This story, written by Robynne Sisco, originally appeared on the Workday blog. We thought our local readers would also find it interesting.
It's critical for finance organisations today to be able to deliver data and insights that can help inform decision-making, manage risks and plan for the future. But while there is more data available than ever before, many companies struggle with how to use it effectively. The challenge often boils down to one fundamental thing – the ability to trust the data.
Finance leaders often talk to me about their challenges with data, describing a similar scenario: Their finance teams are working with data that is spread across disparate systems, so the bulk of their time is spent on data gathering and reconciliation, and then putting it into a format that is consumable for the business. As a result, the data is delivered too late to make a difference.
This problem was echoed in our "Finance Redefined" study, which gauged the views of over 670 CFOs and senior finance leaders around the world. Results showed that only 35 percent of respondents are making extensive use of advanced analytics in key areas such as planning, budgeting and forecasting. What are the barriers? System inefficiency was cited as the second-highest barrier standing in the way of developing data-driven business insights, with integrating finance and non-finance data as the first.
System challenges can make it very difficult to use data effectively. I saw this first-hand in previous organisations where I worked. For example, each month finance would have to close the period, access the data, reconcile it, format it and analyse it. By the time we delivered the numbers to the business, it was two weeks after the period ended and too late to take action. This means we were always looking back at the data, versus analysing it at the moment when it could inform a decision.
I think one of the top priorities for CFOs today is to be able to trust that the numbers their teams use are timely and accurate. Our finance organisation uses our own system – Workday – where our finance and workforce data live in one system. This gives us one version of the numbers – in real time – and it's the foundation for how we make decisions.
Why is having a single source of truth so critical? There are several areas where I've seen a significant impact:
Real-time, high-quality data and insights are delivered directly to managers' laptops and mobile devices. I've seen how this can impact the way they work and make decisions about their organisations and teams.
Having the same data changes the conversation and the trust you have in the decisions you make.
For example, our finance team has created dashboards in the system that are accessible by leaders. At any time, managers can look at their organisation and see budget versus forecast versus actuals for headcount and spend, and make in-the-moment decisions that will drive the results within the current period. If managers are running behind on hiring, they could reallocate that spend to employee travel. Not only does this help managers be more strategic and stay on track with goals, but they become more accountable and better financial stewards of the business.
As companies look to advance their analytics – by leveraging technologies such as machine learning and bringing in more operational data – having a single version of the truth becomes even more important.
Our finance organisation has been able to glean richer insights around metrics such as costs and profitability by bringing external data into the finance system of record. We can pull in external data, such as data centre usage, that allows us to understand our profitability at a very granular level. By better understanding our numbers, we can better drive pricing decisions and determine what markets we want to enter.
One of the biggest impacts that having a single version of the truth has made is on the quality of conversations between finance and other parts of the business. When it comes to business partnership, what often happens is that finance, HR and other managers come together in a room, each with different data, such as varying headcount numbers. People spend most of the time debating what numbers are right rather than talking about what the numbers really mean. Having the same data changes the conversation and the trust you have in the decisions you make.
It's an exciting time as advances in technology are enabling finance to harness data – beyond just the financial numbers – to add greater value to the business. Being able to do this effectively starts with having trust in the data, and will be the foundation for taking advantage of advanced analytics capabilities in the future.