In today’s data-saturated business world, sometimes more is less. Companies have more and more information in the form of financial reports packed with metrics and KPIs, but decision makers are challenged to get a single, comprehensive, connected picture of performance across the enterprise.
The financial data itself is accurate. That’s not the problem. The problem is having too much information and not enough context to support decision making in an increasingly complex business environment. The ever present issue of being able to align the right financial and non-financial data, while applying specific internal and external organizational factors weighs heavily on the recipients of the information. This can result in employees who are often not confident in their understanding of the impact of these numbers.
Today many organizations take their financial results and incorporate extensive operational information in the hopes that the business recipients of this information will be able to connect the dots, create the context, and establish the relationships needed to affect change. However for the CFO, it is not as simple as merely providing the information to the end user. To achieve real results, CFO’s must take a proactive role in selecting key operational components that align with finance in the right context, allowing the business decision makers to make decisions rather than align data points. Effective, forward-looking decisions need to be based on knowledge around a host of internal and external factors such as economic trends, government policies, supply chains, long-term revenue forecasts, and the impact of changing markets on product lines or customer segments. CFOs are essentially responsible for creating a connected picture of a company’s results and providing this to the business decision makers.
Equally important, as decision makers understand this picture and move forward, their decisions should be aligned with established business strategies. For example, if the organization’s strategy is to be known for excellent customer service, then it should be gathering data on customer satisfaction rather than just sales and cost. For the CFO, this means acting as a primary stakeholder and conduit, presenting the right picture to the organization and enabling stronger communication across different organizational layers. Only by aligning the financial and operational data will insights be created so that decision makers get a clear view of customer activity, performance benchmarking, improved management of working capital, increased cost-of-goods efficiency and other areas that help drive growth and increase competitive advantage.
In short, the problem is not just creating information, but translating all of this information into insights for decision makers. An effective solution needs to recognize the complexity of a decision (information, context, multiple points of view) and support the user in a more intuitive decision making process. It also needs to integrate an organization’s economic model with other models providing the supply chain and customer view for a clear line of sight between business objectives and the information required to make actionable decisions. CFOs must be challenged to provide a comprehensive picture of performance across the enterprise and to act as champions for providing insight, not just information.
Developing the Solution
Data integration and contextual alignment of information is the key to enabling better decision making in an organization. However many companies are still using multiple, disparate systems that cannot provide that level of insight on products, product lines, regions, functions and other areas. These deficiencies additionally limit the analytical capability required to analyze this data and gain new insights, which can translate into business value.
To address these issues, an integrated decision platform should be designed leveraging digital dashboards to provide an enterprise wide business picture that engages discussion and insight rather than reconciliation and alignment. Focused contextual information gathered from HR, sales, customer relationship management and many other key functions, both financial and non-financial are presented in a manner that guides both understanding and decision support. The platform should present detailed comparisons between business units, products and product categories, backed by complete and consistent data from multiple sources with detailed KPI displays, including data sources and timelines of data updates. At the same time, the platform will support effective communications for and between users, including interactive user interfaces and regular information updates.
As an added benefit, employees are more engaged when the economic and business models are better integrated. They can understand the economic and operational implications of their decisions in greater detail and can align their actions with initiatives designed to drive expected strategic results.
With the right strategic picture of the business that integrates financial and non-financial information, decision makers and their colleagues can determine both growth trends and the actual economics of that growth, helping to support the organization’s strategic business goals.
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