The term â€˜big dataâ€™ has been around for some years. However, it seems as if big data is only now beginning to be used to its potential, which could have a significant impact on a range of industries and professions, not least those in the financial sector. In fact, research from order-to-cash specialist Onguard has found that almost 64% of CFOs expect that within the next five years the financial world wonâ€™t be able to operate without big data. Meanwhile, 13% of CFOs believe that this is already the case.
There are numerous use cases for big data within the financial sector with financial directors currently using it mainly to shape well-informed decisions (54%), make predictive analyses (41%) and to analyse large, unstructured databases (29%). Yet, despite this almost 18% of CFOs do not use big data at all.
In terms of predictive analytics, big data enables CFOs to make connections that inform decision-making processes. This enables them to add strategic value by being proactive, rather than reactive, as they can use information from the past to predict the future. For example, in credit management, predictive analysis may show that a certain customer has paid their invoice on average within 28 days for the past seven years. This means it is highly likely they will also do the same when they receive the next invoice. CFOs can then use this information to decide how they interact with this customer, chasing for payment only after that time period has elapsed.
Additionally, by identifying patterns in the data, CFOs can determine new strategies to cut costs, which has been demonstrated to great success by UPS. In this example, UPS used the wealth of data at its disposal to uncover that it could significantly reduce costs if drivers took fewer left turns. By turning this insight into action, the courier estimated that in 2016 it was able to save 10 million gallons of fuel and the substantial price tag attached to that.
The introduction of real-time finance cycles as a result of big data could also change the way CFOs operate as it means they are no longer having to look back at outdated figures and therefore base important decisions on information that might not be accurate any longer. With real-time finance cycles, CFOs can instead work with the most up-to-date information. CFOs having real-time insight into all the data from the order-to-cash process enables them to react immediately. It also means they can see at a glance how the organisation is doing financially and judge where possible adjustments need to be made to optimise the process.
Despite the benefits big data offers, 36% of CFOs see big data as a threat to employment, while 42% expect artificial intelligence to have a major impact on employment opportunities and 30% of CFOs seeing robotisation as the biggest threat to jobs. While these concerns are understandable, rather than the role of the CFO being replaced as a result of these developments, the more likely scenario is that the role will continue to evolve from the traditional idea of the CFO.
As demonstrated, big data can help CFOs and finance professionals more generally with the execution of their work. They have a great deal of information from both internal and external sources that is of added value for both the performance of the organisation and customer service. The more information they have, the better they can advise customers and adjust internal processes to optimise the service offered. Over the next five years, as the use of big data and technology becomes more prominent, finance professionals will be required to develop new skills, such as greater analytical capacity, and focus on adding more value to their organisations.