#BQs – Data is the new oil, so why are CFOs neglecting it?

Digital transformation changes the landscape rapidly.  Even though this megatrend is on virtually every organisation’s agenda, surprisingly few are progressing at speed, or being successful.

Research has shown that only half of executives think that they develop and implement strategies successfully (Wipro Digital 2017). The examples for failures are many.

What is the reason behind this outcome? It is a complex area, for sure, but one essential aspect is neglected; the importance of beginning at the right end.

A data-first approach

The industry, and particularly its vendors, are often focused on the wrong incentives, and the dominant focus on tools and systems is always counterproductive, as too many believe that the essence of transformation is yet another software solution.

Although the hype and promise of new smart ERP implementations never fail to impress, the implementation reliably fails to deliver on those promises, and ROI is far from uncertain as the scope is clipped while timelines and budgets are extended.

So pause before you jump and start with a hard look at your data. And no-one is better equipped to do this business-wide review than the CFO.

Fundamentally, digital transformation ROI requires a step change in business insight to make it worthwhile. New insight requires information to be digitalised and data-driven. And the practice of putting digitisation in place is data management.

For businesses, it means the art of collecting, processing and reporting on data and aligning these with processes and organisational goals. This may also mean changing processes altogether to meet new digital requirements or insight possibilities.

The unsung hero of data management

Many aspire to be leaders in this process, with new roles being created, such as the CIO and CDO who claim ownership.  But this might be a clue to why organisations fail.

After all, the core data of any organisation today is the same as it was centuries ago, with structured data being derived from its sales and purchases and system of record, aka its business transactions. In other words, data is derived from the domain of the CFO, our unsung hero in digital transformation.

And data processing, analysis and reporting have been on the desks of CFOs, treasurers and accountants for centuries. Not only is accounting one of the first professions in history, with some of the oldest written documents ever found originating from the Mesopotamian empire, but accountants have also been managing this structured data ever since.

Therefore, it is surprising that very few CFOs (and finance process owners) are not leading this digital transition. In fact, IFS Digital Transformation (2017) survey states that only 35% are in the digital driver seat.

Step #1: Assess your organisation’s transformative potential

  • Start where you stand, and choose a low-risk area to transform.
  • Establish your potential by defining the ratio between analogue and digital input data such as supplier invoices.
  • How many supplier invoices are e-invoices?
  • How many are paper or PDF invoices (keep in mind that PDF is not a truly digitised format)?
  • Make a plan to incentivise your suppliers to adopt digital formats. Only digital information is possible to process efficiently, whatever your objectives are.
  • Note, this is not a customer-facing process, therefore low risk and a great starting point.

 

Stay tuned for learning #2: “Why do we need to focus on data quality? An E-invoicing example

Co-authored by Christopher Argent, Generation CFO and Per Holmlund, Qvalia, a Stockholm-based fintech company that improves and automates financial processes. Learn more about digital transformation in practice for CFOs in this 30-minute webinar.

More big questions here – #BQs

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