Many CFOs have not deeply investigated the limitations of the accounting, general ledger, and/or reporting systems that they depend upon so heavily. They often focus on these systems’ capabilities with respect to providing regulatory and financial reporting. However, there is a significant ‘new world of finance’ that CFOs can tackle by leveraging BI and data warehousing to integrate data in a way that helps transform finance processes and related analytics. Exploration of these opportunities is usually left to I/T and BI professionals, who often have limited insight into financial data and the individual processes that generate it. As a result, many CFOs are looking to partner more effectively with I/T in an effort to leverage BI-related technologies in a way that provides finance and other decision-makers with information that is more current, more accurate, and more meaningful.
The finance department sits at the information nexus of the organization. Finance can be a powerful agent of organizational change. It can leverage the information that it collects to assist executives and line of business managers to optimize processes, achieve goals, avert problems, and make decisions. Most Finance departments are playing a back office role: they are forced to spend too much time producing internal and statutory financial reports, which leaves little time to analyze data and collaborate with business managers about how to improve the business. In the process of producing all these reports, finance teams create information silos, using spreadsheets and other low-cost tools that interfere with top executives’ ability to obtain a consistent view of enterprise performance. Forward-thinking finance departments have learned to partner with the IT department—more specifically, the business intelligence (BI) team—whose job is to manage information and deliver a single version of corporate truth. In so doing, they have liberated themselves from manual data collection and report production processes so they can engage in more value-added activities.
To succeed, the BI team must create a data warehousing environment that contains all the data that the finance department needs, with the appropriate rules and calculations already applied. The data must reconcile to the penny with operational reports generated from the general ledger. The BI team must also provide reporting, analysis, dashboard, and planning tools that access the data warehouse as well as other data sources and empower finance users to explore data on their own without IT assistance. Once the BI team delivers a solid DW and BI infrastructure, the finance department can spend 80% of its time analyzing data instead of collecting it. They can work proactively with the business to forecast the future instead of report on the past. Armed with analytical insights, the finance department can collaborate with business managers to optimize pricing, reduce inventory, streamline procurement, or improve product profitability. They can help business managers evaluate options, such as whether to add more salespeople, change commission fees, partner with a new supplier, or change merchandising assortments, make new customer pricing, and build better multi-channel investments and operations. There are several great examples recently, in many industries, where the DW/BI has worked closely with the financial team, to enable a vast new set of analytics and decision-making processes. Following are just two examples of many:
A very large telecom company, with ten of millions of customers, needed to separately analyze the business and consumer customer bases. Senior management required a more consolidated, transparent, and faster view of line of business performances. Through a joint effort the team created a new subscriber reporting system capturing daily changes through self-service BI views; created a 30-line subscriber-level P&L through a portal; automated key metrics which were manual; automated average revenue per subscriber data/reports; and now provides a single, integrated platform which feeds enterprise-wide, reliable metric calculations… all for faster and more accurate resource management and decision-making. A large technology manufacturing company needed to implement a single data warehouse to achieve an easily synchronized, consistent view of company performance at any given point in time. The team determined that there was an excessive amount of manual labor and spreadsheet reliance for reporting and analytics – e.g. pricing decisions slowed by inability to integrate pricing, sales history, compliance metrics and CRM information. By consolidating and integrating financial information, the company can now quickly factor sales history and compliance behavior into product pricing negotiations and has also accelerated processes such as revenue reporting (now completed in minutes). By combining production, sales forecast and financial costing data, they can better identify which yield improvement projects will provide the highest return, generating $100 million in incremental annual gross margin. Through quick synchronization with the ERP system, they can now roll up consolidated financial data within minutes not hours.