In the later half of last year, Oracle released a report along with Chartered Global Management Accountant (CGMA), a notable, distinguished accounting organization. The report entitled The Digital Finance Imperativeanalyzes how businesses must increasingly adapt in the digital age in order to connect with customers and outside constituents. The report notes that with the advancement of technology, assets are becoming increasingly intangible. Businesses must rely on streams of data to learn more about who their customers are and how to better reach them, or how to achieve optimal, operational success.
Businesses are reevaluating how to run operations in a digital age and are turning to data to guide the organization’s direction. The report states that while some areas of concentration within a business are embracing this change, finance in particular may not be utilizing the power of data to its fullest potential. According to the report, “finance may lag behind marketing, sales and other customer-facing functions that are investing widely in digital technologies to capture valuable data about intangible assets such as brands, customer relationships, intellectual property and human capital.”
Finance departments can no longer turn to the same measurements and forecasting capabilities that sufficed ten years ago. In order to be successful, finance departments need to be well versed in data analytics in order to make effective decisions.
The report presents a call to action, presenting the mandate that company CFOs must use cloud-based technology to their advantage in order to be a powerful player in today’s business arena.
“The attitude you need to have is not ‘think outside of the box.’ Instead, it’s ‘don’t even see the box,’” Oracle CEO Safra Catz said.
More than 50 percent of the 744 respondents in the report study revealed that their top five business value drivers were intangible assets, including items such as brand reputation and customer satisfaction. This confirms the fact that companies now value the intangible over the tangible. Part of the challenge in the digital age is establishing new KPIs that accurately measure a company’s progress and turning those measurements/insights into action steps.
The report states that the role of the Finance team, particularly the CFO, is expanding, with the Finance scope growing to include data analysis and technology management. In other words, Finance is becoming more of a player in data analysis and organizational decision making. Finance must embrace the influx of data, establish new KPIs and allow for data-driven decisions that benefit shareholders.
CFOs and management accounts may now be in the right position within the organization to own data that can lead to effective decision making and drive stronger performance. Finance can be an objective party that can offer valuable input for company management decisions.
