This is the first of four blog posts written in collaboration by Robert J Zwerling and Jesper H Sorensen of the Finance Analytics Institute and is an excerpt from their book, Implementing an Analytics Culture for Data Driven Decisions. Mr. Zwerling is also Managing Director of Aurora Predictions (www.aurorapredictions.com) and Mr. Sorensen is Senior Director FP&A with a Fortune 500 technology company.
The information in the article and more will be covered at JPK Group’s Implementing Analytics Academy. Click here for more information.
This is the first of four articles on the Roadmap to building an analytics culture for data drive decisions. Here we begin to build the framework to transition from today’s rear facing Finance, to forward-looking Next Generation Finance. For many years Finance has had a monopoly on reporting numbers to business leaders, but this monopoly no longer exists. In the digital world, data flows everywhere in the business and Finance needs to collaborate and build relationships to gain access to some of that data.
Further, larger companies are creating analytics centers that will “compete” with Finance to serve the business. Unless Finance gets into the analytics game, Finance risks being replaced in many of its FP&A functions.
Gaining access to data and turning it into insights and foresight is crucial for, what we call, “Next Generation Finance”.
Here, Finance provides value added analysis that is more than just standard financial information. The most valuable CFO competency today is knowledge of how to transform Finance from operating as a hindsight looking spreadsheet driven accounting/reporting center, to a value-add top line and forward-looking predictive hub.
Traditional Finance Transformation has had the admirable focus on better and more efficient reporting, understanding how to communicate with executives, and building strong business acumen (i.e. operational knowledge of the business). Competencies like analysis, communication, understanding the business operation, and partnership building are the skillsets sought.
Next Generation Finance builds upon these skillsets with the addition to empower Finance to drive value-add analytics. World Class Finance organizations understand how to utilize advanced tools and techniques to bring insight and foresight to business leaders that enables them to take data driven decisions.
The “Evolution of Analytics” depicted in the chart below, visualizes analytics stages and analytical tools that have been available to Finance spanning 40 years. World Class Finance works across the full spectrum of Value Creation whereas immature organizations only work on the left side of the figure.
Imperative to note that if Finance does not move to the right of the chart toward higher value creation, it risks being sidelined as other groups will emerge to deliver analytics insights. The role of Finance will be shunted to audits and compliance vs. being a business partner and strategist.
However, today is a brave new world for Finance. It is in the center of all operations, has access to all the data it needs, and by engaging the principals and systems of Next Generation Finance can transform the business from hindsight reactions to foresight planning.
Register today to attend JPK Group’s Implementing Analytics Academy March 25-27 in San Francisco to hear more from Robert, Jesper and other top contributors. Click here for more information.
Copyright 2018 Finance Analytics Institute, Robert J Zwerling & Jesper H Sorensen. All rights reserved. No part of this document may be reproduced without this copyright notice.