Most CFOs -- in fact, 82 percent of them -- see the value of integrating enterprise-wide data. The bad news: only 24 percent think their teams are up to the task. So says a new IBM study that reveals a 205 percent increase in the gap between data importance and the ability to leverage its value since Big Blue first looked at the issue in 2005.
Conducted by IBM’s Institute of Business Value and entitled “Pushing the Frontiers,” the study draws from face-to-face conversations with 576 CFOs in companies worldwide. One of the big takeaways from the study is the importance of technology. Although macro-economic and market factors are still vital, tech has moved up from fifth to third on the list of most impactful issues since the 2010 study.
Bill Fuessler, a partner in the Finance, Risk & Fraud group at IBM Global Business Services, noted that the significance of technology and analytical tools in transforming the finance function and broader enterprise has continuously increased in the company’s discussions with CFOs over the past decade.
“Data has always sat in the center of a CFO’s job responsibilities, and CFOs now recognize how insights from big data are helping their company become more competitive,” Fuessler said. “CFOs are being asked to anticipate the future and discover new areas of revenue growth -- we anticipate this will spur a new strategic alliance between the CFO and CMO as they partner to drive the corporate growth agenda.”
All CFOs Not Created Equal
One noteworthy study finding is that some CFOs are more effective in finance efficiency and analytical insight than their peers. IBM has labeled these CFOs “Value Integrators.” The study also identifies another subset called “Performance Accelerators," CFOS who have mastered their core duties so thoroughly that they’re far ahead of their peers.
IBM reports this group has been 70 percent more successful than Value Integrators when measured in terms of revenues and profits generated during the past three years. What’s more, twice as many Performance Accelerators are effectively integrating enterprise-wide information when compared to Value Integrators. Performance Accelerators are also nearly twice as effective in continuously improving processes and developing finance talent.
What’s the Performance Accelerator’s secret sauce? How they use data. For example, the average CFOs rely on spreadsheets and intuition for 66 percent of their work, while 44 percent of Performance Accelerators combine internal and external data to produce insights. That gives the latter group an analytical edge in many areas, including tracking and forecasting supply chain financial data, planning and predicting resource capacity as well as conducting industry and competitor analysis.
Analytics To Understand Big Data
Cordell Sweeney, senior vice president and CFO at Pabst Brewing Company, said the company has transformed its finance function to move away from the proverbial thousand spreadsheet march, and now uses an analytics platform to completely shift the workloads of the finance team toward higher value activities.
“Our business has a tremendous amount of information, and we have been able to change the culture by leading more robust data driven discussions with our leadership teams and field,” Sweeney said. “Leveraging analytics has enabled us to change the conversation and become value-added partners, using business insights to drive decisions that lead to gaining market share, increasing profitability, and creating value for our shareholders."
We caught up with Charles King, principal analyst at Pund-IT, to get his take on the study. He told us the ability to generate digital information for virtually every portion or corner of a business has accelerated radically over the last five to seven years. In fact, the age of big data has come upon us so fast that most businesses find it difficult to extract value from the sheer volume of information.
“Finding value in data is not something every company is prepared to do out of the box and it points to the value that a company like IBM can present to their customers, both to guide them and provide them the tools that they need,” King said. “You could say that everybody understands the value of the house, but not everybody is ready to build it on their own. IBM is like the general contractor.”