Intelligence. Sometimes it means how smart you are, but in this case it is the information you have. Like in military intelligence, financial intelligence can help win the war or lose the battle. No one got to the top by ignoring it.
Finance teams have always collected data and analysed it to reveal insight into business performance, whether using pen and paper or punch cards. But in the last five years a couple of things have happened.
First of all, the global credit crunch focused minds like never before and the minutia of financial performances came under the microscope. Every piece of inventory, every unpaid invoice, every unsold product could mean needlessly adding to company borrowing.
Secondly, business intelligence software has become more accessible and data more widespread. Finance teams now have the opportunity to exploit data not only from their own systems, such as payroll or purchase order management, but also from other business applications such as enterprise resource planning, sales, supply chain and HR. The software has also become easier to use, better at adapting data from different sources and adept at presenting results more visually to help finance teams act on them more rapidly.
Meanwhile, business functions have become more connected and data more up to date. Instead of waiting weeks for important data on sales or invoices, finance teams should only have to wait days or hours. Some businesses have even begun to analyse data from live systems using so-called in-memory analytics.
All of this puts the CFO in a unique place in terms of understanding the company’s financial position.
KPMG North American leader for financial management Don Mailliard says: “We believe the CFO is becoming the primary funnel for an organisation’s crucial data. As the new knowledge leader, the CFO can leverage business analytics to connect operational and financial performance. In manufacturing, for example, the management of plant utilisation, capacity and backlog is paramount to operational success. However, these priorities also have direct ties to revenue forecasts and the CFO is in a great position to harness this business intelligence and accelerate overall business performance.”
This view is also backed by data. A joint study by Gartner and Financial Executives International shows that 15 of the top 19 business processes that CFOs have identified as requiring improved technology support are largely addressed by business intelligence, analytics and performance management technologies.
Business intelligence projects are not easy. They can take a lot of effort persuading people from all over the business to agree terms and taxonomy of data in order to get a coherent understanding of performance – and having control over information handled by an organisation is the first step on this journey. CFOs now have the tools to help understand their position as it changes and know how to improve it when required. All it takes is data, software and a lot of hard work.