Data-Driven Decisions in Business Analytics | Cowen Partners

      Data-Driven Decision Making | Business Analytics

      Cowen Partners highlights what it means to be a data-driven business and make decisions based on financial analytics and business intelligence.

      Chief Financial Officer Executive Search Firm

      As the leader of a company, CEOs make a fundamentally large portion of corporate decisions, including management, operations, and sales development. In order to do that effectively, they need to have the best, updated forecasting resources to make sound decisions and be confident in the outcomes.

      This is vital throughout corporate growth, and the demands for automation, data analytics, and forecasting are more prominent now than ever before due to the current economic events taking place. Because of this, it is time for Chief Financial Officers (CFOs) to make some drastic changes in financial planning and analysis systems to get accurate data to provide it for CEOs.

      Companies Demand Data

      CEOs need timely data that is accurate, viable, and trustworthy at all times. This gives them the ability to make the correct choices that will better the company overall and help it thrive. When the data they are working from is outdated and inaccurate due to lack of automation, everyone associated with the business suffers. The critical areas which are the leading cause of concern include:

      • Forecasting frequency and accuracy
      • Using data to drive decisions internally
      • Cash flow reporting and insight
      • An efficient budgeting and planning process

      A recent Bain & Co. survey of nearly 800 executives worldwide found the share of companies scaling up automation technologies will at least double in 2020, and the fallout from the coronavirus will likely accelerate this adoption.

      These technologies include low code automation, optical character recognition (OCR), robotic process automation (RPA), and conversational artificial intelligence (AI). If CFOs are able to implement these financial planning and analysis software systems for their companies, CEOs will be able to run their companies more optimally.

      Enterprise Resource Planning

      Enterprise resource planning (ERP) is the integrated management of primary business processes, using real-time data that is mediated by software and technology. CFOs’ understanding of enterprise resource planning is now a necessity, not something that is a bonus anymore. CEOs require CFOs to have expertise in this area of business, and that need will only continue to grow, especially post-pandemic.

      “While CFOs with ERP experience have been in demand for a long time, ERP experience is now a prerequisite, not unlike an accounting or finance degree. Many of the CFOs we place are inheriting ERP selection and implementation initiatives at their new companies.” – Shawn Cole, President and CFO Search Practice Managing Partner of Cowen Partners Executive Search

      Mr. Cole says the days of using excel as an ERP solution are over, due to advancements in automation, data analytics, and forecasting. With this new technology, many of the ERP solutions implemented five years ago are already dated, meaning the gap between CFOs with and without ERP experience is widening.

      Enterprise Resource Planning Solutions

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      Though these alterations from original operations to utilizing new software can sound daunting, it does not have to be that way. There are already many financial resources and software platforms that can help CFOs integrate ERP solutions for CEOs to feel comfortable relying on. For example, performance management and business analytics consulting firms help companies make better decisions by modernizing their financial planning and analysis. In today’s environment, using data will be critical to future success.

      Another route that CFOs can look into are software solutions such as OneStream. Their software simplifies the complex factors, ensuring a user-friendly unified financial experience, all while CEOs obtain the diverse range of vital financial information they need to run their business. Going this route will allow global organizations to migrate away from Excel spreadsheets and legacy CPM platforms for improved process management, planning, and reconciliations.

      As it stands today, it is apparent that 2020 budgeting and forecasting must be completely redone, which is no longer feasible without automation, data analytics, and forecasting.  CEOs need real-time projections to prepare for an evolving business environment, sometimes weekly, and CFOs are responsible for meeting this requirement. With ERP solutions being at the forefront of innovation and filling in the gaps, CFOs need to adapt to this to give CEOs the most accurate data to perform their roles adequately. This is a mutual relationship between the two parties, and if CFOs do their best at meeting the required needs for CEOs, then the future of corporate business will transform into a much more viable stance then if limited action is taken to remediate the current detrimental issues in corporate management and decision making.

      Modern CFOs Manage Data

      There’s a CFO crisis in the global economy. According to a 2015 study published by KPMG, 2/3 of surveyed CEOs believe that CFOs will increase in their significance over the next three years (which, incidentally, they have). Yet, 1/3 of those CEOs feel that their CFO is not up to the challenge. Now, this might not sound like news- CEOs putting pressure on CFOs is certainly not an unprecedented 21st century phenomenon- but it’s not just the CEOs of the world demanding more of Chief Financial Officers. It’s everyone.

      There was a time when the role of the CFO was grounded in risk aversion and crisis management. They were the ones maximizing company resources, monitoring cash flow, and tempering the large-scale visions of more creative executives to ensure longevity and stability. In 2020, however, the scope of a CFOs role is radically different. CFOs are now getting wrangled into more public-facing responsibilities, developing equal partnerships wit CEOs, and taking an active role in day-to-day operational management according to longterm strategic policy.

      Why? Because companies who don’t lean on their CFOs fall flat. – President, Shawn Cole

      The massive shift in responsibility stems from an unpredictable economic landscape. The terrain of our global marketplace is indeed changing at an accelerated rate, not in the least because of COVID-19 and its monumental financial disruption. Growth and longevity for businesses demand greater financial risk. The marketplace is much more volatile, and technology has globalized every industry out there, which deepens, expands, and complicates market niches and competition. The entrance of advanced technology, among other factors, has created a need for what KPMG has coined, “the Renaissance CFO.”

      The Modern CFO & the Evolving Expectations

      What does this modern, 21st century CFO look like? They bring much more creativity, communication, and technological skillsets to the table. CFOs are no longer just executive accountants. They are a partner to the CEO, a vocal leader of an organization, and an action-based executive within the context of a company’s structure. What was once the highlight of a CFO’s resume – extensive financial management and accounting experience – is now a minimum requirement to take on a CFO role. In fact, a strong accounting and ERP system management background holds no guarantees.

      What Private Equity Firms Want CFOs to Know

      President and CFO Search Practice Managing Partner of Cowen Partners Executive Search, Shawn Cole, stated, “there is an evolution taking place. While CFOs with ERP experience have been in demand for a long time, ERP experience is now a prerequisite, not unlike an accounting or finance degree. Many of the CFOs we are placing are inheriting ERP selection and implementation initiatives at their new companies as part of their company’s data automation, analytics, and forecasting goals.”

      Technology has permeated every facet of commerce and generated increased opportunities for gains and losses. It determines everything from advertising and marketing to sales to internal operations, and it has the potential to make or break a company. Today’s unpredictable technology-driven market means that companies need to constantly cultivate stronger connections in between departments that result in more strategic and organized operations. CFOs play an integral role in cohesive company management.

      Even more importantly, CEOs are looking for someone who understands how to leverage technology to improve data analysis, strategy development, risk management, and communication within departments. They want to see a CFO to bring a wealth of both financial and non-financial expertise, innate creativity, and technological prowess to the table. They expect CFOs to use their abilities to implement meaningful, data-driven, and company-wide initiatives.

      Additionally, CEOs need CFOs that understand the global, changing market. They want CFOs that can use their understanding of emerging markets and new industry players to adapt and modify company strategy at a moment’s notice. Flexibility, creativity, and craftiness are three of the most in-demand soft skillsets to bring to a CFO role in 2020. Albeit a far cry from the isolated financial expertise of traditional CFOs, these abilities are crucial when it comes to crisis management and successful growth strategy. You can have decades of diverse financial management experience and get nowhere near a CFO office in today’s economic climate because it won’t mean anything without the ability to modify it in the face of new competitors.

      CFOs face the enormous task of acting as a bridge between daily operations, long-term strategy, and financial goals. The role of a CFO is no longer about signing off on expenses and monitoring budgetary concerns. Rather, the modern CFO has to look at their company’s cash flow, analyze it with effective and cutting-edge technologies, and work collaboratively with other executives to develop short-term and long-term plans that safeguard a company’s assets without compromising on a CEO’s vision. A CFO of 2020 needs to embody the detail-oriented and data-driven CFO of the past while embracing the volatility and international nature of today’s 21st century markets.

      While the task of becoming a modern CFO may seem daunting, the role has never been more exciting, engaging, or unlimited in its potential to make a tangible impact on company growth and performance.

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