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Finance Meeting 2018: CFOs and Analytics

Finance Meeting 2018

In the new business environment, CFOs are urged to take on a more proactive and strategic role in their organizations to drive financial transformation and ensure bottom-line success and business sustainability

In today’s ever-changing global economy, information is power, and even more so considering the need for greater cost efficiency and control in the midst of constant organizational transformation and crisis management scenarios while continuing to grow revenue and profit.

As the pace of business relentlessly increases in the wake of the digital revolution, this has put the traditional role of the CFO under intense scrutiny as they are forced to ride the wave of new technology in order to leverage increasingly complex situations without losing sight of their company’s bottom line. While traditional business intelligence is a reality at most companies, there is a growing need to embrace digital technologies based on advanced and innovative technologies to build intelligent data analysis systems.

With the finance function in the spotlight, in recent years CFOs have been urged to step beyond spreadsheets and become digital pioneers in order to meet the increasing expectations placed on their role. Until recently, organizations have relied heavily on KPIs displayed on dashboards and the use of balanced scorecards to measure how effectively they were achieving key business objectives.

However, the new business reality requires CFOs and their finance teams to take on a more proactive and strategic role, using analytical tools to gain insight into key data and capitalizing on that insight for the decision-making process by building predictive models that look beyond traditional financial reporting and respond faster to the increasingly complex market reality marked by rapid change and higher volatility on a global scale.

Everis Observatory

In the digital era, Value Models are being created and destroyed on an unprecedented scale. Data drawn from the everis Observatory, the largest startup repository in the world (over 2 million) reveals that:

  • There are an increasing number of companies creating and investing in disruption.
  • The number of “unicorns” (companies valued at more $1bn backed by venture capital) has tripled since 2014, despite the slowdown in economic growth.
  • The volume of investment has also tripled.
  • The average time to reach that volume of capitalization has dropped to just 2 years from the 20 years required by traditional businesses.

At everis we know that transforming a metrics-driven company into a data-driven company requires an essentially data-centric approach based on exponential rather than linear growth, a disruptive concept that challenges traditional empirical approaches. But data-driven business models require a new mindset altogether, one that is not afraid to set aside sacred cows and advocate a data-driven culture. This is where CFOs are expected to step into an increasingly complex role that involves copiloting the business alongside CEOs and other senior executives, assisting them by providing key information to anticipate potential problems and make better, insight-driven business decisions aimed at gaining market share, increasing profitability and creating value for shareholders.

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Finance Meeting 2018

The need to rise to these new challenges was the underlying theme at the Finance Meeting 2018, a benchmark annual event that brings together finance and management executives from leading private companies and public organizations with the aim of transforming the financial management of their departments through innovative solutions based on new technologies such as Big Data, Internet of Things, Analytics and Robotics.

This third edition, which turned the iconic Santiago Bernabéu Stadium in Madrid into an elite venue on October 17th, 2018, brought together representatives from different sectors at conferences and round tables, where they addressed current topics such as digital transformation, the changing role of finance, data-driven decision-making and the need for new business models in four different industries that are radically facing the impact of the digital revolution:

  • Retail. New online marketing models versus traditional models and omnichannel retailing.
  • Mobility Services. Ecosystem and the non-owner smart/connected car model. Impact on relationships with manufacturers and the value chain.
  • Digitalization. Competition from new ventures born in the digital economy.
  • Manufacturing. Industry 4.0, IoT, the data revolution and digitalization of factories.

Ruth Alcázar, Industry Manager at everis, moderated one such round table on the application of Advanced Analytics to the finance function: “Most CFOs with whom we work convey the message that understanding how the digital revolution impacts their role within the organization and using this knowledge to their advantage is critical.” But what does this mean? It means looking beyond cost efficiency and tracking performance indicators to “make data-driven decisions using solutions that link operations and business plans with the income statement”.

To this end, CFOs need efficient budgeting and forecasting tools that will input essential data into their companies’ strategic business planning processes. In this regard, Advanced Analytics solutions help companies leverage business-critical information from overwhelming collections of datasets to drive operational efficiency and boost performance.

Transforming talent in finance teams

In this disruptive scenario, CFOs face growing pressure to effectively align investment in revolutionary technologies with the business strategy and core finance function. The ability to extract valuable insight from datasets together with data-driven business models will help them determine how changes are likely to affect the organization and its capacity to continue to meet customer expectations. Therefore, beyond providing vital financial leadership, CFOs are also expected to deploy the necessary resources to structure and implement timely transformation plans across organizations that will add value and ultimately grow the business.

This evidences the urgent need to establish an analytics agenda that envisages installing tools and applications and making data centric to the business strategy, processes and corporate culture. The new business reality requires making data-driven business-critical decisions to thrive and gain competitive edge in challenging scenarios. Only by overcoming data resistance can organizations aspire to successfully harness and unlock the full potential of their data. In the new business environment, the role of the data-driven CFO will be essential to drive financial transformation and ensure bottom-line success.

In order to succeed in this endeavor, this new mindset must be embraced by all levels of the organization in a collaborative, data-literate environment made up of duly trained analytical professionals and ensuring that common data management standards, methods and tools are adopted across the board. Beyond deploying analytical capabilities, a business-centric finance function is also required, evolving its traditional role to one of business partnering. But in addition to being strategic planners and technology evangelists, CFOs must also focus on building their leadership skills to spearhead change while motivating their teams to excel. This requires a new skill set based mainly on communication, emotional intelligence and flexibility.

Not surprisingly, the complexity of transforming talent in finance teams is perceived as a major challenge. In this regard, there is a prevailing belief among companies undertaking digital transformation that the “Millennials” profile is the best qualified, and yet their presence and relevance in finance teams is still very limited. That is, digital natives who have an innate ability to identify opportunities and design strategies for capturing, discriminating and analyzing market data and combining them with the company’s information and strategy.

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