Ask any CFO if his or her role has changed in recent years, and you’ll likely hear the same answer: Yes, in more ways than one.
Data has played a huge part in redefining their roles. Recent technological advancements in data and analytics have heralded in a new era of competitiveness; an era where data is a living and evolving asset, that can unleash fresh opportunities for monetization. Even at a national level, data has been identified to be a source of competitive advantage.
Data monetization is about effective and timely exploitation of this ever-growing class of asset, enterprise data, and converting that asset into currency (profits) by increasing revenues or decreasing costs. And by unlocking the value of data, CFOs can identify and advise CEOs on the new opportunities ahead.
Yet, most CFOs we speak to confess to having only a rudimentary understanding of the value of data. To a large extent, data as the new corporate asset remains an abstract concept to many C-level executives. Unknowingly, they end up squandering the value of data.
Enterprise data as a new product line
Data can be utilized as a game changer. CFOs have been accustomed to handling and analyzing data whilst budgeting and planning for the business. Now they need to view data as a new product line, one that can be used to monetize customer segmentation or introduce new products and services through a data platform. It may even open up a totally new market, such as a counterfeit management in the supply chain world. All this can be done via a data driven solutions approach.
To identify the right opportunities, CFOs need to be better at finding business needs, and defining a problem where data could provide a tangible benefit.
For a start, CFOs must appreciate the data they have at an enterprise level. What is the breadth, integrity and quality of the company’s data? What does the data mean for the business and what is available from their ecosystem (suppliers, customers)? How can data sets be used to create new products, new offerings? Beyond financial data, CFOs also need to understand non-financial data as well, such as customer relationship management textual data.
However, collecting and integrating data cross-organizationally can be a slow process as data often exist in silos due to organizational structures, existence of different systems, and legacy issues. CFOs may need to exert their influence and justify having access to other data sources. They may also need to reiterate that data sets have to be looked at in totality to make better sense of it for the business.
When CFOs break down these silos, combine all the various data sets (such as customer data with logistics and financial data) for analysis, they can provide CEOs and the board with a holistic perspective that drives more value for the organization.
Tapping into external data
CFOs should not also confine themselves to just enterprise data. Even within the organization, financial data sets can be too small if operational or customer data sets are not monetized. Publicly available data can be triangulated to give CFOs a deeper understanding of the business environment. Other external data sources include news, syndicated industry data, analyst reports, blogs and social media.
Indeed, data is a core asset of the 21st century enterprise, and CFOs are the de facto custodian of this asset, managing it to create returns for the company.
By creating innovative data solutions, a traditional business model can be transformed to become a game changing business. It’s about the CFOs dissecting and leveraging that data and giving this advice to the management team.
In recent years, companies have been appointing Chief Data Officers (CDOs) to be responsible for the organization’s data management and governance, and to establish and integrate data and information policies in the company. However, CFOs can also take on a CDO role by helping to define and execute a data strategy that will drive their organization’s top-line growth.
The digital CFO needs to have a broader understanding beyond just accounting and finance. Traditionally, CFOs spend the bulk of their time on preparing financial and management reports, but this role will become less pronounced in future as they utilize more automation and analytics. CFOs would need to balance these traditional responsibilities with a growing demand for data-driven analysis and insights to support growth and strategy.