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6-21-2017 Adaptive Insights

CFO Indicator Q1 2016 Report

Big Data, Better Vision: The Agile CFO

As CFOs take on a broader, strategic role in the organization, they are faced with both challenges and opportunities in the form of big data. Big data is impacting every aspect of business today, with the sheer volume, sources, and veracity demands of data continuing to increase. But it is big data’s potential that is charting the course for strategic CFOs. As they respond in real time to macroeconomic, industry, and competitive issues, strategic CFOs have the opportunity to harness the power of data and analytics, developing a level of agility not previously possible.

How are CFOs using data and analytics to drive corporate performance? How are they responding in a turbulent economy? And what technologies will they use to manage their business? 

In a Q1 2016 survey of 377 global CFOs, we found that CFOs are concerned about the economy, yet confident in their predictions.

Why?

Big data and analytics, combined with scenario planning, are driving their overall confidence and guiding performance. Whether it is the changing regulatory environment or uncertain economy, CFOs are remaining agile through multiple scenario planning, enabling their organizations to rapidly respond and change course, as necessary. And they are embracing technology to model these potential changes, with an eye toward cloud-based technologies. 

Is confidence on the rise?

CFOs should feel confident in their ability to accurately forecast sales, as nearly 50% believe their forecasts were in the range of ±2% for the last quarter of 2015. And, despite the recent market turbulence, the financial outlook for the first two quarters of 2016 was very or completely stable for 41% of CFOs responding, with only 14% reporting little or no stability in their forecasts.

CFOs are responding to growing uncertainty.

While only 23% of CFOs expect the market contraction to worsen, all CFOs were asked how they could provide the most strategic value during such a contraction. Nearly half (48%) said that it was by planning for multiple scenarios in response to growing uncertainty. Turning real-time data into insight to inform actions (30%) was the next most important source of strategic value. Moving far beyond numbers management, the focus on multiple planning scenarios highlights the CFO’s recognition of an uncertain climate and the speed of change under which today’s corporate environment operates. Uncertainty and multiple scenarios create a desire for quantification—which moves strategy further into the CFO’s court. 

But CFOs view their value to the organization differently than their CEOs.

Sixty-five percent of CFOs believe having technical and analytical skills is the most beneficial attribute to their performance. This is in contrast to the views of the CEO, as noted in the 2015 KPMG Global CEO Survey, ‘The view from the top,’ where global CEOs were asked about the most important business attribute a CFO can possess. CEOs ranked technical and analytical skills the lowest (8%), and instead ranked global experience (48%) the highest.

This suggests that CFOs have a long way to go to meet CEO expectations. For CEOs, the capability that finance executives value most highly in themselves is simply the price of entry to the CFO role. Where they are aligned is experience with transformation and innovation, with both CFOs (59%) and CEOs (34%) ranking it the second most important attribute, indicating they are united in their concern about the pace of change that CFOs must drive. 

How will they drive this change?

CFOs (43%) believe big data and analytics will have the single biggest effect on their future role. Analytics are being used to drive the scenario planning process. The challenge for CFOs is combining financial data with real-time transactional data and real-time operational data to see the impact of investments. This combination does a better job predicting where the business is going, using leading indicators instead of lagging KPIs. 

When looking for ways to support strategic finance activities, the new technologies with the most promise are dashboards and analytics (identified by 56% of CFOs), underscoring the CFO’s role in developing, reporting, and sharing business-critical information across the organization.

56% of CFOs Will
Invest in Dashboards
& Analytics Technologies

Where will these new technologies reside?

Increasingly, the cloud, according to CFOs. Validating the shift to a cloud-based approach across all aspects of the organization, CFOs estimate that 33% of their IT infrastructure is software as a service (SaaS) today, yet forecast this to grow to 60% of their infrastructure in four years. Why? When asked for the biggest advantages of using cloud-based, or SaaS, technologies solutions for financial planning, CFOs cited increased collaboration (24%), less reliance on the IT department (21%), and significant cost savings (17%).

Our study looks at how CFOs are using big data and analytics, where they see their value in the organization, and how they are planning for the future.

Download the report to learn more.

 

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