What's behind the unprecedented valuations of unicorns such as Airbnb and Pinterest?
It's data — predictive analytics that forecast widespread user adoption, to be exact.
What about the sales strategy of the seed unit at a stalwart agricultural cooperative that increased profits 30 percent?
Data takes center stage again. Here, analytics and modeling matched seed type to soil conditions to maximize sales, something that couldn't be done before supercomputing came along.
And in the hospitality sector, hotel guests who are having their best lodging experiences ever have data to thank. Customer feedback gathered onsite at the property level of a major international hotel chain feeds a rapid-improvement cycle. Managers at each individual hotel can use the information to make changes immediately to improve customer experience, without waiting for approval from a corporate office.
As these examples illustrate, all types of companies are using the value-creating power of data insight to launch new products, services and business models. In fact, some would say data is the new currency — or at least, a new form of high-potential capital.
Investors have taken notice as well and are rewarding data-driven initiatives because such insight can increase positive outcomes across the enterprise, whether it's C-level executives or front-line operators making the decisions.
Data has become at least as important to modern commerce as cash assets, inventories, facilities and intellectual property; and in some business models, it's the only form of capital.
Wherever your company falls on this spectrum, you can be sure the data within your enterprise is valuable, but it's also possible you're losing some measure of benefit by not optimizing it.
According to an Oracle survey of 742 executives conducted in collaboration with WSJ. Custom Studios, nine out of 10 executives consider the ability to garner insight from data vital to their company's future. Yet, more than half have serious doubts about their organization's ability to manage significant data inflows. On average, the surveyed companies are losing an estimated 16% in revenue annually, and close to one-fifth of the respondents estimate their revenue loss at more than 20 percent.
It can be daunting to take the first step toward fully optimizing data. After all, data can come from anywhere in the business: social media marketing, e-commerce platforms, embedded product sensors, CRM records and more. It's stored in different places, has variable accessibility and is often used for a variety of functional projects by limited groups.
Who takes charge to make sure a company's data is being used as effectively as possible to support high-level strategy?
We've seen CFOs take on the commanding role at both our client companies and our own. This alignment makes sense because financial leaders and their teams have:
- A high-level view of the extended enterprise, from supplier management to fulfillment and across functions internally.
- A quantitative mindset with experience in analyzing data.
- Business training and acumen with the ability to see new business opportunities that others might not.
Despite these strengths, not all CFOs will fit this new role. Success requires an expansion of thinking from a mostly reactive point of view (Where are we losing value, and how should we react?) to a mostly proactive one (Where can we create value, and what should our goals be?).
It also requires skills for working with non-finance functions and roles to effectively implement new ideas and/or manage change across the enterprise. In today’s digital age, many of the new forms of information come from outside of finance. Finance professionals need to learn new analytic capabilities and hire new analytic talent into their organizations. Finance professionals require new leadership and soft skills that motivate, mobilize and guide collaboration driven by the bottom line —instill an analytic culture with departmental decision-making based on facts, not intuition.
In addition to identifying the right talent and skill sets, companies that want to optimize data for value creation need the right technology. Executives participating in the WSJ. Custom Studios survey noted that, with their existing technologies, business managers must rely heavily on IT to access, compile and analyze data, which in turn leads to a lack of timely information.
Companies should consider adopting new predictive planning and analytics tools, including visualization technology to help see the signals. Cloud-based models make it easier and cost-efficient to roll out these tools to a wider group of people across the organization.
When you take a broad look at the growing volume and value of enterprise data; the digital transformation of business and commerce; and the skills that are needed to optimize both, you'll see that finance is the best choice for modern strategic leadership roles. Financial professionals have the skills needed for end-to-end cash management, accounting and compliance; but they also have the big-picture thinking required to spot value-creating potential—internally and externally.
And with the right technology, finance leaders can automate those tasks that are necessary but don't create value, and instead concentrate on analytics tools and visual displays to find new opportunities within data.
The emergence of data as a new and valuable asset has turned the finance function around. Instead of mapping where the business has been, modern finance leaders can lead the way in identifying new paths that further strategic goals.
For more on the impact of data on the finance function, read Top Trends in Enterprise Performance Management.