How Finance Can Become An Analytics Powerhouse
The Finance function is undergoing a rapid change like everything else in business. In order to maintain its relevance, not only as a stand-alone function but also as a part of the business it’s time for Finance to power up its analytical capabilities and take over the analysis from the frontline.
I have in previous articles described quite a bit about current trends in Finance not least when writing about the finance transformation nine-box. Those trends are supported by several surveys but for more insight I also encourage you to read “Being The Best: Inside the intelligent finance function” published by KPMG in 2013. Last week we discussed the future of the accounting profession in “Why Accountants Are An Endangered Species” which turned out to be a hot topic and quickly developed quite a heated discussion. This week we will discuss the middle layer of the nine-box and look at analytics.
First, we must have one set of numbers
The classic issue for Finance has always been whether or not the numbers that came out of their analysis could be trusted. There is not always just one solution, but flat out making mistakes makes it quite embarrassing to present something to business leaders. The reason for the many mistakes has often been that the analysis has been quite manual rather than an automatic output from a system. Whenever something is manual and requires human intervention it increases the error ratio. Therefore, Finance has invested heavily over the past years in upgrading systems and automating data output in order to eliminate manual intervention. At the same time, many systems have been consolidated into one ERP system leading to only one source for the numbers. Finance can, therefore, in general, claim that they now have one set of numbers which are mostly free of errors when presenting to the business.
How Finance should leverage the newly gained confidence
Finance now needs to leverage its newly gained confidence to start consolidating all analytics in the company within the function. The case for this change is fairly clear as it can be free up resources in the frontline to work more with the customers than producing internal analytics. Basically, Finance should create packages for sales people to meet with their customers giving them as much knowledge as needed to close the best deal for the company. There is no need to leave anything to the sales person’s imagination as they have full information about the customer and the potential outcomes of any deal they make. How good a deal they will make of course still depends on the individual sales person, however (s)he can’t claim afterward that they were unaware of the consequences of their choices. Similarly, all management information whether it’s classic financials, operational information or sales statistics should be produced in Finance’s new analytical powerhouse. This will emphasize the “one set of numbers” approach as well as minimize confusion around how a company is actually doing.
How to avoid the politics when Finance gets more power?
In general, I will spend much more time discussing this point next week when we look more into the last part of the nine-box regarding business partnering, however, here it should be recognized that making such a shift is not without challenges. The frontline could end up feeling concerned about how their performance is portrayed to management when they are no longer in control of the analysis of the presentation of results themselves. However, this is where the good finance business partner comes into play. (S)he understands that Finance is a support function and that its main purpose is to work well together with the frontline, understand their needs as well help them deliver results. Finance can never be successful if the business is not successful!
Let me know what you think about Finance as the analytical powerhouse of the business and what it takes to get there? As always leave a comment if you want to add to the discussion or perhaps disagree with my point of view. You can also just find it relevant or share the article and I would certainly appreciate it!
Originally published at www.bebee.com.