By the year 2020, our civilization will be producing 40 zettabytes of data annually – the equivalent of every grain of sand on earth, times 75. Much of that information is simply background noise – the random security camera shot, the “see you at dinner” tweet, the cat video.
But a small portion of it has the power to transform your finance operations. Finding gold among those grains of sand is what Big Data analytics is all about.
In my role as CFO of SAP’s EMEA operations, I have access to a deep well of high-quality data. And I have access to the very best tools for managing that data.
I think of Big Data analytics as an impartial, statistically savvy expert on my shoulder who guides me and the company to better decisions. Big Data enhances the finance function’s ability to steer, control, and develop the business.
For instance, my team and I use Big Data analytics to identify patterns such as:
- Cash forecasting: Big Data is invaluable in helping to project our cash requirements in the future, based on historical trends.
- Collections: When we analyzed our collections history, we discovered what percentage of our customers pay in a timely manner and do not require a collections call. This helped us focus on those accounts that were delinquent, helping our collections representatives work more productively and allowing us to allocate resources to the right customer segments and regions.
- Discounts: We analyzed customer discounts by date of closing, to detect patterns that give us greater control.
In a Harvard Business Review article, Making Advanced Analytics Work for You, Dominic Barton and David Court explain, “In our work with dozens of companies in six data-rich industries, we have found that fully exploiting data and analytics requires three mutually supportive capabilities. First, companies must be able to identify, combine, and manage multiple sources of data. Second, they need the capability to build advanced analytics models for predicting and optimizing outcomes. Third, and most critical, management must possess the muscle to transform the organization so that the data and models actually yield better decisions.”
The authors added, “Two important features underpin those activities: a clear strategy for how to use data and analytics to compete, and deployment of the right technology architecture and capabilities.”
Harnessing The Data You Already Have
In its High-Performance Finance Study, Accenture notes, “For now, the adoption of Big Data and analytics in particular remains at the early stage. Just four percent of respondents have fully deployed Big Data and enterprise analytics capabilities across businesses.”
That’s a missed opportunity, because every organization – including yours – already has Big Data, and has been gathering it for years. The key is to harness that data for insights. That requires tools, strategy, and very likely a cultural shift that places importance on real-time decision making.
As CFO, you can play a key role in creating that culture. When you do, your entire organization can have a statistically savvy “expert” on its shoulder.
Peter David is regional CFO at SAP
This story originally appeared on The Digitalist Magazine.
Top image via Shutterstock