IBM study shows CFOs are the key to integrating enterprise-wide data solutions
Unlocking the value in an organization's data has moved to the forefront as businesses look to keep ahead of customer expectations and edge out the competition in obtaining new ones. According to a recent IBM study—entitled "Pushing the Frontiers" and based on findings from face-to-face conversations with 576 CFOs from around the world—the C-suite point person for integrating enterprise-wide data solutions is the CFO, and CFOs who better leverage a company's data are finding higher levels of success than their non-data using counterparts. Bill Fuessler, Partner, Finance, Risk & Fraud, IBM Global Business Services sat down with Consulting to discuss the findings of its latest CFO study and what it means for the future of Big Data, which he calls "the next natural resource."
Consulting: What were you looking for in this latest study?
Fuessler: It builds off the last study where we identified the Value Integrators, those organizations that were excelling in the areas of finance efficiency and business insight. They're what we would call "getting their house in order." They start to build around their analytics; they start to integrate their operational with their financial data, and are putting more predictive insight into it. In a sense, they're getting more forward-looking, instead of just looking in the rear-view mirror. These Value Integrators represented only 23 percent of the 1,920 organizations we interviewed.
This time we saw a bit of a progression in that there was another group that excelled even beyond that, we called them the Performance Accelerators, and they represented just 7 percent of the organizations. They're looking at where to find profitable growth. If you look at our study, we found they were closer to the customer, which then leads them to being more effective at identifying new revenue growth opportunities. We found the Performance Accelerators use big data to a much greater extent than their peers.
Consulting: How is the CFO's role changing in this environment?
Fuessler: I think the new alliance forming out there is between the CFO and the CMO. You see that in the way they're driving profitable growth. In order to do that, the CMO is the one out there deciding what are the next 10 big opportunities to find new customers. The CFO's role in this is to say 'guess what? You found 10, but we only have the resources to do five, so let's pick the best 5.' The role the CFO is playing is to utilize forecasting and predictive capabilities to do a deeper dive on the analytics around the customers. We're seeing this emergence of higher performing finance organizations that is beginning to look more external and help drive the growth agenda within the enterprise.
The "ownership" of information we think is clearly going into the office of the CFO. The CFO has the responsibility to make sure the data is being reported on properly. All those things together drive what we're seeing now which is that the CFO is at the forefront of the information agenda, and how do you use it to better help the organization. Who do you turn to when you have a question around financial data? It's the CFO. Everything a CFO is doing has more importance than it did even three years ago, and much more than it was back in the 2008 study.
Consulting: What long-term disadvantages are facing organizations and CFOs who aren't yet on the Big Data bandwagon?
Fuessler: I think they are going to struggle to be able to understand their customers and be able to grow as quickly as these other enterprises. There is a statistical basis for that. The higher-performing organizations in our study actually financially out-performed their peers. We're not saying there's a direct correlation but it's difficult to dismiss that out of hand. It was across metrics of revenue growth, return of investor capital, etc., so there is something to it. They're going to be losing opportunities and will be at a competitive disadvantage because if they're still struggling to get commonality, they'll be spending time on reconciliation instead of doing analytics.
Consulting: And how do CFOs get their teams up for the task?
Fuessler: Talent is a big issue. First, they're doing a better job at training, but also recruiting a lot of analytics-minded people. I know a couple of key financial services companies aren't just looking for recruits with traditional accounting and finance degrees, they're also looking at a lot of people with a statistics background because they're more analytical in nature and are better at looking at risk. Going forward, the profile of the person who sits in finance will be very different. You're going to have more of the data scientist type, someone who can really understand correlations and do a lot of work around predictive and prescriptive analytics.
Consulting: What's the biggest pain point for clients in integrating enterprise-wide data solutions?
Fuessler: Data integrity and quality, no question. I'm working with a very large bank right now, and they've come to meetings where they're a billion dollars apart on some of the numbers. What we're helping them with is getting their data in order so they have data consistency and accuracy so they're not in the room debating whose numbers are right. That will be the key driver in the next three to five years. Once organizations get over that, then you're going to have a whole new way of how finance does their work because it'll be much more analytical in nature with a much more skilled workforce, which is the way it should be.
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