08 June 2017
Companies collect stores of massive, and mostly idle, day-to-day data that can provide a unique advantage in better understanding, predicting and delivering what customers really want. These data can also help improve the way the business is run, by cutting costs, better fraud detection, improving tax audits, optimising internal logistics and predicting future maintenance risk.
This is where analytics comes in. Data mining and analytics can unlock hidden value in the sets of data that companies collect from customers, suppliers and vendors.
Armed with digital tools, CFOs must explore analytics to improve the way finances are run in their business and, as part of their role as a strategic partner, contribute more towards their organisation's growth.
Untapped sources of data
It is the finance department's duty to put a number to everything it does and tracks. As such, it is expected by the management to lead efforts to derive actionable insights from all this information. A recent survey by KPMG reveals that 85 percent of CEOs believe that applying financial data to achieve profitable growth is a major strategic result a CFO can bring to an organisation.
"Strengthening the alignment between financial planning and corporate strategy will likely be one of the CFO's top five priorities going forward. CEOs expect their CFOs to take the initiative to apply financial data analysis to explore new products, markets and channels. In addition, CEOs believe the CFO should be able to understand how financial and HR data can impact each other," the firm says.
Analytics: a growing market
Although initially slower than other regions, such as Asia, to adopt data analytics, the Middle East's CFOs are now keen to embrace this solution, with strong growth in this market.
According to International Data Corporation (IDC), revenues for big data and analytics in the Middle East and Africa (MEA) totalled U.S$1.98 billion in 2016, and will expand even further next year.
In its latest Worldwide Semi-annual Big Data and Analytics Spending Guide, the research firm says it expects the region to see annual growth of 11 percent in 2017 to reach U.S.$2.20 billion. Over the coming years, IDC forecasts the growth to continue, reaching U.S.$3.20 billion in 2020.
"Organisations in the region acknowledge the need to leverage data for taking strategic decisions," says Megha Kumar, research director for software at IDC MEA. "There is a lot of focus around customer analytics and operational analytics to gain insights on customers and improve overall performance."
Kumar notes that while there is uptake around advanced and predictive workloads, many industries are still struggling to understand how analytics can help their specific sectors.
Defining an analytics strategy
In finance, CFOs understand that analytics offer obvious ways to improve operations in terms of process or performance efficiencies, but do not always know where and how to start.
For instance, they may want to launch a company-wide audit to identify the data points that could be used to provide insights on cost-cutting.
CFOs then need to select the right technology to capture, store and incorporate the data into their IT systems, which may require an upgrade. They also have to identify appropriate solutions to analyse and interpret the data, and consider visualisation solutions to help better communicate the insights from data analytics.
As part of the process, talking to all the business departments is of utmost importance. Every function in the organisation needs different numbers and thus a different perspective on the data. Consulting other departments will offer the added benefit of breaking the data management silos that often exist within corporates, and foster more collaboration within the business.
As suggested in KPMG's survey, finance and HR could help each other tremendously by sharing data insights, for instance to measure employee engagement and improve employee retention. This will, ultimately, translate into savings and stability for a business.
Technology is obviously important to implement analytics successfully. However, what is also key is a holistic approach and vision - the chance for finance leaders to drive efforts to create a smarter and more competitive business.
© Oracle 2017