From data to impact - The Holy Grail of Finance
Anders Liu-Lindberg
Leading advisor to senior Finance and FP&A leaders on creating impact through business partnering | Interim | VP Finance | Business Finance
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Data is the lifeblood of modern business. Remember a decade ago when we were all told that "data is the new oil"? That phrase seems strangely dated today, but not because the claim was overblown.
In fact, data has taken on importance reminiscent of oil, electricity, and human thought all combined. Data, measurement, and optimization have become so fundamental to the ways in which we organize business and society that they are conceptually near-inseparable.
And yet, just as crude oil is completely impractical for the average end-user, data on its own is not useful. To continue the fossil fuel metaphor, we might think of data as the naphtha - the complex hydrocarbon that is not yet a tool in itself, but rather a raw material that we can manipulate and leverage to create things that help us in other ways.
Only when processed into insight it becomes valuable
Data is useful because, amongst other things, it helps us to create insight. Businesses cannot run on data alone. If all we ever did was monitor and quantify, we would be operating in a closed loop that achieved nothing but stasis. Insight is the missing piece - the product of data that allows us to take action.
The data-to-insight pipeline is absolutely crucial for finance professionals. We need to understand how data is gathered safely and efficiently, how it can be processed and worked with, and, most importantly, the ways in which we can put it to use for the purposes of generating better outcomes.
Data & Analytics is a means to an end
In the previous series of articles in the newsletter, I looked at the role of Data & Analytics in relation to the modern Finance Function. I looked at the differences between these two specialisms, and what the rise of Data & Analytics means for the ways in which the Finance Function creates value.
As I explained, the idea that D&A is going to be 'the end of Finance' is not true at all. Instead, as with so many tech-related developments, the explosion in awareness and understanding of Data is actually a boon for the Finance Function, providing us with an extraordinarily powerful new lever for value-creation. To use that tool, we need to understand how to turn data into insight.
Over the course of this new series, I'll break down the steps on that journey, and go over the key hurdles that finance professionals are likely to encounter. We'll look at effective practices for gathering data, cleaning and presenting that data, understanding business needs, and producing valuable outputs that can be returned to the business to generate better real-world outcomes.
You can get started right now. Make some quick notes on the following questions:
How is data currently used in your organization, if at all?
Do you know who collects it, and how?
What does the word 'data' actually mean to you?
As part of the series, we'll also be talking to Brent Dykes who authored the Data Analytics Marathon concept to get his perspectives on how to finish the marathon in style. And finally, don't forget to subscribe to the newsletter to read the rest of the series as soon as each article is published. You can read the previous series on Data & Analytics below.
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Anders Liu-Lindberg is the co-founder and a partner at the Business Partnering Institute and the owner of the largest group dedicated to Finance Business Partnering on LinkedIn with more than 10,000 members. I have ten years of experience as a business partner at the global transport and logistics company Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a long-time Finance Blogger on LinkedIn with 110,000+ followers and 190,000+ subscribers to my blog. I am also an advisory board member at Born Capital where I help identify and grow the next big thing in #CFOTech. Finally, I'm a member of the board of directors at PACE - Profitability Analytics Center of Excellence where I support the development of new analytics frameworks that can improve profitability in companies around the world.
Sr. Cloud Solutions Architect at Microsoft specializing in Azure solutions
2yAnders Liu-Lindberg to take the hydrocarbon metaphor a bit further, it could be said that data like crude oil has to be refined into multiple byproducts each having its own value stream. In contrast to crude oil which is processed in centralized refineries. Data is being refined into actionable information by individual organizations with varying degrees of success.