Data-driven finance is no longer a choice; it’s survival

The results of the latest F&A research from HFS have been an eye-opener for finance leaders across the globe. Being data-driven is no longer a choice; it is the only way forward to survive in the industry, and finance as a function is at the heart of this journey. Most finance leaders have identified this as a crucial change required for the future of finance, however, it is easier said than done.

While some organizations believe they are already data-driven (Stage 3), some believe they are midway in the journey (Stage 2) and some others still are honest about being in the early phases of data-driven finance (Stage 1).

• Stage 1 – Organizations that are late to the party – Roughly 25% of finance leaders in the F&A study believe they are at an early stage of still managing the quality of data by focusing on improved data analysis and compilation techniques. Unless they make further headway in this direction, the goal of being data-driven will be unachieved. These organizations will continue to be reactive to market movements rather than proactive.
• Stage 2 – Organizations that are well on the way to being data-driven – Around 50% of finance leaders believe they have all the infrastructure needed to start deriving strategic insights from the data at hand but are yet to do that. This is the more difficult part as it needs infrastructure backup and a huge mindset shift. Culture plays a massive role in driving mindset changes and a lot of organizations are stuck in a status quo rut in this respect.
• Stage 3 – Mature and data-driven organizations – Only about 23% of firms believe they have conquered the technological and cultural challenges to truly start deriving strategic insights from finance data. Data-driven organizations are the minority in the current industry but hold the potential as leaders to pave the way for the rest of the industry.

Being data-driven in finance means allowing finance executives to focus on the larger strategic goals of an organization which otherwise take a backseat due to mundane transactional activities. Real-time insights are the gateway to achieving broader strategic goals, but a lack of talent and data access is currently slowing the process.

The Bottom Line: Data-driven finance is an inevitable goal for finance leaders – the question is when and not if it will happen. Reaching maturity at Stage 3 requires organizations to focus on a combination of people, processes, and data to achieve the goal of data-driven finance.

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