This article originally appeared on November 17th, 2015 in Datanami
CFOs Taking Ownership of Data
The role of CFOs has expanded significantly in recent years, positioning them to lead one of the most important business functions of the early 21st century—leveraging a company’s data to gain strategic insights and make smarter decisions.
Traditionally, CFOs have focused on creating shareholder value and maintaining fiscal responsibility. Today, they increasingly are responsible for helping to bolster and sustain growth. But CFOs aren’t entirely comfortable with this, or at least they recognize the scope of the challenge before them.
According to a 2013 survey by McKinsey & Company, 86 percent of CFOs report that “finding new sources of growth (both organic and nonorganic) is a challenge,” which is why it is so important for CFOs to embrace data. Data contain hidden insights that are crucial to finding new avenues of growth. For CFOs who are newly accountable for increasing the bottom line, rather than just protecting it, data may be the key to making that requirement less daunting.
Some CFOs on the cutting edge already are embracing data, but they are in the minority. For many, the expanding role of CFO is still fresh and fraught with some uncertainty. For others, big data and data analysis is a job they prefer to leave to others, such as the CIO, whom they may regard as better suited for the job. But that thinking is limiting the potential of CFOs to leverage a powerful analytical tool.
There are additional reasons why CFOs are well suited to championing data initiatives. Their experience with statutory reporting combined with financial planning and operational reporting make them uniquely qualified to identify the data that will generate the most insights. Many organizations struggle with this, focusing on metrics that are obvious or relevant to an individual’s performance, but not very relevant to business goals.
For example, instead of simply looking at top-line revenue growth, a CFO may suggest looking at customer satisfaction data to gain a better understanding of how the organization is performing in the marketplace and how customer behavior and impressions may impact future sales. Increasingly, the most advanced companies also are looking at non-traditional measures, such as those relating to corporate responsibility and sustainability, to uncover valuable insights.
Now that we’ve established the importance of CFOs owning data, what is the best way for them to become their organization’s data champions? It’s a process that will take time, but there are three important ideas to consider to ensure a successful start.
Define Categories and Identify Owners of Data
Data is a broad term that can be defined in many different ways depending on which data is collected and how it is categorized. Work to clearly define the data to streamline the process and get everyone on the same page. Assign ownership of the data so people have incentives to collect and maintain quality data. This is important to turn data into insight and insight into action. That action, properly incented, is what drives value throughout an organization.
Prioritize What Is Measured
Cut through the clutter and decide on top priorities for the organization and focus on those. Out of tradition or force of habit, many organizations continue to report on metrics that are not relevant to growth. The CFO’s leadership in this area is important to making sure the data-gathering effort is lean, impactful and strategic. As we all know, there is a cost associated with measuring and focusing on data that are not useful. Make the decision on what to care about and what to ignore.
Get Buy-In from Executive Leadership
A good partnership with other key leaders, such as the CIO, COO and heads of business units, will help empower the CFO in leading data initiatives. The more team members that are on board, the more likely the company is to trust the CFO’s leadership and decision making.
It’s clear that data analytics is not going away anytime soon. More companies are using it to get an advantage, but the learning curve is still very steep. Now is the time for CFOs to begin fully investing themselves into the data initiatives of their companies. It’s where the future is, and where CFO leadership and knowledge will be indispensable for years to come.
About MorganFranklin Consulting
MorganFranklin Consulting (www.morganfranklin.com) is a global management and technology consulting firm that works with leading businesses and government. The firm helps organizations solve their most pressing challenges and address critical finance, technology, and business objectives. MorganFranklin is headquartered in the Washington D.C. area with regional offices in Atlanta and San Francisco, and supports clients across the globe.
MorganFranklin Consulting is the brand name referring to the global organization of MorganFranklin, Inc. and its subsidiary MorganFranklin Consulting, LLC.