Reports and Analytics: How Data-Driven Solutions Can Help Your Bottom-line
What does it take to succeed as a CFO in today's fast-paced business environment? The answer lies in the effectiveness of the decisions you make for the organization.
To do this, it’s crucial to have access to accurate and up-to-date data. In this blog, we will talk about the common challenges for data driven decisions and how data helps in decision making.
One of the roles of the modern CFO is to be a catalyst for change among the members of the C-suite by making data-driven decisions. It is also the CFO’s responsibility to bring together seemingly disparate pieces of information from various units such as the IT department, sales, operations and utilize this information to optimize business performance.
What are the Common Challenges for Data-Driven Decision-Making?
With the ubiquity of Internet of Things (IoT), machine learning, cloud computing and other technologies dominating the tech and finance world, today’s decision makers are now faced with increasing pressure and challenges to effectively glean useful information from the mountains of data generated by their organization. These challenges include:
Poor Quality DataOne of the biggest challenges in data-driven decision-making is dealing with poor quality data. This can include incomplete data, inaccurate data, outdated data or data that is simply irrelevant to the decision being made. Poor quality data can lead to incorrect or incomplete conclusions, which can have serious consequences for the organization.
Lack of Data LiteracyAnother challenge is the lack of data literacy among decision-makers and other employees. Understanding how to analyze and interpret data can be difficult, and it requires a certain level of knowledge and expertise. Without this knowledge, decision makers may struggle to make sense of the data and may make decisions based on incomplete or inaccurate information.
Read: Building Data Literacy in the Workplace
Identifying Actionable DataEven if the data is of good quality and decision makers have the necessary skills to analyze it, identifying actionable insights can be a challenge. It can be difficult to separate the signal from the noise and identify the data points that are most relevant to the decision being made.
To overcome these challenges, organizations must invest in the necessary tools and technologies. They should also foster a culture of data-driven decision-making and encourage collaboration and communication between departments to ensure that everyone is working towards the same goals.
How Do We Leverage Data Driven Decision?
Data analysis and decision making have become indispensable in the CFO’s toolkit. Nevertheless, not all CFOs are equipped to break down and analyze the available data and convert it into useful insights that can inform their company’s growth strategy.
The first step to making an organization’s data useful is to collate the data and transform it into a format that is more usable. If information is stored across different systems, it’s important to find a way to integrate these to get a holistic view of your business performance. Some platforms provide consolidation support to achieve this.
Investing in a Right System
The next step is to formulate actionable insights, for which you would need a suite of tools or a sophisticated financial system that is able to interpret huge data sets. Investing in such a system would allow your CFO to get real-time access to business numbers, allowing them to respond to and address opportunities to increase efficiencies and reduce costs in a timely manner.
As a result, data analytics can directly impact your bottom-line in a number of ways, such as enhancing vendor/ supply management, optimizing customer profitability, improving the flow of products and optimizing asset productivity, among others.
Data analytics enable CFOs to get a deeper understanding of the metrics that drive their business. As they get a better handle of it, they get more opportunities to improve business outcomes.
Read: The Future of Business: How data analytics is revolutionizing the finance industry?
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This post was first published 27 August 2020 and edited 26 May 2023. Edited by: Angelica Garcia