Being surrounded by information is an inescapable reality for today’s business leaders, especially those in Finance departments. An astounding 2.5 quintillion bytes of data are created each day, which is enough to fill 10 million blu-ray discs. While CFOs have been working with numbers for decades, the current data revolution has changed the game by turning Finance leaders from reactive company auditors into proactive strategic decision makers. Specifically, here’s how big data impacts the CFO.
Potential Benefits are Staggering
There’s no denying the appeal of big data in the Finance sector when countless news reports, industry leaders, and competitors tout the seemingly-endless benefits it brings. Big data can create new business opportunities, spot previously-hidden inefficiencies, provide better internal controls, grant a better understanding of customers and revenue fluctuation, allow for quick querying to a large database, deliver better sales targeting and personalization that increases income, and the list goes on.
Most importantly, big data can provide a foundation for better financial decisions that are backed by hard facts. It is no longer a guessing game to determine if a previous large investment paid off or not. The right algorithm and data analysis can pinpoint the less-obvious outlying results that would have otherwise been hard to connect to the initial decision. By mining historical records and using predictive modeling, big data can reduce costs and better manage risk by more accurately forecasting the future results of present decisions.
The Challenge of Organization
With so much information in existence, and given the fact it is doubling every 12 months, there is simply too much data coming into a business from every direction. If left in a jumbled pile of servers, it can be impossible to discern which information is vital to CFOs and which is completely irrelevant. In order to reap the full benefits of powerful analysis, data must first be organized and easily identifiable. This can be a difficult and time-consuming task, which is why data silos are a top CFO challenge in 2017.
Organizing big data requires the buy-in and support of the IT department. It may be a challenge to work through the initial mountain of data, but once a solid plan and system are set in place, then additional data coming in after that point will be drastically easier to organize. Raw information cannot be connected to a strategic decision and a subsequent positive business outcome if it is disorderly.
In order to thrive and compete in the modern age, a CFO must fully embrace digitalization. Partnering closely with the IT department is a good start in getting organized, but going further is necessary to realize the full efficiencies and impact of big data analytics. New tech tools, software applications, modified infrastructure, and intricately programmed algorithms will likely be needed.
The overall goal is to interpret how data affects the bottom line and base future business decisions on this information. While some of these insights can be gleaned from a CFO reviewing raw data, technology holds the power to produce drastically more powerful reports. With so many factors affecting financials, the technology appropriately tailored to a business can connect the dots between peripheral data and the balance sheet and income statement.
But what programs will work best? And is someone currently on the IT team able to turn data into analytics? Investing in a new hire or outside consultant is the fastest way to get up to speed and on a level playing field with the competition. A CFO must foster a close relationship with the CIO in order to determine how to move forward and best achieve an organization’s big data goals.
The gift that big data can bring also carries with it a curse in the form of constant threats to cybersecurity. With 638 million ransomware attacks alone in 2016, consumers and employees are more concerned than ever about the privacy of their personal and financial information. Once big data is put to use producing easy-to-read reports and insights, then such information becomes even more valuable to hackers.
A CFO does not have the option to ignore cybersecurity and must understand the risks and vulnerabilities in their organization’s computer infrastructure or network and how they can be alleviated. If the IT department currently lacks a security expert with the breadth of knowledge necessary to secure big data, then one must be hired. It’s already hard to find great Finance and Accounting talent, but with a 0% unemployment rate in cybersecurity it can be just as difficult to find the necessary security specialist.
How Big Data Impacts the CFO
As long as the appropriate effort is put in, tremendous benefits await a CFO that delves into big data. Investing time and resources can pay big dividends, granting concrete direction for decision-making that leads to operational improvements across many departments. And when it’s too difficult to find the right talent to help reach these goals, the right staffing partner is just one call away.
For more market insight affecting CFOs and for detailed industry salary figures, download our 2017 Finance & Accounting Salary Guide today.
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