The value that analytics can bring to the business has long been debated, and this segment of technology started garnering attention during and after the global finance crisis that began 2008.
While finance teams can utilize analytics to contribute strategically to the business, selling analytics to the business may prove a challenge.
Which begs the question: Should the finance department lead the analytics charge, or leave the task to the IT team?
One CFO feels the adoption of analytics lies strongly in finance’s domain.
“Business analytics doesn’t mean using a high level of technology, it’s more about understanding data and using IT as a tool or technique,” said Nina Tan, CFO for Trax Technology Solutions at a panel discussion organized by Deloitte Singapore and the Association of Certified Chartered Accountants (ACCA) Singapore.
“CFOs have a very thin margin for error so it is absolutely necessary for the CFO to embrace business analytics.”
Drivers of Analytics
Indeed, a joint survey conducted by Deloitte Singapore and ACCA Singapore showed finance to be a commonly regarded driver for analytics.
Results of the online survey, which polled CFOs and professionals from 108 organizations in Singapore from September to October last year, saw 77% of respondents citing finance as the function most driven by business analytics.
The top three uses of analytics in the finance department were shown be in the areas of
- Financial Planning and Analysis (92%)
- Financial Control (51%)
- Statutory Reporting (47%)
Organizations covered were both local companies and multinational companies (MNC) of various sizes across a wide range of industries. The manufacturing, construction and property industries were shown to be the biggest users of analytics.
Further results from the survey showed that organizations that are more analytically inclined and have business analytics embedded in the organization roadmap have better competitive advantage compared to those who have just started their analytics journey.
However, only 14% of organizations surveyed could be classified as Analytics Innovators with well-defined analytics capabilities.
There are other barriers faced by companies embarking on the analytics bandwagon, mostly arising from fragmentation.
Survey results show that analytics efforts, resources and applications tend to be scattered across the organization, with only 17% of those surveyed have some form central business analytics center.
Only 11% of organizations surveyed who had two or more different end-user IT systems were synchronizing and reconciling their systems across the organization.
“The shared ownership of information is crucial,” said Tan. “Only if we have a shared repository of information can we then really milk the data to the benefit of the business.” Tan cited an example of a beverage company currently enjoying volume and revenue growth year-on-year.
“What you see at eyelevel might not be reality; data analytics can show territories where competitors are but you aren’t, hence opening up new opportunities for growth.”
Tan added that a company could also innovate by utilizing analytics to better serve its customers.
In addition to fragmentation, data integrity was also listed as a stumbling block to effective analytics strategies – about a third of organizations surveyed did not have controls in place to ensure the integrity and quality of data.
The CFO, being the organization’s gatekeeper of data, is hence tasked with the challenge of ensuring data is utilized to the business’s benefit.
“CFOs have to be discerning. Finance has visibility but CFOs have to remember that not all of it can be shared,” said Tan.
Resource and Talent
Despite the benefits analytics can bring, drivers of analytics, namely finance teams, appear to face stumbling blocks with garnering suitable levels of investment in the technology.
Survey results showed less than 1% of annual revenue was being invested into the training of analytics staff - a situation Tan feels finance departments have the power to change.
“Finance teams should take the initiative to invest in analytics, even if the organization does not devote a high percentage of investment to technology,” Tan added.
How then should business analytics be marketed to the C-suite? The answer, says Wilds Ross, lead partner for Southeast Asia at Deloitte Analytics, is to promote the technology as one that will make the C-suite’s job easier.
Citing an example of a company he’d worked with a few months ago that facilitated the management decision making process with large piles of papers and binders, Ross described how the introduction of dashboards helped speed up the procedure.
“Everyone used to have to pause while people flipped to the same page, but putting together dashboards enabled the C-suite to assemble in the conference room and correlate info without having to adjourn the meeting.”
“Analytics should be promoted as an opportunity to improve the efficiency at which a company operates,” said Ross.
Analytics should also be touted as a means to saving money in the long term, said Sunil Golecha, VP for finance at Thomson Reuters.
Analytics enabled Golecha’s organization to trim its T&E budget by some 15%, when data analysis showed the average expenditure for a hotel room could be cut from US$400 to US$340 per night without any adverse effects.
The analytics charge should be led by finance, was the overarching opinion of panelists.
“It is only the CFO who has complete visibility and who can practice discernment as to what information should be shared,” Ross said.
About the Author
Melissa Chua is a Contributing Editor at CFO Innovation.