Engaging Your CFO in Business Analytics | Palestrante: Celso Chapinotte

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Gareth Herschel

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Celso Chapinotte [email protected]

To the Point: Engaging Your CFO in Business Analytics

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1

The Digital Tsunami Is Upon Us


We Need a Three-Part Response to Face the “Digital Tsunami”

Renovate the core of

IT

Create powerful

digital leadership

Build bimodal capability

• Clear digital roles

• Savvy digital executives

• Digital vision & digital legacy

• Information

• Cloud/Web-scale infrastructure

• Talent

• Sourcing

• Agile development

• Multidisciplinary teams

• Innovative partnerships

• New risk/speed trade-offs

Digitalization IT Industrialization

2


We Need a Three-Part Response to Face the “Digital Tsunami”

Renovate the core of

IT

Create powerful

digital leadership

Build bimodal capability

• Clear digital roles

• Savvy digital executives

• Digital vision & digital legacy

• Information

• Cloud/Web-scale infrastructure

• Talent

• Sourcing

• Agile development

• Multidisciplinary teams

• Innovative partnerships

• New risk/speed trade-offs

Digitalization IT Industrialization

CFO

3


Why Must the CFO Be Your Ally for Business Analytics?

• The CFO determines investment levels

• The CFO oversees capital budgeting

• Increasing role in Financial Governance

• The CFO (and the finance team) are struggling to get the

information they need about business effectiveness from

ERP and other business applications

• The CFO has a great deal of influence

• The CFO may be your boss

Investments

Business

Processes

Influence

4


Key Issues

1. How is the influence of the CFO changing?

2. What does our CFO study tell us about their role in business analytics?

3. How do you enable your CFO to be more strategic through technology?

5


Key Issues




6


Titles/Job Functions

CFO, Executive VP, Senior VP, VP-Finance 60%

Controller 14%

Treasurer 7%

Other Titles 19%

Company Size: Annual Gross Sales

Under $50 million 21%

$51 million to $499 million 38%

$500 million to $999 million 10%

$1 billion to $9.9 billion 24%

$10 billion or more 7%

Financial Executives International

N = 237

7


Influence Over IT Investments Compared to 2 Years Ago

Decreased significantly

0

Decreased slightly 7%

About the same 49%

Increased slightly 23%

Increased significantly

21%

7%

7%

10%

10%

11%

16%

38%

To lower enterprise costs of the IT portfolio requires your

concentration

Risk impact on the enterprise IT portfolio requires more of your

attention

IT needs additional senior executive support as it competes for funding

IT has been mismanaged and it needs to align more with

corporate goals/objectives

To ensure ROI on IT investment decisions

To increase efficiency with finance applications and

finance enablement

You are an enabler of corporate strategy and see IT is key to

that strategy

Reasons for Increased Influence

CFO influence up 44% compared to 2010-2011.

N = 237

8


1%

3%

14%

52%

27%

4%

2%

15%

39%

35%

Business Unit Leader

Chief Administrative Officer

Chief Operating Officer (COO)

Chief Financial Officer (CFO)

Chief Executive Officer (CEO)

Current

Recommended

• CFO continues to own many IT departments. • Most CFOs think IT should report to them.

CIO or Most Senior IT Executives Report to …

N = 237

9


Role That Authorizes Technology Investment Decisions

2%

4%

7%

8%

24%

24%

26%

Steering Committee of IT and Business Area Operational Managers

COO

CIO

CIO and CFO Together

CFO

CEO

Steering Committee of IT and Business Area Executives

N = 237

CFO continues to lead IT investment.

10


29%

26%

31%

10%

3%

IT is responsible for managing and operating technology systems and

resources efficiently

IT is responsible for enabling business

operations by building and operating technology

systems defined by the business

IT is responsible for contributing to the

enhancement of business operations by using

technology proactively to raise business performance

IT is responsible for being the primary source of the enterprise’s competitive

advantage as technology is a differentiator in enterprise

products or services

IT is responsible for the transformation of the

enterprise’s business model and the creation of new

markets and rules of competition

Expectation of IT

Only 13% view IT as transformational. N = 237

11


Key Issues




12


Currently Need Improved Technology Support

18%

24%

26%

27%

33%

34%

43%

43%

45%

45%

50%

59%

Managing business risk/controls to ensure accuracy in compliance

Ensuring consistency between transactional data and analyticals

Understanding and managing the drivers of profitability or cost of service delivery

Integrating the financial function with the overall enterprise

Creating/maintaining an enterprisewide view of business relationships

Developing business plans and budgets

Reducing enterprise operating costs

Measuring product and customer profitability

Quality of the data used for business decisions

Creating an effective environment for sharing relevant information

Ongoing monitoring of business performance

Facilitating analysis and decision making

• Can largely be addressed by improved BI, analytics.

• Emphasize data-driven decision making and transparency.

N = 237

13


1%

3%

3%

2%

4%

3%

11%

17%

19%

36%

2%

3%

8%

8%

8%

9%

3%

12%

16%

29%

3%

4%

5%

11%

9%

11%

7%

16%

18%

12%

Social networking

Disclosure management solutions (to work with publisher and establish XBRL tags)

On-demand spplications/software as a service (SaaS)

Reconciliations management applications

Mobile technologies

Governance risk and compliance applications (GRC)

Cloud computing

Business process management (BPM)

Integrated financial management applications/ERP

Business intelligence, analytics, performance management

Ranked 1st Ranked 2nd Ranked 3rd Sum

77%

54%

45%

22%

22%

21%

21%

15%

10%

6%

Top Technology Initiatives 1 Year From Now: Financial Organization

N = 237

BI, Analytics and PM Consistent YOY

14


Investment in Business Analytics

16%

18%

22%

30%

35%

43%

45%

54%

Statistical analysis

Predictive modeling

Big data

Customer and product profitability

Data warehouse

Budgeting, planning & forecasting

Financial reporting and consolidation

Performance measurement/scorecard/dashboard

N = 237

Corporate performance management is the top area for investment.

15


Why Do These Trends Exist?

The CFO needs to:

• Report WHAT happened.

• Explain WHY it happened and explain deviations from targets.

• Analyze HOW these results may affect future performance.

• Advise WHICH strategic changes are needed to meet future performance expectations.

The CFO requires transparency, personalized decision support; however, these responsibilities affect the performance of the entire organization.

16


Key Issues




17


Understand the CFO Focus Will Evolve

CFO Focus CFO Needs Financial Info & Tools

Financial

Stewardship

and Compliance

• "Give me transparency

and reporting tools"

• Core finance and

regulatory tools, a "single

version of the truth"

Performance

Optimization

• "Help me work with

LOB heads to tune

the business"

• Advanced analysis,

reporting and portfolio

management tools to

enhance decision making

• Benefits realization

Visionary

Leadership

• "Give me time, and give

me tools to think about

the future"

• Corporate performance

management tools

• Scenario modelling tools

(personalize information

requirements)

18


What Gets in the Way

The CFO-CIO relationship has the potential to be a powerful contributor to business success; however, there are three primary reasons it often doesn't reach this desired state:

• Poor perceptions of IT performance

• A CFO or CIO with a parochial view

• Failure to invest in the CFO-CIO relationship

19


Recommendations

Build the mindset that there are no IT projects — only business projects.

Implement or increase the maturity of processes that foster communication (e.g., relationship management, project management and advanced technology group).

Become a key strategic partner with finance/CFO to steer the information technology function.

Education of your CFO on technology must be a prime focus to improve partnerships.

20


Gartner Framework for Cost Optimization

Technology Procurement Get the best pricing and terms for your purchases

Cost Savings

Identify opportunities to reduce Technology costs

Joint Business and Tech Cost Savings

Implement cost-saving technologies with the business

Business Restructuring and Innovation

Process improvement, reorganization, new methods

Complexity VALUE

21


Gartner Framework for Business Analytics

22


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Gartner Framework for Business Analytics

23


Recommended Gartner Research

A Business Analytics Framework for Finance Business and Decision Processes Nigel Rayner (G00234579)

Impact of the Nexus of Converging Cloud, Information, Social and Mobile Forces on CPM Applications and Strategies Christopher Iervolino (G00237712)

Align CPM and Analytics Within a Broader Business Analytics Framework for Best Use Christopher Iervolino (G00237223)

Magic Quadrant for Corporate Performance Management Suites Christopher Iervolino, and others (G00238924)

For more information, stop by Gartner Research Zone.

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The Digital Tsunami Is Upon Us


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insight necessary for our clients to make

the right decisions, every day.

Obrigado!!!

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