Linking W

hile finance plays a role in corporate

Business
strategy, other business units are find-
ing they have as much, if not more,
influence on key business decisions. What is
spurring this shift from finance to operations is

Intelligence
the relatively easy access by operational business
units to business intelligence (BI): tools purpose-
built to serve the business unit.
Data is everywhere, yet much of it is not inte-

to Strategy
grated and a remarkable few are using data to
their benefit, particularly in finance. In a recent
Gartner Inc. study, "The CFOs' Top Imperatives:
Results of the 2014 Technology Issues for Finan-
cial Executives Survey," and a subsequent fol-
low-up survey of financial executives, an
interesting theme has emerged: Finance exec-

Helps CFOs Stag Relevant

utives are looking for tools to help them obtain
accurate data they can use to influence corpo-
rate strategy.

The Role of "Business Intelligence"

Traditional business intelligence is a rapidly evolv-
If financial executives ing industry with many players vying for atten-
want to make strategic tion. Traditional analytics has given way to big
data and the need to gather, store, access, analyze
business decisions that and optimize it. Companies want to know as
move the company much as possible about their customers and
forward, they must prospects so any BI they can aggregate to help
them understand customer behavior patterns,
have useful information market segmentation and other predictive analyt-
that goes beyond ics is considered a Holy Grail.
historical financial data. Who is using this data, though, is where the
breakdown seems to be occurring. Most BI tools
function within business units. Even when the
tools are in place, finance relies on conventional
data found on balance sheets and static spread-
sheets (often created by the business units), all
By Jason Morio of which presents a historical view of what has
already happened and possibly why it happened.
Finance takes a backseat to operations when
it comes to influencing business decisions. For
finance to claim its rightful place, there needs
to be a shift in perspective for many finance de-
partments, from backwards thinking to forward
thinking, and an investment in tools that sup-
port the business. This will require a shift from
the traditional understanding of "business in-

FinancialExecutive • FALL 2014

 BUSINESS INTELLIGENCE

telligence" to a re-contextualized concept that finance should ways translate into action. According to the Gartner research,
embrace. Using the right technology, real-time "business Intel- for the past five years, CFOs claim the majority of their IT spend
ligence" can be accessible and leveraged by finance to earn its is to replace aging systems with effective business intelligence,
seat at the decision-making table. analytics and performance management tools to help them ac-
tually deliver useful information.
The Proof is in the Numbers The FERF survey report offers best
> Figure 1 < practices to help the 25 percent of fi-
According to Gartner's CFO
What information can finance provide?
study, it appears many finance nance organizations who are less con-
organizations are getting the fident of their ability to provide
message. Those who are com- 2014 2013 consistently useful information. By
mitted to playing a role in the Performance measurement/scorecard 52% 54% simply improving processes, these or-
direction of their companies are Financial reporting and consolidation 50% 45°o
ganizations can quickly catch up with
embracing the concept of BI and those already implementing a compre-
Budgeting, planning, and forecasting 48% 43%
using tools including Strategic hensive technology strategy.
Customer and product profitability 40% 300 0
Corporate Performance Man-
Data warehouse 30% 35%
agement (Strategic CPM) meas- > How would you best describe the infor-
urement tools to provide Statistical analysis 21° 160 0 mation that finance is capable of provid-
dashboards and scenario build- Predictive modeling 18% 18% ing? (Figure 2)
ing with real-time data. There Big Data 17% 22% According to Gartner's model for
are plenty of organizations, Other 7% 0% Business Intelligence Maturity, there
however, who have yet to step None 5% 00 o
are four levels in which a finance or-
out of the days of spreadsheets ganization can be classified in terms of
Gartner 2014
and balance sheets. levels of information of increasing
Planview, with the help of the value to business strategy. On an in-
Financial Executive Research creasing scale from "Information" to
Foundation (FERF), set out to > Figure 2 < "Optimization":
learn what type of information What information can finance provide? • Descriptive Analytics: What hap-
finance should provide the busi- pened? (Inform)
ness, why some still struggle, LEVEL OF PROCESS MATURITY
• Diagnostic Analytics: Why did it
and who they should collabo- RESPONSE TO
happen? (Explore)
QUESTION 1 :
rate with to get over the hump. Inform DO YOU THINK
• Predictive Analytics: What will hap-
45%
YOUR FINANCE
The survey asked finance exec- ORGANIZATION
pen? (Predict)
CONSISTENTLY
utives several questions around Explore
33% PROVIDES USEFUL
• Prescriptive Analytics: How can we
INFORMATION?
these issues to compare the dif- make it happen? (Optimize)
Predict • Yes
ferences between finance or- ▪ No
When the FERF study asked partici-
ganizations with high and low pants to rank their level of maturity,
Optimize All responses
maturity processes. nearly half of those surveyed believe

.41 FED and Planview 2014 Strategy and Finance Survey
When viewed in tandem, finance consistently provides useful
these findings reveal CFOs can info' illation and categorized their sys-

and should control IT investments that directly affect their tems as informativ e or explorative. The interesting point to
ability to influence critical strategic business decisions. note is these executives still believe useful financial data is the
historical analytics that only shows what has already hap-
> Do you think your finance organization consistently provides use- pened (and possibly why). This means the 47 percent who be-
ful information? (Figure 1) lieve this are unaware of the power of having forward-looking
Of the 286 responses, 75 percent believe they have the ability analytics, namely predictive (what will happen) and prescrip-
to consistently provide useful information for making critical tive (how can we make it happen) tools.
business decisions. Having the "ability," however, does not al- How much more effective could these finance executives be

FALL 2014 • FinancialExecutive

 > Figure 3 <
if they were armed with this kind of What are the barriers to better information? operate in a vacuum. It has inter-
data? What kinds of strategic deci- dependencies critical to achieving
sions could they make for the com- high process maturity and ulti-
pany if they utilized data proactively Yes No Gap mate operational success. Finance
instead of reactively? These compa- Not enough time 24% 31% 7% has an opportunity to influence IT
nies clearly represent the less ma- Lack of enabling tech 18% 38% 19°b decisions, which in turn can pro-
ture organizations who say they Operating data not accessible 24% 31% 6% vide the entire organization with
want business intelligence, analytics Staff lacks skills 15% 31% 16% quality purpose-built BI and ana-
and performance management, yet Concerns over timeliness of info 15% 15% 0% lytics and Strategic CPM tools to
have not taken the steps to ensure Concerns over quality of info 22% 170/6 -6% support effective business deci-
their financial systems and applica- Other 7% 14% 7% sions. For those finance executives
tions support the strategic objec- - FERF and Planview 2014 Strategy and trounce Survey
seeking a larger leadership role,
tives of their organizations. this might be the foot in the door
to providing real business value.
> What is the greatest barrier that pre-
vents finance from providing better in- > Which function within your organi-
formation? (Figure 3) > Figure 4 < zation has the most influence on cor-
While many CFOs may realize they What functions does finance work with? porate strategy? (Figure 5)
need to provide better information For respondents who believe fi-
to key decision makers, only 28 per- WITH WHAT FUNCTIONS DO YOU COLLABORATE WITH? (SELECT ALL THAT APPLY) nance provides valuable informa-

cent feel they are able to provide the 70%/150 RESPONSE TO tion to the organization, finance
IT QUESTION 1:
more valuable data available from 54% / 39
DO YOU THINK
and operations are viewed nearly
Prescriptive Analytics. Respondents Operations

YOUR FINANCE
67%/ 143
ORGANIZATION
equally as having the most influ-
63% / 45
who did not feel confident finance CONSISTENTLY ence on corporate strategy. The
PROVIDES USEFUL
provides useful information (ques- Marketing 29% / 21
53%/ 113
INFORMATION? larger dichotomy was found

tion 1) cited "lack of technology," fol- Product or 38%/131
U "Yes of responses among the respondents who be-
Service Delivery .111111113112% / 23 ▪ rr of responses
lowed closely by "operating data not lieve finance is not able to provide
accessible" as being their biggest ,--,,. FERF and Planview 2014 Strategy and Finance Survey valuable information, with an over-
hurdles. Whereas many CFOs rou- whelming majority identifying op-
tinely approve IT spend for other de- erations as having the greatest
partments, it would benefit these CFOs to invest in technology influence over corporate strategy.
tools that would make real-time data more accessible and use- It appears more mature finance organizations with at least
able within finance. some "business intelligence" tools in place to provide quality
Interestingly, "concerns over the quality of the information" data to the company have much greater influence on corporate
seemed to be more of a challenge for those who were confident strategy than other business functions. Those with less confi-
in the usefulness of their information than those who were not. dence and lower process maturity depend on operations to
This discrepancy suggests a correlation to relative business in- make critical business decisions. These finance organizations
telligence maturity of the respondents. Many of the "confident" likely will remain relegated to churning out traditional descrip-
describe their information as predict or optimize, where quality tive and diagnostic analytics instead of the more useful predic-
may be more difficult to achieve, whereas most of the "not con- tive and prescriptive analytics that are more valuable to
fidents" only attempt to inform or explore. business strategy.
The Gartner research provides valuable insight into modern
Which functions within your organization does finance regularly col- CFOs' influence over IT investments. Coupled with the FERF
laborate with? (Figure 4) findings, it is clear most organizations desire to provide useful
At 66 percent, both IT and operations ranked as the top func- information to support strategic business decisions and are at
tions saying respondents finance works them with to develop least open to finding the right tool(s) to improve their ability to
strategic intelligence. This proves again that finance does not do so. What differentiates those companies further along in

Q FinancialExecutive • FALL 2014

BUSINESS INTELLIGENCE

> Figure 5 <

this process than others is how Which function influences corporate strategy? more integral in contributing to key busi-
they define "useful" information. ness decisions and strategy, they may be
More mature organizations re- willing to allocate budget to their own
WHICH FUNCTION HAS THE MOST INFLUENCE ON CORPORATE STRATEGY?
alize the benefits of providing 2 8% department to procure such tools.
30% RESPONSE TO
predictive and prescriptive ana- Finance 2
2% QUESTION 8: In either case, Strategic CPM tools
lytics that enable critical busi- 2% DO YOU THINK
3% YOUR FINANCE continue to be identified as the most de-
ness decisions to be made with II!
IT ORGANIZATION
CONSISTENTLY sired technology by finance, likely be-
confidence, using forward-look- Marketing 11111114
21%
20% PROVIDES USEFUL
INFORMATION? cause they can address so many BI
33% ■ Yes
ing metrics that put the com- Operations 31% challenges. For any finance organization
38% ■ No
pany on a proactive course. Tools 17%
seeking to influence corporate strategy,
1596' ■ All responses
that improve accessibility and Product or Service Delivery
22% persuading IT to prioritize investment in
quality of this data are of the ut- cij FERF and Planview 2014 Strategy and Finance Surveyl these tools is the first step. Gartner and
most importance to these organ- FERF offer best practices any organiza-
izations and working with IT to tion can use to climb the process matu-
procure such investments is a priority. adequate, investing in new tools and rity ladder.
For less mature organizations who be- technology may reveal the more valu-
lieve the descriptive and diagnostic ana- able analytics they have been missing. JASON MORIO is a solution manager at
lytics they provide to the company are Once they discover their role can be Planview.

CONGRATULATIONS

GAYLEN LARSON 62 NORTHERN ILLINOIS UNIVERSITY

College of Business
The Northern Illinois University College of Business congratulates Where the Classroom Meets the Business World

Gaylen Larson ('62 Accountancy) on his induction into the Financial

Executives International Hall of Fame. cob.niu.edu
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