This is the second 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.
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In this, the second of four articles on an analytics culture, we describe the Roadmap for implementing such a culture.
Much has been written about improving Finance business partnering and how Finance should move from the trusted scorekeeper in the back office to a front-line strategic partner. Finance wants and needs to have a seat-at-the-table for strategic and operational decisions. To get there requires a disciplined, step by step journey that is benchmarked along the way to assure focus and prove attainment.
Gaining a seat at the table requires delivering insights; that is, to tell the business something that it both does not know and when known could influence or change a decision. Even more value is provided when foresight is delivered; that is, an often-reliable prediction of the future. As such, insights influence decisions, and foresight impacts the strategic direction. The former provides knowledge about the past and the latter a forecast of the future (with all things being equal).
Building the culture to advance Finance from average to world class has four key components: (1) Mindset, (2) People, (3) Processes, and (4) Systems. These components, when aligned, institutionalize the practices about data driven decisions for business optimization.
Creating a “culture” of data driven decisions with analytics requires a Roadmap to advance Finance to the world class strategic business partner. Depicted on Figure 3-1 below, illuminates the four components of culture as a tightly integrated and interdependent framework.
Mindset regards Finance participation in the decision process. Each Mindset has a corresponding “Persona” and is related to a step on the stairs of Next Generation Finance (discussed in the previous article). We encapsulate four Mindsets with its Persona in the table below:
In short, the Reporter focus is on “What happened”, the Commentator on “Where it happened”, the Advisor on “Why did it happen” and the Strategist on “What might happen.”
People is about Finance, as a group, and how each individual views his role in participating in decisions. To go beyond a Reporter, there needs to be a “sufficient” number of people for analytics and an aligned Mindset to establish a culture of data driven decisions.
Processes regard the written procedures needed to institutionalize data driven decisions. Process are in two main groups of Data Governance and Decision Governance. The former is about assuring data used in decisions is accurate, complete, timely, and accessible. The latter regards the decision-making process itself to identify the decision-making participants, steps, and authorities.
Systems is the hub of analytics and regards the technology employed by each Persona in the application of the Mindset, as follows on the table below.
The coordinated combination of the four components of Mindset, People, Process, and System is crystallized on the figure below. This is the Roadmap to build a culture of analytics of data driven decisions for Next Generation Finance.
The X axis is the Mindset to contribute to decisions, and the left Y axis the analytics intelligence for each Mindset/Persona. Below the Commentator is routine reporting that supports decisions but has no analytics intelligence to influence or impact decisions. The right Y axis links the System to the Persona.
Analytics starts from the Commentator and becomes more advanced as Finance progresses towards the Advisor and Strategist. The two latter Personas provide insight and foresight to influence and enable business leaders to take better decisions to impact the execution and strategic direction of the company.
With the Persona of a Strategist, analytics intelligence becomes predictive and Finance needs access to advanced analytics tools of Discovery, Visualization & Analytics. The two Z axis engage the People and Process, noting there needs to be a sufficient number of people and written processes to build, institutionalize, and sustain a data driven decision culture.
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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.