Across many industries, both business planning and key decision-making are increasingly informed by big data. As pressure mounts to match business operations to the record pace of current, aggressive market innovation, more organizations are looking to base decisions on hard numbers in order to mitigate risk and raise return. But faulty interpretation of data invites error in deriving and applying insights. These new risks have created opportunities for the CFO to collaborate with both other members of the C-suite and human resources to usher in new ways of working and to obtain a competitive advantage in their markets.
One such risk derives from big data failures from information overload and resulting delays in decision making. The successful strategic use of big data requires two steps: deriving relevant insights and then implementing them to create informed strategies. Both of these steps have spawned problems within organizations today. According to a recent report, “Joining the Dots: Decision Making for a New Era,” by the American Institute of CPAs (AICPA) and the Chartered Institute of Management Accountants (CIMA), 32% of 300 C-level executives at large organizations from 16 countries around the world C-Suite said big data has made things worse, not better, for decision making.
Further, large companies are finding their decision-making structures are working against them. Common vertical hierarchies undermine the ability for a company to use existing skillsets, collaborate effectively, and execute initiatives swiftly, especially in response to the “information overload” that big data brings. In fact, 70% of those surveyed said at least one strategic initiative failed in the last three years due to delays in strategic decision making.
With these new findings shedding light on common big data struggles, it’s critical that CFOs identify new ways of working with it. Finance is best situated to do so because of its unique position of understanding the whole, empowering the corporation’s existing information technology team, and collaborating with both HR and other members of the C-suite. Finance chiefs for companies interested in besting the competition in terms of the use of big data can overcome the roadblocks in two steps.
Step One: Mobilizing the Finance Function
The first action CFOs can take is spurring their companies ’ big data successes is vetting their finance teams’ capabilities. It’s essential that this be a discussion, rather than a performance observation, as the team’s abilities can differ greatly from what they’re tasked with executing day to day. Analyzing data and turning the most relevant pieces into strong business insights requires new and untraditional competencies, including macroeconomic analysis, influencing organizational outcomes, negotiation and decision making, collaboration and partnering, and business relations.
If the current finance function does not have these capabilities, you should refer to a competency framework to help identify what skills and competencies are missing from your team. After all, investing in professional development is far more economical than looking to attract new, unproven talent, and no one within the organization has a better understanding of how to analyze numbers and apply them in a business context than the finance function.
Next, work with HR to implement training and professional development opportunities. This will evolve your finance team’s business skills, preparing them to speak in business contexts and contribute to strategic planning, thus helping to avoid scenario in which the organization misinterprets data.
Step Two: Fostering a Culture of Collaboration
CFOs also need to become a catalyst for decision making structures that promote cross- team collaboration to enable their companies to achieve success from big data initiatives. This helps the business to benefit from your finance team’s new competencies. Bureaucratic processes are the common culprits for an organization unable to operate swiftly and efficiently, and you have the ability to partner with the CEO to break down these barriers, championing finance’s ability to provide solutions.
To do so, it’s important to instill “new age principles” across the organization. These include trust, collaboration and transparency. Greater trust among leaders allows exchange of information and discussion of current team challenges, inviting new ways of problem solving and thinking. By ensuring that managers of other functions are aware of meetings and offering them a seat at the business table when decisions are being made, a stronger culture of collaboration and transparency can be cultivated, helping to shine a brighter light on problems in order to develop true solutions.
With a third of organizations reporting that an initiative has failed from faulty use of big data, it’s time to take a look at the ways to set up businesses for success. The most effective organizations will lead by identifying existing talent, developing new competencies, and promoting a culture of collaboration and transparency. In doing so, strategic decision making can keep up with today’s fast pace of innovation and competition.
Ashok Noah is vice president of Chartered Global Management Accountant (CGMA) external relations at the American Institute of CPAs (AICPA).