Technology & Innovation

How can CFOs unlock the power of trapped data?

Accountant Shortage

Using data to drive efficiencies, save costs and generate growth has become an integral part of the role of today’s CFO.  However, with more data available to businesses than ever before, finding the most valuable insights to achieve strong, data-driven growth is rarely quick or easy.

In this article, I’ll explore the challenges CFOs can face when harnessing financial data.  I’ll look at how using software automation can build a better data culture within finance teams and how it can drive growth, minimize risk and identify new opportunities.

Don’t let your financial data cause staff burnout!

It may sound like a bold warning but, after a recent workshop with our partners and customers, the impact of inefficient and complex financial data processes on IT staff became clear.

Everyone laid on the table the IT department’s pain points in financial reporting and I gathered them into these five key hurdles:

Hurdle one: The raw data

It all starts with the data, of course, stored in ERP systems, accounts and finance software and – for almost every organization, no matter what they might claim – a ton of Excel spreadsheets.

For many IT teams delivering reports to a CFO, what should be a straightforward act of connecting to and accessing these systems is often a major challenge.

Hurdle two: Complexity and mismatches

There are so many layers of complexity in financial reporting to wrestle with.  Not least currencies, countries, and differing terminology/semantics.

In terms of mismatches, it’s fair to say that integrating, consolidating and understanding the relationships between and data and databases is a job in itself.

Hurdle three: Timings and adjustments

Deadlines, chase-ups and late submissions… According to Companies House in the UK, there’s been a 10% increase in late submissions of accounts in recent years, despite continued investment in ERP, accounts and finance systems.

Fast reporting is clearly a struggle that’s on the increase and adjustments, reviews and redrafts remaining a lengthy, manual and labor-intensive task.

Hurdle four: Error correction

Detecting and correcting errors in financial reports is the next major hurdle and one which can also be quantified.

Looking at just one example from the UK, 176,000 companies were fined last year for errors in their financial reporting (again, according to Companies House), with the total fines amounting to £89 million ($117 million).

Hurdle five: Security

Above all of these hurdles, there’s the overarching work in security and data governance that’s a vital part of every organization. Compliance to GDPR and numerous financial and auditing standards – which, of course, vary from territory to territory – all need to be considered.  Again, another manual task that has traditionally been very time-consuming.

How can software help?

Is there a fix for all of this?  While there’s never going to be a magic wand solution, software automation of business-critical, time-consuming aspects of financial reporting are emerging which I think are well worth a discussion.  They’re worth considering in the IT department and they’re something the CFO (and the CIO and CEO) of an organization should also be cognizant of.

The last few years have seen the arrival of software automation into the world of finance and data processing, designed to tackle all the hurdles above.  To my mind, there are four key ways that automating data management with software can relieve the ‘data headaches’ that surround financial reporting.

  1. Firstly, being able to automate data integration is a major step forward. Software can consolidate all your data automatically, so nothing is missed. As a result, tasks that might have taken your finance team weeks or months can be turned into quick, app-based clicks.
  2. For reporting itself, it’s possible to put software in place to that can deliver a central, consolidated ‘data hub’ from which efficient and accurate analysis can be pulled at any given time.
  3. Also data modeling, with software, can become a fast, intuitive – rather than manual, laborious – process. Certain variants of data management software will come with a user interface that makes it easy to prepare complex financial data for reporting at the user-/IT-level, without the need for technical experts.
  4. Finally, security and governance. If all data management is automated, a very useful result is that you then have an overarching system in place that will control, audit and log all activity.  From password and access control to reconfiguring mismatched data.

What do the analysts think?

For a second opinion on all of this, I’d recommend Helena Schwenk’s white papers. She’s a chief analyst at IDC, an organization that looks at both the underlying technology (in this case ELT “or extract, load, transform” processes) and the bigger picture. Helena explains,

“ELT routines (in data management software) provide automated profiling and transformations for data sources, including the ability to identify and manage custom aspects of deployments, alongside prepackaged data warehouse models for specific business applications.”

On that data security/data governance angle, data management automation software can, IDC explains, “provide configurable administration and security capabilities – with additional support for extracting security from ERP systems – to help ensure access and compliance requirements are upheld.  In addition, auditing modules provide IT administrators with data on user activity, resources usage, and system monitoring to help fine-tune performance.”

Financial reporting without the headaches

As for my take on the bigger picture, with data management automation software, CFOs and IT teams get – at the basic level – faster reporting without the data headaches.  They also become able to better manage their data, by removing the hindrances of accessing legacy systems, while still tapping into its legacy data.

Their ability to navigate through periods of growth – and downturns – are less obstructed by data trapped in silos.  Instead, they have increased confidence in the financial intelligence readily available to them, regardless of whether it’s in the cloud, on-premise or a combination of both.

Utilizing software automation solutions which improve the accessibility and manageability of data across the financial arm of a business enables CFOs to identify trends and issues before they make an impact (rather than after).  It also improves processes and drives efficiencies.  Fast reporting – and gaining insight quickly and easily – allows the CFO to stay ahead of the curve, by anticipating the next question before it’s even asked.