As the CFO you possess information that nobody ever asks for, and if they do, it is difficult to give a quick answer. But the CFO sits on a gold mine that is seldom utilised: data, the very key to an ever more important role for the finance department.
CFO need-to-know in a digital world:
Almost all material information in an enterprise flows through its finance department – invoices, disbursements, account summaries and much more. In an international organisation, some of this information must also be consolidated and packaged into formal reports on a regular basis. These reports are “the single version of truth” in most organisations, a version that unfortunately often is incorrect.
Do you recognise this scenario? Have you had a furious Country Manager complain to you on the phone or by email that the results for his or her region have been reported incorrectly? Has the Sales Manager grumbled about the way sales are reported? I think this will be familiar to you.
How do you unlock the value of data?
It is always possible to find alternative ways of presenting facts. Especially when you are trying to normalise and standardise numerical material from many different countries, accounting systems and processes. The unfortunate thing is that this affects people's view of the CFO and the finance department. Sometimes this department is seen as a place which admittedly does produce information, but the quality of much of this information is about the past, and – as already mentioned – quality is a matter of opinion.
Of course, it doesn't have to be like this. On the contrary, the finance department is the place that most data flows through, data which, if used correctly, could create enormous value. The question is, how do you “unlock” this value? The bad news is that there is no quick fix. The good news is that in the process of creating value you also solve a number of other problems: efficiency, predictability, development of key performance indicators as control mechanisms, global standardisation, and consolidation.
Allow me to explain my reasoning.
More efficient handling of standard information reduces costs and usually also improves quality. For instance, automation can drastically cut costs and reduce the time it takes to produce reports about common data: sales, profit margin and cash flow. The finance department of a large organisation should not have to deal with these simple tasks manually. It ties up resources – people who are able to talk, think, count and plan – in the wrong way.
Predictability is an important step on the way to a finance department that creates value. Only when the business operations have faith in your routine reports – and can see that the reports are consistent – will they be able to trust what yo have to say on more important, strategic issues.
This is why it is also important that you develop and implement key performance indicators as control mechanisms. The key performance indicators should be used to ensure that the organisation is developing in the right direction. It is incredibly important that you produce and deliver these key performance indicators accurately and promptly.
Only when this aspect is on track, are you able, realistically, to start looking at ways of harmonising and standardising global reporting and consolidatinginformation into reports that the organisation see as “the single version of truth”. Once this happens, your finance department will also be consulted when it comes to providing supporting information for decisions on how the business should develop in the future.
Responsible for Cognizant’s Business Process Services in the Nordic region.