Overcoming Data Immaturity: How CFOs Can Unlock Value Creation

Below is a guest post Hung NguyenCConsultant On Sapling Financial Advisors. The opinions expressed are those of the author.

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Information is the currency of the modern marketplace. Yet CFOs of small and medium-sized businesses (SMBs), from Silicon Valley startups to regional business dynasties, often find that their organizations are overwhelmed by data challenges due to a lack of resources and expertise.

Data accuracy, completeness, and consistency are perennial issues for data-immature organizations. In these places, data is stored and operationalized in silos across business units and functions. The lack of a common framework allows them to communicate with each other and create a consistent, accurate, and timely picture of the health of the business.

The CFO role in these organizations is often unnecessarily complex. They must reconcile ad hoc reports from different business functions without reliable access to fundamental data points and methodologies.

This pain point is more acute in growing organizations. As a company grows and more business systems are acquired, the simple task of reporting on business activities can become so time-consuming that it takes away valuable resources from gaining insights and creating value.

The data challenge is spreading downstream because there is no single source of truth. Few departments have a complete picture of the organization and how they should align their goals in response to changing circumstances.

Solving the problem of data immaturity requires collaboration between technical and business stakeholders

To overcome data barriers, SMEs must adopt a multi-faceted approach that addresses both technological and cultural barriers.

Investing in integrated platforms that synthesize data from disparate sources can break down silos and streamline access and analysis. These platforms, such as off-the-shelf enterprise resource planning (ERP) systems or custom database solutions, provide a single source of truth across the organization, facilitate integration of disparate data sources, and enable cross-departmental analysis to provide holistic visibility into the business.

The CFO should also address the human element by empowering a data champion to build a data culture across the organization. These are change agents with a deep understanding of the business and technical aspects of data. They are excellent at communicating complex technical concepts and inspiring and empowering others to adopt data-driven practices and behaviors.

The bottom line is that the CFO’s ultimate goal should be to build a motivational structure to drive data best practices throughout the organization. This starts with the leadership team.

A data-driven manager understands that all business decisions should be based on data—and only data.

They run their organizations by key performance indicators (KPIs) rather than by intuition or received wisdom. Instead of speculating on why sales are slowing this quarter, they examine sales data by product line, customer segment, sales cycle, etc. to identify anomalies and potential optimization levers. If conversions are low, they can focus on training sales reps. If a product line is selling slowly, they can advertise it differently or discontinue offering the product altogether.

When meeting with business unit leaders, data-savvy executives expect them to provide data to support their findings and proposals. They don’t take data at face value, but they are adept enough to critically examine their reporting methodology.

This habit has a positive knock-on effect throughout the organization. Because C-suite executives make decisions based solely on data, there’s an expectation that they’ll provide data-backed answers. This further creates an incentive for other employees to adopt data best practices to advance in the organization.

Data-centric SMEs benefit from a vicious circle of value creation

As the entire organization begins to view data as a valuable asset and data analytics becomes an integral part of everyday business operations, new opportunities to create value emerge.

The most immediate benefit is reduced inefficiencies in business reporting. By leveraging a unified data analytics platform, capable SMEs can reduce the time spent aggregating data points from different silos and free up time to extract insights from those reports.

Different business units also gain access to a consistent, accurate, and up-to-date view of the company’s health. Synchronizing time between departments is no longer about catching up on current status, but offers the opportunity to harmonize strategic goals and implement them across the company.

In the marketplace, data literacy can play a critical role in determining market trends and consumer preferences.

SMEs often operate in niche markets or specific customer segments. Integrating and synthesizing insights from various sources of market information, including sales data, market research reports, and industry trends, allows SMEs to stay ahead of the competition in responding to changing tastes and demands.

With a wealth of data collected from their customers, a competent SME is uniquely positioned to gain insight into consumer preferences by analyzing purchasing patterns, demographic information and informal social media interactions. This allows them to tailor their offerings and marketing strategies to better meet the needs of target demographics and even expand into new markets.

In today’s landscape, effectively deploying data assets is no longer a nice-to-have but a strategic imperative. In a market of giants with deep pockets and an obsession with the latest technologies, purposeful deployment of fundamental assets like data, combined with innate agility and the ability to adapt quickly, is proving to be a winning strategy for CFOs.