Modern business organizations benefit from productivity tools and software that streamline and automate tasks and processes. They simplify how we do things and help manage the many aspects of our business with greater accuracy, efficiency, speed, and ease. They facilitate communication, collaboration, customer service and support, sales and marketing, project management, business processes, HR and workforce management, IT management, and just about every component and task relevant to running a business or managing an organization.
One of the core areas that software solutions have impacted is that of finance, keeping company numbers and figures accurate, organized, and manageable. Whereas before we thought of it as just a unit tasked with record keeping, accounting, and preparing company payroll, finance has been evolving to take on a bigger role and greater importance in step with today’s changing business, thanks in part to business intelligence software solutions.
Business + Intelligence = Insights
BI is a set of tools to help businesses aggregate data they generate, sort and analyze it, and present it in easy to comprehend visualized reports. The resulting insights are used to guide key corporate people to come up with information-based decisions. BI enables businesses to unravel and understand patterns and trends that can affect corporate performance and respond accordingly to what their data is relaying to them.
In business, making the right decision is crucial as it can spell the difference between success and failure. BI solutions, therefore, are vital in providing decision makers with relevant and timely information to guide tactical activities and chart strategic directions. But who should manage and oversee BI operations? You may say it’s the turf of the IT department and you are right since they have handled and processed corporate data ever since. But business and organizational roles are changing, and many management experts believe business intelligence software rightly belongs to finance for valid reasons. That has already been happening.
Emerging Trend: CFO Overtakes COO
The changing business landscape has put a premium on financial activities and responsibilities and elevated the CFO from the corporate backyard to the boardroom. Aside from managing corporate financial risks, financial planning, and record keeping, the CFO is now largely in charge of data analysis. Not a long while ago, the CFO was tasked to assist the COO and CIO. Now the CFO’s duties have encompassed even certain operational areas as well as information technology aspects.
Studies substantiate the paradigm shift. Research by executive recruiting firm Crist Kolder Associates showed that only 33% of Fortune 500 and S&P 500 companies still have COOs, a 45% drop from year 2000. The trend is seen to continue as core corporate duties are now being split between the CEO and CFO. A research by EY3 reported that 75% of CFOs spent 50% or more of their time on strategic aspects of their business, with 2 out of 3 saying they are the face of the company when it comes to strategic issues related to financial performance. Also, IBM’s 2013 Global CFO report showed that 88% of the CFOs surveyed said they were responsible for helping select key metrics linking performance to strategy execution.
The Unique Position of CFO and Finance
The heavy reliance on finance and its chief is not without reasons. In an era of business competitions, challenges and risks, the financial gatekeeper is counted on by management to keep tab of corporate health and performance since it is the one which has access to and processes data from the different departments and units of the organization. The IT department is also in such a position, but finance is seen as having more influence, agility, and efficiency (they deal with figures and measurable indicators, in the first place). In addition, CFOs have a more profound understanding of organizational units, making them suitable IT overseers who can integrate technology, data and information across the various units.
Today’s digital tools like BI allow finance to get needed data, analyze it, and come up with an overview of corporate operations. Finance is in the unique position to harness business intelligence data because it is the one which crunches the numbers, making sense of what’s happening and the direction to take. Management is increasingly calling on the CFO to help in strategic matters and decisions. In a 2013 McKinsey report, 88% of 164 CFOs surveyed reported that CEOs expect them to be more active participants in shaping the strategy of their organizations. Since they are the stewards of business information, reporting and financial data, CFOs are depended on to enable the company to run more efficiently and effectively.
The BI Boost to Finance
BI solutions have entered the mainstream, from being a specialized corporate tool to an indispensable business platform. The availability of BI tools (like Sisense) has facilitated the metamorphosis of the finance department, empowering it further, and boosting its corporate stock and value. Being at the crossroads of an organization’s information network by reason of its functions, the finance department is in that distinct role to process and make sense of all data generated by the corporation.
BI capabilities are being utilized by finance in several ways. Here are some examples:
- Analytics – This core BI feature helps discover trends, patterns and indicators, allowing finance to measure see how vital areas are doing – production, sales, marketing, inventory, workforce, etc – and provide management with insights on corporate performance and operations.
- Forecasting – Since finance itself handles financial planning and projection, this particular feature greatly assists in analyzing historical data, enabling a view of past and present opportunities to forecast scenarios and the next possible steps for the company.
- Visualization – BI is designed to transform data into relevant and useful information through visualized reports, charts, graphs, and dashboards. Finance can harness this to give management a picture of what’s happening in the corporate landscape.
- Data management – BI can manipulate, extract, and query raw, unstructured data turning it into meaningful information. This data handling feature of BI coupled with its ability to integrate information from various business systems used by different units, further steps up finance’s data/information management capability.
As you can see, business intelligence improves and transforms finance as it collects and consolidates financial and operational data from across the corporate organization, enabling it to extend key information to support department/unit managers in their decision-making. In this way, finance gets empowered to spearhead actions and directions towards realizing strategic goals.
Leading the Strategic Charge
From clerical and accounting tasks, the finance department of today led by the CFO has emerged as the strategic advisor to the CEO and the Board, aside from providing essential support to other levels of management. Finance has been aided largely by technological solutions available, most especially by the robust analytical, reporting, visualization and data management features of BI solutions.
The shift in role and responsibility has been dictated by the times when today’s businesses demand information on operations and performance with a financial perspective, or the other way around – a financial outlook encompassing operational aspects. However one sees it, finance has always had a bird’s eye view of the corporation while having access to every unit of the organization on the ground. Add the fact that the CFO, trained on systematic and quantified methodologies to business, serves as counterbalance to the traditional gut-feel or instinct-based approaches of management.
It is in that unique position, with finance tapping into the powerful tools of business intelligence, that it has earned the right to advise the CEO and higher management, and be heard when it comes to charting the corporation’s strategic course. Getting there was a process honed through the years, anchored on expertise and experience, and the requirements of modern business for efficiency, resiliency, and productivity which are drivers of corporate growth.