Businesses make hundreds if not thousands of decisions every day. From deciding whether to proceed with key strategic initiatives such as making an acquisition or entering into a new market, to every-day recruitment and pricing decisions, judgments are constantly made.
But to what extent are these decisions made based on data? According to a global KPMG survey of 1,300 finance and operations leaders, there is significant scope for improvement. Just 46% of finance leaders and 38% of operations leaders are very satisfied with their ability to make informed decisions based on data. In addition, fewer than half of these executives are very satisfied with their ability to use finance and operational data for planning or analytics.
of finance leaders are very satisfied with their ability to make informed decisions based on data
Finance’s vantage point gives it a view of performance across the organization. Coupled with its analytical capabilities, this uniquely positions the finance team to identify, combine and analyze data from across organizational silos to enable better decision making.
When it comes to innovation, finance itself is well equipped to not just identify where investment should be allocated, but also to monitor progress, govern execution and compare performance across investments.
We spoke to two finance leaders to find out how they are using new technology and data to enhance decision making across the business.
AXA integrates finance and operations data to improve decision-making
Roland Moquet, CFO at AXA UK, explains why data has to be accessible — and how businesses can make data work for them.
With more than 100 million customers worldwide, AXA is one of the world’s largest insurers. Its customers expect propositions that are relevant to them and their evolving needs. Every interaction a customer has with AXA needs to be reliable, of high quality and timely. Data is core to achieving this.
“Consumers have become used to interacting with retailers online, whether that be enquiring about products and services, making a purchase or making a complaint, and they now expect this from their insurer,” says Moquet. “And these digital interactions only work if the finance and operations systems that support them are connected and plug into live data.”
Take the example of a vehicle breaking down. Whoever is processing the insurance claim — human or chatbot — needs instant access to the claimant’s policy and to data that helps them, for example, to send a mechanic to repair the vehicle.
Away from day-to-day claims processing, Moquet says that easy access to live finance and operations data helps senior management to make decisions such as changing prices, expanding into a new sector and launching a new product.
But making this type of data easily accessible is not easy. “Large insurers that have been around for some time use systems that were not designed for data extraction, which is a big issue,” says Moquet. “It can take a day to get the data you need, and by the time you get it you realize you need something different.”
How can organizations remedy this? “There’s no quick fix,” says Moquet. “The only way to make material improvements is to move core systems and data to the cloud, which makes data much more accessible.”
Even if a significant volume of data is in the cloud, Moquet says that businesses need to work hard to organize and structure it so it is clear where data lives and how to access it. That data also has to be clean, standardized and based on clear definitions. Strict data-entry governance and controls, combined with data processing tools, will help to achieve this.
Moquet also says that businesses need to define the requirements for data analysis, and that calls for close collaboration between operations and finance. “You need a good analytical framework, which means clearly defining and articulating what insight you need and what problem you are trying to solve with data,” he says. “Finance, operations and the wider business need to collectively define this before you start digging into data. That’s key to success, but is often overlooked.”
New technology enables finance to guide business strategy
Ashanika Perimal is Head of Finance & Business Control at multinational mining engineering company Sandvik, which has more than 37,000 employees and revenues in excess of US$9bn. Prior to that, she was Director & Senior Manager Finance at global transportation and e-commerce company FedEx, which generates $92bn in revenue and has hundreds of thousands of employees worldwide. She explains how new technology can unleash the finance function to support operations and guide growth and transformation strategies.
of finance leaders are prioritizing Cloud / SaaS-based core applications for investment in the next 18 months.
Large businesses can become disjointed. To help combat that, Perimal has led the implementation of multiple technologies within finance functions during her career, including financial planning, budgeting and forecasting tools, automated digital procure-to-pay systems, and travel and expenses claims platforms. When implemented, planning and forecasting tools can for the first time bring together previously disjointed systems such as those for stock planning, customer orders, financial transactions and logistics.
One important benefit of technologies such as these is that the finance team’s time is freed up for more interesting and valuable work. “These tools replace manual, Excel-based processes, which are slow and frustrating and involve bringing lots of data together,” says Perimal. “By using artificial intelligence, automation and robotics, we strip out all of the mundane and repetitive actions, which enables the finance team to use their real skill, which is critical thinking, analytics and questioning. The tools empower people to go to the next level.”
Liberated from process-driven tasks and equipped with powerful forecasting tools, finance can then help operations teams become more efficient. For example, armed with more accurate and timely finance and operational data, finance has better insight into the impact of poor stock turnaround and write-offs on cash flow and profitability, which enables it to initiate conversations with various operations teams to address the issue. In addition, new procure-to-pay platforms speed up purchasing decisions.
And Perimal believes that the ability to conduct scenario-planning will enable finance to guide strategy. “With the right data and technology, finance can start to run powerful scenario analyses that can inform key business decisions,” she says. “All of a sudden, we can work out the impact of raising prices by 5%, or the profitability of a new initiatives that requires 50 new employees. The number one question people leading businesses ask is ‘what if?’ — they always want to know what they would get out of a particular initiative. And scenario-planning provides this.”
But implementing new technology is not easy. One big challenge highlighted by Perimal is securing time with the IT team, which needs to make sure that any new technology works with legacy systems and that security protocols are in place. Apathy is another problem. “The invisible challenge that any leader should prepare for is human acceptance and use of a new system,” says Perimal.
“My strategy is to get the buy-in of the team members before I start implementation. So I engage them in how to resolve a particular problem and choosing the system that will help resolve it. New systems can also influence people’s psychology, because they may worry about it replacing them. So you need to reassure them that it won’t.”
These case studies demonstrate the advantage of investing in technology that brings finance and operations data together. Many businesses struggle to do this: in the KPMG survey, just 42% are very satisfied with their ability to share information between operations and finance.
Finance needs to work with their operations teams to define, together, which insights they want to get from the data. And when major new tools are introduced to the finance function, leaders will need to involve their teams from the very start to make sure they can make the most of them.
Read our main report (PDF 587KB) to find out how Operations and Finance can work together for mutual advantage and to the benefit of the business as a whole.
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