change within your organization.
This course clearly recognizes the education that a growing number of finance professionals are getting in the workplace today.
No longer relegated to just making sure that the numbers add up, finance teams are increasingly being summoned to the C-suite to reveal the insights buried in enterprise data. And when CEOs ask “What if?” these days, they are counting on their finance leaders to have a pretty good idea of the outcome.
Finance as Change Agent
Here’s why. As the primary financial gatekeeper—generally responsible for financial planning, record keeping, and financial reporting—finance teams have usually had more insight than most into each of the business units within a company. Thanks to modern data technology, finance teams can now do the kind of timely data analysis that truly supports better decision-making at the enterprise level.
Ovum Consulting recently published a paper on how the role of finance leaders and their teams is changing. The finance function, Ovum concluded, is being challenged to “create value for business—with ‘big picture’ as well as ‘exact picture’ analysis.” As a result, a growing number of finance teams are utilizing modern technology to enable continuous planning, in-depth predictive analytics and better decision-making.
In the process, they’re taking the lead in democratizing analytics across a growing number of business units.
Accurate Forecast Modeling and Answering “What if?”
Proactive finance departments will score points by modelling budget requirements more accurately and estimating overruns, said Ovum. By working with business units to obtain more granular views of performance data, finance teams can have a better understanding of which lines of business are adding (or detracting) value from the business.
The big pats-on-the-back, however, will be given to finance teams that can help forecast the outcome of “what-if” scenarios. Increasingly, CEOs want more insight into just how well their newest venture will perform.
And to mitigate the risk of “it-could-happen” challenges to the business, more companies are working with finance teams to be prepared for anything - from political upheaval in world markets to a surprising play by a major competitor.
Making better use of traditional analytics processes, where data sets, schemas and queries are predetermined, will certainly help, noted Ovum. But to find the answers to forward-looking questions, finance teams will need to become more adept at exploratory and predictive analytics processes.
With exploratory analytics, researchers can discover why KPIs have changed, or whether those KPIs are even important. It will also help determine if new data sets need to be considered.
Finance teams need to become even more aware of the importance of external data to planning and analysis in particular, Ovum said. Finance teams whose solutions base forecasts on internal data only will likely miss out on information that could strongly impact their business. For example, would anyone argue that customer sentiment data found in social media channels isn’t important?
Ovum noted that cloud technology is better suited to analyzing streams of data whose business value cannot be determined before analysis. Cloud solutions enable more nimble analytics by providing an elastic infrastructure that can be provisioned, managed, and scaled up and down at will, without creating additional overhead.
Investing in cloud-based solutions, Ovum believes, allows finance leaders to act as change agents to end departmental silos and unify analytics across the entire company.
Predict Scenarios, Meet Rolling Forecasts
Helping more business units understand how they can react quickly to shifts in market conditions or corporate priorities is vital. Because plans can’t be static anymore, business units need the flexibility to meet rolling forecasts or address shifting business requirements. As noted above, in today’s volatile economy, the ability to predict scenarios and model different scenarios that address them is crucial.
Finance teams need to take the lead in promoting an analytic culture within their business. There aren’t many department leads who doubt the benefits of insightful analytics. Marketing departments are improving their performance by analyzing how their campaigns perform. Human resources teams are taking deeper dives into data to recruit the best talent, and more importantly, retain them.
But as finance departments demonstrate how an integrated approach to data analytics enables better decision-making across the enterprise, more business units are likely to take notice.
Here, too, cloud technologies will further the cause. The more advanced analytics capabilities in modern cloud-enabled planning systems can allow lines of business to develop and manage their own plans. Plus, these solutions give finance teams the ability to roll them up into a managed database for a comprehensive view into the entire enterprise.
As the driving force evangelizing organizational analytics, finance can end departmental silos, report across the enterprise, help departments understand and manage costs, and drive integrated planning.
There’s a good chance some of this information will be covered at Stanford next year. But if you want to get a jump on anyone who might be attending, read the Ovum Consulting paper to learn more about how finance teams are leveraging analytics to play a more strategic role within their organizations.
Jennifer Toomey is Senior Director, Product Marketing at Oracle Enterprise Performance Management.