Data flows across your company and presents a massive opportunity for your company. However, you will miss this opportunity if you do not structure it into information and analyze it to develop insights. Decisions will be less data-driven, and you are almost guaranteed to create less value. We are not just talking about financial data but even non-financial data. Why? Because non-financial data is the leading indicator for financial data. Hence, more useful for decision-making.
Too often, data ownership is spread across many departments and stored in multiple systems. Rarely it interconnects. Instead, it gets analyzed in silos, providing each department with only parts of the puzzle. There can be no doubt that this leads to sub-optimal decision-making and must be changed.
The solution? Make Finance the master of all data in your company and put Finance in charge of analysis across the entire value chain. Sounds radical? It is not, and it will free up time for other functions to do what they do best. Let us explore further what it would take to make it happen and address some challenges.
The power of connected data
To understand what it would look like we need look no further than to our value chain. Even from a generic perspective we can map what data is generated in each part of the value chain. Then all we need to understand is where the data is currently stored, how it is generated, and how it can be connected.
There are many different options for storage, generation, and connection. Below are mentioned a few of them.
- Local hard drives
- On-premises servers
- Manual input after the fact
- Generation at source in an automated flow
- Data dump in Excel
- Data lake
- Directly between systems through API
The most optimal combination would be data generated at the source, stored in the cloud, and systems connected through APIs. However, few companies have this luxury, although newly started companies are mostly born this way.
The challenge for most companies is that they struggle with legacy (ERP) systems that do not easily connect to bolt-on systems. This makes any change or system integration costly and cumbersome to do. To overcome this, they most likely need to dismantle the legacy systems and use a modern ERP system or a best-of-breed approach. In either case, systems must be able to interact with each other to create a seamless flow of data that is connected and ready to use.
Weapons of mass value creation
With the proper setup from generation through connectivity, you have unlocked a massive potential for value creation. Having one owner ensures you have one set of numbers, whether financial or non-financial. That said, you can make data available as self-service to everyone in the organization.
One of the primary users, though, figures to be the finance business partners. They should view value chain data and develop insights to help business stakeholders make better decisions. In addition, they should help their stakeholders deep-dive into the numbers that are specific to their function. If data is disconnected and fragmented, the business partner spends most of the time gathering, structuring, and analyzing the data. Then there is little time to use the data to improve decision-making. Therefore making Finance the Master of Data makes a lot of sense. The question is, who is the master of the data in your company, and does it lead to optimal decision-making?
The question is, who is the master of the data in your company, and does it lead to optimal decision-making?
Please read our guide on Finance Business Partnering, co-written with Co-founder of The business partnering Institute Anders Liu-Lindberg.
HOW DOES FINANCE MOVE FROM BEING A COST CENTER TO A PROFIT DRIVER