The Cloud

Is Finance a Business Intelligence Customer Or Owner?

The answer may determine whether you play a greater or lesser role in the future of your business.
Beth RussellJanuary 26, 2012

Using cloud computing for Business Intelligence (BI) promises to improve the quality and increase the speed of data-based decision making by tackling two historic BI pain points: the lack of ubiquitous access to data, and too many ill-matched, difficult-to-integrate data silos that inhibit composite analysis. Theoretically, cloud computing can aggregate any type of data for use by anyone in the organization in near real time. And once the data is uniquely combined and standardized across the enterprise, forward-looking and historical analytics become not only much more insightful but also proprietary.

In effect, BI graduates to the rank of a corporate asset, on par with intellectual property (IP).

Now, BI may never be financially booked beyond the cost to acquire and operate it, but its ability to make a net contribution in value has come of age with cloud technology. And, according to the bible, Brealey and Myers, the finance function exists to increase shareholder value. To quote Brealey, how this gets done depends upon “experience, creativity, judgment and a pinch of luck.”

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Now is the time for Finance to embrace BI beyond what’s contained in the ERP system, to optimize its potential value, and to use it as a coming out party for the Finance function itself.  If Finance does not assume specific aspects of BI ownership, it will be adding risk to this newly minted corporate asset and relegating itself to the job of simply reporting shareholder value instead of addressing the far more interesting question of what could happen to it and how to enhance it.

Risks Finance mitigates for cloud-based BI

  1. Revenue and costs for customer satisfaction and loyalty. Uniting data in the cloud, figuring out what it can mean to customers, and taking action based on that data is a process that has never before had a better chance of successfully producing value for the business. The sources of data for mining also have never been broader – from social networks to geo-spatial technologies. A carefully crafted and functioning BI system can help bring products and services to market faster, with feature sets that are more pleasing to customers. For Finance, that means less trial and error (and, it follows, less cost and better inventory management) and better ways to monetize goods and services. Because mobile device-toting customers are buying 24/7, determining what they like and don’t like from a smorgasbord of global offerings, we’ve reached a moment in which not taking advantage of that data can put an organization at a competitive disadvantage. Customer clicks either promote or demote a company. Increasingly, this is the battleground upon which companies struggle for market share, and competitive differentiation can be achieved through superior interpretation of the sentiments captured in those clicks. In this environment, Finance needs to be able to help the other functions achieve less cost, more margin, and understand impacts to the overall P&L before the business takes action. Shareholders would like to know that Finance does more than just report results (even if it does so accurately).
  2. Operational governance. All parts of the company are affected by what happens to one interconnected system of truth. Sales, Marketing, R&D, and Customer Service departments should focus on using and acting on BI, but it is easy to be distracted by the process and protocol of managing it. Finance is the perfect venue to coordinate operations, beginning with investment, data integrity, HR access and use policy, security, etc. Further, to maximize accountability, Finance can be the one point of internal contact for a BI cloud provider. Finance should be looking for a cloud vendor that provides real time service beyond 24/7 call center support and four 9s monitoring. This is all about support for changes, problems, upgrades, and scale.  Real, dedicated human contact between the company and the service provider is critical. It may be pricey, but without it you’re buying a Maserati with no tires. This doesn’t mean that Finance handles technical management,but it does overseeall discussions to understand the need for more or fewer resources and where challenges are occurring.
  3. Privacy. Data collection and use from any source for any reason is a growing concern for governmental and public interest groups fearful of who’s watching from the shadows, especially now that it’s becoming public knowledge that much of what people do on their phones (when and where one sends a text message; what apps one is running) is transparent. This could present a considerable risk to organizations trying to mine that data for improving products and services. This may sound like an area for Legal, but it should be a subject in which all functions participate. However, only one is competent to balance value against risk: Finance. In isolation, Legal will always interpret risk based upon current law, not necessarily upon current or future market value.

The Coming out Party for Finance
Before Sarbanes-Oxley, the three groups within the CFO office were more differentiated than they are today. Accounting groups focused on what happened to the business via External Reporting and Audits. Treasury groups managed money. Finance groups acted as an intermediary between how a company operated and how those operations were funded. But governmental demand for strong controls and weak post-2008 economic times have led many organizations to downsize Finance, leaving resources available only for External Reporting, Audit duties, and a sprinkling of Treasury activities. The vast majority of operational analytic roles (outside ERP) now sit within business units, product marketing, or sales departments (a trend only accelerated by the ease of adoption of software-as-a-service applications), and each brands their own version of the truth for enterprise consumption. Each also carves out a portion of their precious budgets to pay for their version of the truth, thereby claiming ownership. Cloud-based BI is a way to re-unify, de-duplicate, and better interpret how the company prioritizes, analyzes, and executes on data. Finance can use this moment in time to add value by taking control of managing BI and, at the same time, participating more fully in the opinions and conclusions from the outputs of BI that will be translated into future dollars and sense.

Beth Russell is a senior executive in Corporate Development at Nokia, in California. She has industry expertise in Mobile-Cloud, Software and Retail for hi-tech companies, including Apple. She specializes in business transformations from a sales operations, finance, and go-to-market perspective. She can be reached at[email protected].

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