The relationship between companies and the adoption of new digital technologies has been a strange one.
Within the financial services sector investment banks, stock exchanges and other major financial players have been ardent backers from the early days.
However, on the other hand, some industry sectors remain stalwartly conservative, still working on paper and yet to explore “new fangled” technologies such as cloud computing or artificial intelligence.
In my many conversations with CFO’s in recent months when we’ve discussed their key challenges in the digital age, one kept repeatedly coming up – Big Data.
Of the emerging technologies, Big Data is potentially a more significant revolution than the invention of the computers on which it is based.
Never in human history has it been possible to process so much information.
However, you can only learn what you ask of it.
Figures provided last year in a survey by digital consultancy firm Whishworks as reported in Consultancy UK suggest that only 18% of UK companies are making substantial use of it and over a third aren’t using Big Data at all.
How businesses seek to use Big Data is also somewhat conservative.
Of users, around 55% use it for product/service marketing rather than for innovation or reporting accuracy and insight (38% and 24% respectively).
65% said that their leadership team lacked sufficient understanding of Big Data.
71% reported a shortage of skills to implement and apply it.
70% said their forays into Big Data had thus far failed to achieve the dividends expected.
If slow uptake isn’t due to a lack of conviction, it must be due to a lack of clarity about the road to take.
Here are five abilities I think a CFO needs to navigate their way better on this road.
#1. Imagine New Ways for Data to Inform Decision-making
A truly data-enabled CFO needs an open mind as to how new types of information could be used in the business, whether at the leadership level or day-to-day operationally.
This means getting creative and thinking beyond the type of data they have been used to working with in the past.
Big Data is not only about balancing books and monitoring how existing day-to-day operations are conducted.
Data extracted in the right way can achieve things a CFO may hardly have considered part of their remit in the past, such as identifying unnecessary supply-chain overheads, measuring quality standards compliance, or actively changing consumer demand and behaviour.
Big Data has the power to reveal social trends that may have little to do with the company at first sight, yet have the potential to reveal future threats and opportunities long before they become apparent through more conventional channels.
Big Data is dumb data until you make it smart by asking a reasonable question.
The challenge is not so much that of answering questions, but of knowing which questions to ask.
#2. Identify The Critical Data Points That Drive Their Business
This ability is almost the opposite of the previous one. It requires the analytic rather than the creative side of the brain.
Nor does it mean asking what data is already available and in use.
While it may go against a CFO’s instincts, many steps in business decisions have to be taken based on incomplete data; guesstimates, samples and surveys.
Using Big Data presents opportunities not only to improve these metrics but also to monitor them continually.
This means that things once requiring upward referral for executive decisions can become automated business procedures.
There are also key metrics underlying the chances of success (or otherwise) of an enterprise that was not previously possible to meter.
Most businesses either trust to instinct and experience (for example, continuing demand) or avoid investing at all in areas dependent on these “unknowables”.
Today’s CFOs need to recognise two things.
Firstly, that more and more unknown or poorly known predictors can now be upgraded with real information.
Secondly, (and even more crucially) that assumptions that have been reliable in the past may not be safe in the future, precisely because better information is becoming available (for example, to competitors and customers).
#3. Track What Customers Care About
One of the least discussed aspects of Big Data is its ability to change the way people, governments, economies and markets behave after insightful metrics has heightened their self-awareness.
Social media and Big Data have something in common.
Fifteen years ago, sources of news and opinion could be counted in dozens at most (TV channels, newspapers, close friends).
Today social media exposes everyone to thousands of opinions and snippets of information.
Inter-connections span the globe.
While sources of information may be unreliable (“fake news”), underlying patterns are mutable and dominated by no one.
While some markets are still relatively conservative, none are immune to this phenomenon.
The ability to discern customer desires and reactions will be more critical in the future than ever before, and CFOs will be wise to concern themselves with it.
#4. Live With Uncertainty
Here is a paradoxical ability, yet the data-savvy CFO must be able to live with the fact that definitive answers will not always be available.
As explained previously, Big Data may sometimes be a part of the reason they aren’t.
CFOs may need to embrace new decision-making strategies to deal with more complex markets as well as larger, more diverse sources of information.
For one thing, many existing data-processing infrastructures and number-crunching software suites are inadequate to deal with petabytes of data.
You won’t be mining Big Data on your Excel spreadsheet any time soon that’s for sure.
In a world flooded with data, some enterprises will adapt by allowing decisions to be made in ways that don’t give that same seat-of-the-pants feedback the typical CFO is used to.
An extreme example would be to delegate significant parts of data collection, analysis and decision making to Artificial Intelligence.
A.I. can be a significant investment, and technologies are not standardised.
However, they are becoming more flexible.
A more significant obstacle for many companies could be a corporate culture that has tended to view IT as mostly a maintenance operation rather than a primary source of company innovation.
CFOs will need to step up to the plate and work ever more closely with their IT team than in the past.
#5. Use Data to Improve Management Communication
As data sets become vast and very complex, an overhead projector and a copy of Powerpoint will no longer cut it.
Rendering complex data into images that are easy to understand and convey to others is a specialist field called Information Visualisation.
Cloud-based software to help you prepare such presentations is becoming more readily available and easier to use.
Even with much more straightforward data and statistics, the sheer quantity of it will often argue against presenting table after table and graph after graph.
To make good use of more data, the future CFO and other business executives will need a sound and intuitive grasp of what to leave out, summarise, or present in a creative new way.
If less doesn’t become more, more will most certainly become less.
The Big Data Savvy CFO needs to be able to:
1 Imagine new ways for data to inform decision-making
2 Identify the critical data points that drive their business
3 Track what customers care about
4 Live with uncertainty
5 Use data to improve management communication
Master these abilities and make Big Data effective in your organisation because one thing is certain, as Krish Venkataraman, former CFO of Big Data company Syncsort, recently said in an interview for Forbes, “Over the next decade, big data is going to be …a truly disruptive force across the globe.”