Trust is a privilege earnt by Finance over decades. But our once trusted advisor to the business has lost its status. A lack of data management focus, and arguably a loss of control, are to blame. Unfortunately, today the most frequently asked question is ‘whose data do we trust’?
In the Energy sector, the current fluctuations in oil prices brings with it the risk of material misstatement. As stated in bp’s financial reports
, this risk is significant. bp CEO, Bernard Looney, announced the need for transparency and accountability as they drive towards becoming an Integrated Energy Company. But without control of the data, appropriate skills, capabilities and enterprise level tools, can we really say we trust the quality of the data being produced?
A recent survey
from OGUK found that less than 50% of respondents trusted their internal data and only 11% believed in external data sources. There was a greater trust of data from executives, averaging around 65%. But when you look at the views from middle management, that figure dropped by 20%. Why has trust in data fallen so far?
To understand where the trust in Finance came from, we can go back more than 7,000 years. In ancient Mesopotamia, data in the form of tokens were recorded in a bulla
and used to show transactions of trade and finance between parties, but held by trusted advisors.
Throughout history, many trusted advisors have worked quietly in the background. Some eventually became known as accountants; the early shapers of the world of data and analytics as we know it today. The most famous, if there ever was such a thing as a famous accountant, was Luca Pacioli
Pacioli documented journals, ledgers, year-end closing dates, trial balances, cost accounting, accounting ethics, and undertook extensive work on the double entry accounting system, which is still in use to this very day. This system is one of the earliest attempts at a data glossary – ensuring that classifications and standards are properly followed to build the system and give it meaning. This firmly established accountancy is at the heart of the business and the accountant its trusted advisor.
Fast forward to the present day and the Finance department still regards itself as a trusted advisor and partner to businesses, advising them on how to make profitable, commercial decisions while maintaining control over the company on behalf of shareholders.
One of the biggest areas where CFO’s are losing the trust is in the management and control of data. Historically, accountants have been the absolute authority on all things financial. But over the last 20 years, CFO’s have had to increasingly invest time and resources into answering an infinitely repeating question. One which adds no business value. “Can I trust this data?”
The law of diminishing returns
For many businesses today, data engineers and business analysts sitting in different functions – often with skills better suited to today’s digital age – access data from various sources with little to no data management.
An analyst in modern times runs the gamut from a professional who will only deploy to agreed standards, through to the have-a-go hero who dives fearlessly into creating visualisations, unencumbered by mere standards or definitions.
With the latter of these analysts left to their own devices, trust is continually eroded. Meanwhile, Finance struggles to verify data as they lack the time and resources to investigate every infringement on their trust. It equates to a much diminished department with value slowly ebbing away through the death of a thousand badly written reports.
Managing data is not an easy task; integrating different data sources and types, simplifying the raw data into understandable business terms, and optimising for applications such as data lakes is a Herculean effort. Doing so while speeding up access to information and insight for every user makes that task even more challenging. But this effort is necessary for Finance to regain the trust they once had.
How can the trusted advisor return triumphant?
Years of support and solid commercial advice stand the CFO and their team in good stead. The mindset of the traditional CFO needs to pivot and embrace the digital age – driving value for shareholders. Fundamental to this is the need to take back the ownership of data management. To get back in control.
Teradata has perfected an expert data management platform. Much like the double entry accounting codified by Luca Pacioli, our approach to data stands the test of time, and can not only help rebuild the trust lost by the financial community, but enable them to identify savings.
The way Teradata achieves this is through integrating all sources of data, simplifying data standards and speeding up access to information. It equates to a true user-centric approach that delivers real business value.
With a system to control the flow and quality of data in place, Finance can concentrate on speeding up access to the information it produces, turning over project requirements in minutes instead of months.
Once back in the driving seat as a trusted advisor, they can then look to the future with predictive analytics and machine learning algorithms to engage in pro-active management of shareholder value.
All of this is only possible when data management is under control and back in the hands of the original source of trust, Finance.
Get in touch today to see how you can empower your Finance department
to regain the trust.