For finance leaders to revolutionize their departments and unlock new levels of efficiency and profitability, they need first to understand the Chief Financial Officer’s role today extends far beyond traditional financial management.
It’s a rapidly evolving business landscape, so as businesses generate an ever-increasing volume of data, the need for finance functions to transform and adopt a proactive, data-driven approach is more pressing than ever. It comes as no surprise then that CFOs must be critical in strategic decision-making, leveraging data and analytics to drive growth and profitability.
According to McKinsey, “the number of functions reporting to the CFO in a typical organization has increased steadily in recent years, from four in 2016 to more than six… CFOs have reported that they increasingly oversee digital initiatives alongside traditional tasks such as budgeting, planning, and risk mitigation.”
Challenges faced by CFOs in adopting data and analytics
The journey to becoming a data-driven CFO is often fraught with obstacles as finance executives grapple with the challenges of implementing modern technologies. Several key issues hinder the effective adoption of data and analytics in finance functions:
- Unstructured data: Nearly 38% of CFOs surveyed mentioned that their data is not structured for easy analysis. This can lead to difficulties in extracting valuable insights and making informed decisions based on the available data.
- Lack of real-time data: About 31% of finance executives reported that their data is not current or real-time, hindering their ability to respond quickly to emerging trends and market fluctuations.
- Absence of proactive analytical processes: A significant proportion of CFOs (29%) believe that their finance functions lack a rigorous, proactive, analytical process. This gap in analytical capabilities makes it difficult for finance teams to identify, prioritize, and address critical business issues effectively.
Addressing these challenges is essential for finance functions to unlock the full potential of data and analytics, enabling CFOs to drive their organizations toward strategic and profitability improvement goals.
Stay ahead of the pack: These challenges can hold you back if you let them. Speak to one of our digital transformation experts to find what you can do today to get ahead.
What ‘Proactive data and analytics adoption for CFOs’ means
With all the challenges in adopting data and analytics, the importance of using these tools for effective financial management and strategy execution are worth taking a closer look.
Embracing data-driven decision-making and analytics tools can help overcome its adoption challenges. Here’s why:
- Greater strategic focus: According to one survey, 76% of CFOs believe they could positively impact enterprise profitability if they devoted more time to strategic initiatives. By leveraging data and analytics, CFOs can streamline their finance functions, freeing time to focus on high-value, strategic tasks that drive business growth.
- Improved profitability: About 49% of CFOs surveyed stated that their organization’s profitability would be enhanced by at least 5% if they could spend an optimal percentage of their time on strategic initiatives. Data-driven decision-making can enable CFOs to identify opportunities for cost reduction, revenue growth, and overall profitability improvement.
- Future-proof finance function: With 81% of CFOs expecting the pressure on their finance function to become more data-driven to increase substantially over the next two years, bold adoption of data and analytics is crucial to staying ahead of the curve. By fostering a data-driven culture within their finance functions, CFOs can ensure long-term resilience and adaptability in the face of evolving business landscapes.
- Enhanced decision-making capabilities: By implementing advanced reporting tools and robust analytical processes, CFOs can gain deeper insights into their organization’s financial performance, making more informed decisions and responding effectively to emerging trends and challenges.
Proactively embracing data and analytics lets CFOs transform their finance functions, drive value creation, and ensure their organization’s long-term success.
Transformative financial management
Financial management solutions are pivotal in the data-driven transformation of finance functions. These solutions offer numerous advantages that can contribute to successfully adopting data and analytics in finance functions.
As indicated by the survey, 77% of CFOs believe that a best-in-class cloud-based financial management solution would make their job easier.
One of the key benefits of cloud-based solutions is their ease of implementation and upgrading. 89% of the surveyed CFOs cited more straightforward implementation or upgrade as a significant advantage of a cloud-based solution. The cloud simplifies the deployment process and allows organizations to stay up-to-date with the latest advancements in financial technology.
That’s not all. Only 36% of the surveyed CFOs have a clear and functional understanding of what “The Cloud” means and how organizations like theirs can use it to host financial management solutions. This highlights the need for increased education and awareness about the benefits of cloud-based solutions in the finance function.
Cloud-based financial management solutions can indeed offer better security and scalability as the organization grows, as cited by 32% of CFOs in the survey. With a reliable and secure infrastructure in place, finance executives can confidently adopt data-driven strategies without concerns about data breaches or compromised information.
Advanced reporting capabilities that support data-driven decision-making are more accessible from the cloud. By offering features such as automatic data aggregation across multiple systems, the ability to complete analysis without exporting data to spreadsheets, and easy multi-dimensional analysis to meet ad hoc requests, cloud-based financial management solutions empower CFOs to harness the full potential of their organization’s data.
Adopting proactive data and analytics by finance functions is no longer a luxury but a necessity in today’s fast-paced, competitive business environment. A bold finance function, driven by data and analytics, enhances overall performance and enables CFOs to contribute more effectively to strategic initiatives.
For CFOs to effectively leverage data and analytics in their decision-making process, access to the right reporting tools and features is essential. Cloud-based financial management solutions are instrumental in driving the data-driven transformation of finance functions, enabling CFOs to unlock the true potential of data and analytics in their organizations.
What are some common challenges faced by finance functions during the transformation process?
During finance transformation, some organizations might face a lack of skilled talent, resistance to change, inadequate technology infrastructure, and difficulty in data management and analysis. CFOs must work to overcome these challenges to ensure a smooth transition to a data-driven finance function.
How can cloud-based financial management solutions help with finance transformation?
Cloud-based financial management solutions include easy implementation, scalability, better security, and access to real-time data. These solutions can also streamline processes, reduce costs, and improve decision-making by providing accurate, timely, and actionable financial insights.
What reporting tools and features should a data-driven CFO look for?
Reporting tools and features that offer automation, real-time data, ease of analysis, and the ability to conduct multi-dimensional analysis. Other important features include the ability to aggregate data across multiple systems, customizable dashboards, and drill down into financial data.