Are CFOs the new data leaders?
Modern organisations are swimming in a sea of data. Every transaction, every customer interaction, every inventory movement – pretty much every action a business takes – generates data. And when this data is analysed properly, it can yield insights that improve customer service and overall performance.
However, the task of analysing all this data can be daunting, and people with strong data skills are highly sought after. However, there is one group of data professionals who can be already found in pretty much every organisation. I’m talking about the finance function and its leaders, who have the expertise, technical capability, and discipline needed to extract value from their data.
As more and more organisations transform themselves to become better at understanding and using their data, it is vital that CFOs play a prominent role in that process. Aside from the CEO, no function other than finance has such oversight of the entire organisation, from tracking every dollar spent or received, through to maintaining the systems of record that define performance and help inform future decisions.
During these challenging times, we increasingly see CFOs called on to guide their organisations forward. This is placing greater pressure on them to focus on their ability to gather, analyse, and operationalise data, and deliver insights to help their peers make better decisions. And this is why I am seeing more CFOs stepping up to embrace the role of transformation leader.
The finance function’s role has always been data-driven – we just haven’t traditionally described it that way. This was demonstrated in the findings of a recent research study Amazon Web Services (AWS) undertook with Deloitte Access Economics, which surveyed 275 business leaders across Australia and New Zealand from organisations employing 100 people or more, and asked them to assess their organisational maturity when it comes to working with data.
The research showed that finance leaders were far more likely to understand what data is than other professionals. For example, 61 per cent of finance leaders identified supplier information as organisational data, compared to 9 per cent of others. But within organisations, understanding data, is not a universal skill. More than half of the leaders surveyed said that they only analysed financial data on a periodic or ad hoc basis, and only 38 per cent captured and analysed data frequently.
The research also showed that even modest improvements in an organisation’s data capabilities can yield significant results. The study scored businesses across five pillars of data maturity, including understanding of data; organisational strategy; capability and culture; technology tools; and processes. These results were then used to identify businesses into one of five categories ranging from basic to mastery, based on the maturity of their use of data.
While 60 per cent of businesses were assessed as only having basic or beginner levels of maturity, the report found even a one-point increase in their data maturity score could translate to additional revenue of AU$1.5 million. For the average Australian business employing 20-199 people, this equates to a nine per cent increase in revenue, or the ability to hire 16 additional full-time employees.
We already see many AWS customers using data in innovative ways to build better businesses by driving efficiency in processes, unlocking scope for experimentation, and enabling the business to expand more easily.
For example, pizza company Domino’s is applying predictive analytics to its sales data to become more efficient in how it makes pizzas. The company can now predict when customers in specific locations might place orders, by leveraging historical data such as order time and product selection for instance. This means restaurants can begin making pizzas before the order has even been placed, which helps Domino’s meet its goal of having pizzas safely delivered in under 10 minutes.
We are also supporting Australian retailer Kmart’s constant experimentation with sales data, as it seeks to gain a deeper understanding of what items sell best in specific stores. This helps ensure that customers can always find what they want, when they want it.
While these might not sound like the traditional actions of the finance function, the ability to use data in new ways to improve the financial performance makes these investments eminently attractive.
In the world we are living in, it is critical that organisations get access to insights while maintaining the best security posture possible. At AWS, security is our highest priority, and we work hard to ensure that our customer’s transformation can be undertaken in a way that meets the most stringent requirements for data security. In fact, our services have been assessed at a PROTECTED status by the Australian Cyber Security Centre (ACSC) which is the highest level to host Australian government data.
We already know the only way to manage through uncertain times is to bring clarity to the chaos, and a big element of that means transforming to be able to analyse data in real time to enable business agility. Few executives possess the skills to undertake that transformation task to the extent that finance leaders do. That is why we believe that CFOs have a strong calling to be data transformation leaders.
The barriers to getting started with the cloud are low, and the first step is often to simply get started. Experience shows this builds confidence for further experimentation. Given the uncertainty that many organisations face today, that is something from which we could all benefit.