How Finance Can Become An Analytics Powerhouse
Anders Liu-Lindberg
Leading advisor to senior Finance and FP&A leaders on creating impact through business partnering | Interim | VP Finance | Business Finance
The Finance function is undergoing a rapid change like everything else in business. In order to maintain its relevance, not only as a stand-alone function but also as a part of the business it’s time for Finance to power up its analytical capabilities and take over the analysis from the frontline.
I have in previous articles described quite a bit about current trends in Finance not least when writing about the finance transformation nine-box. Those trends are supported by several surveys but for more insight I also encourage you to read “Being The Best: Inside the intelligent finance function” published by KPMG in 2013. Last week we discussed the future of the accounting profession in “Why Accountants Are An Endangered Species” which turned out to be a hot topic and quickly developed quite a heated discussion. This week we will discuss the middle layer of the nine-box and look at analytics.
First, we must have one set of numbers
The classic issue for Finance has always been whether or not the numbers that came out of their analysis could be trusted. There is not always just one solution, but flat out making mistakes makes it quite embarrassing to present something to business leaders. The reason for the many mistakes has often been that the analysis has been quite manual rather than an automatic output from a system. Whenever something is manual and requires human intervention it increases the error ratio. Therefore, Finance has invested heavily over the past years in upgrading systems and automating data output in order to eliminate manual intervention. At the same time, many systems have been consolidated into one ERP system leading to only one source for the numbers. Finance can, therefore, in general, claim that they now have one set of numbers which are mostly free of errors when presenting to the business.
How Finance should leverage the newly gained confidence
Finance now needs to leverage its newly gained confidence to start consolidating all analytics in the company within the function. The case for this change is fairly clear as it can be free up resources in the frontline to work more with the customers than producing internal analytics. Basically, Finance should create packages for sales people to meet with their customers giving them as much knowledge as needed to close the best deal for the company. There is no need to leave anything to the sales person’s imagination as they have full information about the customer and the potential outcomes of any deal they make. How good a deal they will make of course still depends on the individual sales person, however (s)he can’t claim afterward that they were unaware of the consequences of their choices. Similarly, all management information whether it’s classic financials, operational information or sales statistics should be produced in Finance’s new analytical powerhouse. This will emphasize the “one set of numbers” approach as well as minimize confusion around how a company is actually doing.
How to avoid the politics when Finance gets more power?
In general I will spend much more time discussing this point next week when we look more into the last part of the nine-box regarding business partnering, however, here it should be recognized that making such a shift is not without challenges. The frontline could end up feeling concerned about how their performance is portrayed to management when they are no longer in control of the analysis of the presentation of results themselves. However, this is where the good finance business partner comes into play. (S)he understands that Finance is a support function and that its main purpose is to work well together with the frontline, understand their needs as well help them deliver results. Finance can never be successful if the business is not successful!
Let me know what you think about Finance as the analytical powerhouse of the business and what it takes to get there? As always leave a comment if you want to add to the discussion or perhaps disagree with my point of view. You can also just like or share the article and I would certainly appreciate it!
For more information about finance transformation and business partnering, you should check out some of my previous articles.
Finance Transformation Should Be All About… People
Why We Need Business Partnering Transformation
The Skills Of A Finance Business Partner
How To Speak Finance In A Non-Finance World
3 Reasons Your Budget Is Already Outdated
The “CAO” And The Analytics Analyst
How Finance Can Help When Business Is Bad
Anders Liu-Lindberg is the Regional Finance Business Partner for Maersk Line North Europe and is working with the transformation of Finance and business on a daily basis. Anders has participated in several transformation processes amongst others helping Maersk Drilling to go Beyond Budgeting and transformed a finance team from Bean-counters to Business Partners. He would love the chance to collaborate with you on your own transformation processes to help you stay out of disruption. If you are looking for more advice on how to get the most of LinkedIn Anders also has a few tips to share as well as if you want help in your job search. Don’t be shy! Let’s get in touch and start helping each other.
Quant Developer@Shell|Certificate in Quantitative Finance(CQF)
6 年Can you give a brief insight on how the future will be on Financial Engineering?
Sr. Contabilidad NIIF (IFRS) y USGAAP , Finanzas, Gestión Riesgos administración de Proyectos y control Interno
6 年Excellent article; Thank you for contributing to training and financial education, and definitely finance must intervene directly in achieving the objectives of the organization, be the implosor, collaborate directly, to increase sales or services, to increase their performance, to consolidate and grow in the market, the finance man must act comprehensively beyond the interpretation of the numbers, must act and make known as you describe the best options for the operation of the company, should know how to analyze the external context surrounds the company, its technology, scientific advances, policies, government management, foreign trade and market behavior, which allows to evaluate and identify risks or events and look for opportunities that arise to obtain competitive advantages over others.
Investments at Roots Ventures | Venture Capital | Corporate Finance
7 年Tanushree Bagrodia Deenika G.
Advisory- and consulting services
9 年Anders, thanks for sharing your views. I probably agree with you in principal (if the above purely relates to internal financial data), and this is already happening in many organisations today with the deployment of data warehouses and various analytic/reporting applications. But for analytics to truly add value to an organisation you also need context, non-financial data as well as various external data – and this is where it starts to get complicated since you then need to add data to your data warehouse that you do not govern yourself. If an organisation aims to move towards a data-driven decision culture it needs to make a truly cross-functional effort/initiative were Finance as a function must partner with other functions (Sales, Marketing, Business Development, IT, etc.) on this journey. And this is where Finance as a function could gradually start to move towards a Business Partner status – a status that can never be given but only earned based on trust and respect.
General Counsel & Chief Compliance Officer at Chicago Atlantic Group
9 年Thanks for sharing!