It’s almost become cliché at this point to talk about how important data is for driving business decisions, and many companies will pay lip service to this fact, but from our experience – there is still a long way to go in terms of leveraging data to its full potential within the finance team and beyond. Too many decisions are still guided by intuition, adherence to the status quo, or internal politics that get in the way of truly powering decisions through data.
In this article, we’ll explore how to deeply embed a data-driven culture into the finance team so that you can move the typical workflows and processes closer to a fully data-enabled future.
Data literacy is the foundation
In order to achieve a data-driven culture, your finance team needs to be as comfortable working with data as they are reading balance sheets and income statements. Data literacy goes beyond basic number-crunching and speaks to the capacity to read, interpret, analyse, and communicate financial data effectively while understanding its strategic implications. There are four key pillars of data literacy that you should be aiming to train within your finance team:
- Understanding data sources and quality. Your team needs to be able to identify, validate, and evaluate different data sources, understand how they flow through your internal systems, and be able to spot anomalies when problems occur.
- Understanding basic statistical concepts. Ideally, your finance team should have some basic statistical understanding so that they aren’t always relying on the business intelligence team for ad-hoc analysis. This includes things like correlation vs causation, variance analysis, trend analysis, and probability.
- Understanding data visualisation best practices. To truly leverage data, your finance team should have an intuitive sense of how best to visualise data depending on the objectives. This aspect of storytelling is crucial for persuading other stakeholders to take the recommended actions based on what the data is showing.
- Building financial models. Lastly, your finance team needs to be able to build robust models that incorporate multiple data sources, develop and test different scenarios, and analyse sensitivity based on changes to key variables.
If you can build this financial literacy in your finance team, you are well on your way to creating a data-driven culture that lasts.
Using technology as an enabler
The next step for building a data-driven culture is to encourage extensive use of available technology to support and enable data-driven decision-making. Modern FP&A solutions like Apliqo are no longer just tools for financial planning – they have evolved into comprehensive platforms that enable sophisticated analysis and collaboration when used to their full potential.
The first decision here is to select the right technological tools that can scale and grow with your organisation. You need technology that can handle the complexity of your business while still making it easy for users to find the signal in the noise. Then once you have the right tools in place, you need to work hard to ensure that your finance team understands how to use them effectively – giving them the training and support they need to wrangle the data and come to useful insights and outputs.
In our experience at Apliqo, many of our clients are barely touching the surface of what’s possible with IBM Planning Analytics / TM1, and often their problems could be solved by just having a deeper understanding of the system’s capabilities so that they can build more efficient and accurate workflows. Having a data-driven culture means taking this task seriously and embarking on a journey of continuous improvement as you grow and scale your FP&A operations.
Additionally, the more efficiency you can deliver from an operational perspective, the less time your team has to spend on tedious tasks, and the more time they can spend on higher-value data analysis and interpretation. By improving your resource allocation here, you’ll get closer to a data-driven status quo.
Measuring success and continuous iteration
The final aspect of building a data-driven culture is to measure the impact of your decisions, iterate based on the results, and then when you get things right – communicate that success to reinforce the underlying processes that got you there. This is a crucial step for maintaining momentum and securing continued support. If you aren’t able to reinforce this behaviour, you’ll never be able to permanently impact the culture in your finance team and beyond.
Every company is going to think about this differently because of their unique context, but here are some examples of things you can track to better reinforce a data-driven culture:
- Error detection rates in automated processes.
- Reconciliation success rates.
- Time spent on data cleaning and validation.
- Data coverage across business units.
- Compliance with global data standards.
- The time lag between data creation and availability.
- Report deliveries against deadlines.
- User adoption.
- Number of reports generated.
- Support ticket trends.
- User feedback ratings.
- Reduction in manual data entries.
- Forecast preparation cycle times.
- Reduction in overtime during busy periods.
- Forecast accuracy improvements.
- And much more…
Start with a few key metrics that are relevant to your context and then as you improve things, you can slowly start to expand how you measure things. And most importantly – this exercise also needs to spur you on to iterate and innovate on what you’re doing. Every time you get a result that you’re not happy with – this needs to be a catalyst for a new experiment and a new iteration. This continuous process of improvement is the hallmark of a robust data-driven culture.
If you are able to instill these three key pillars into your finance team, you’ll start to grow a data-driven culture that can transform your organisation. It will take a lot of hard work upfront, but once it becomes like second nature to your team, you’ll continue to reap the rewards for a long time to come. Get started with Apliqo FPM today and get there quicker.
