What CFO doesn't want to unlock the hidden gems/insights buried in their general ledgers?
Getting data-driven, business-critical information into the hands of CFOs and their fellow C-suite decision-makers is a serious challenge. It means combining data from different sources into one information platform.
In order to do this, systems must be quick and of course, cost-effective, while at the same time facilitating easy additions so the business remains agile and capable of embracing change. Moreover, the value yielded by a solution must greatly outweigh the cost of implementation.
Yes, you may consider this a rehash of old arguments of speed versus cost, versus functionality, versus the suitability of getting useful information out of an implementation.
These are the usual pain points cited by CFOs and finance managers who unquestionably have all of these issues on their radars, but repeatedly fail to resolve them because they do not change their thinking on these matters.
This describes the long-standing question of 'out of the box' with all of its inherent limitations versus the cost and maintenance of custom development. While CFOs have been talking about this for years, success stories in this space are rare. To achieve this, it is necessary to combine multiple data sources, for example:
- Enterprise resource planning for general ledger data.
- Spreadsheets for budgets, revised budgets and forecasts.
- Human resources systems for people information; for example, staff head count.
Each of the above pieces of the data puzzle is important by itself, but when combined, the business insights reveal themselves.
What if you could take a standard income statement showing profit and loss data from the general ledger, then add a comparison against budgets and forecasts, and finally add non-financial data, like HR head count into the same income statement? Automatically? The result would be a powerful analytical tool that provides awareness of trends that are impossible to spot when looking at the individual data sets.
Unlocking ‘hidden insights’
CFOs need to be able to find, with ease, the insights "hidden away" in general ledger data, which in turn assists them to make better and faster business-critical decisions. The general ledger is excellent at recording transactions and keeping track of the balances in each account, but that is typically as far as it goes. It lacks the ability to analyse what this data is actually saying about the business.
Companies are missing out on insights that can ultimately affect the bottom line.
Being able to go one level deeper and analyse revenue and expense trends, budget tracking or forecasting, usually involves quite a cumbersome and time-consuming process.
The end result is that you're often missing out on critical insights:
- An accurate overview of the ‘true’ health of the business.
- Early line of sight on potential inefficiencies within the organisation.
- The foresight to identify and unlock further growth opportunities.
In other words, companies are missing out on insights that can ultimately affect the bottom line.
What's to be done?
Explore solutions that enable the organisation to easily find the hidden gems in general ledger data and that present it in digestible reports and dashboards, so that these insights can be turned into actionable initiatives that drive business growth.
Being able to generate insightful reports without having to spend countless hours digging through financial statements and spreadsheets is not a pipedream but it should definitely be an objective.
What is really needed is the option of being able to move quickly with multiple data sources that allow the business to explore 'the why' by implementing a system that guides the user through the important views of the data, allows them to add new views of data, but prevents them from breaking the underlying structure.
A self-service option is essential for those who can use it and a guided one for those who cannot. Crucially, companies need to be able to explore the numbers. Remember, associativity is still the best innovation in business intelligence in the last 30 years.
A clear record of account transactions and balances is needed at the lowest, granular level. This in turn will provide a high-level summary of the data, together with the ability to easily drill down to see the underlying detail. It must be possible for accounts or group of accounts to be tracked against a budget. This will provide the information needed and as the year progresses, to automatically make provision for revising initial budgets into updated forecasts.
The bottom line is that it is no longer necessary to ponder the issues that have faced CFOs for decades, only to set about solving them in the same antiquated manner that resulted in them still existing.
Change your mind-set − technologies exist that can automatically combine data from the general ledger with data from multiple sources and gather them into the insightful analyses that are really needed.
What you are essentially attempting to achieve is the acquisition of all of the critical financial data needed, while freeing up more time. Simply put, this is going to make life a lot simpler moving forward.
In my second article on this topic I will explain how to change the approach to debtors and sales through the use of technology.
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