As analytics becomes a much larger trend, some companies are adding a Chief Analytics Officer (CAO) to the C-Suite, notes Fast Company. The analytical CFO is beginning to take on that role in companies not ready to add a dedicated CAO. The question is: What do CFOs need to know to take on the role of CAO?
Owning the financial numbers is not the same thing as owning the data in a big data analytics sense. This article explores three things the analytical CFO need to know in order to take on the role of CAO successfully.
A New Mindset: Data Monetization
According to Gartner, one thing the analytical CFO must have is a data monetization mindset. Analytics is not about data or even reporting. It's about analyzing data to derive insights that can be used to achieve specific business outcomes. Ideally, those business outcomes should be aligned to the top strategic priorities of the business. For example, if the number-one priority of the organization is to grow revenue, analytics projects should be focused on how to use data to increase sales, which can be accomplished in many ways. CFOs who have a data monetization mindset will be able to seek opportunities to help their organizations grow.
When we think of analytics and big data, we think of complex open-source software that requires computer science expertise and/or advanced statistics skills. Effective analytics does not need to be so overwhelming. According to the authors of the book, Behind Every Good Decision: How Anyone Can Use Business Analytics to Turn Data into Profitable Insights, close to 80 percent of data analytics can be performed by teams without advanced statistical skills and with tools most people already use. What's important in performing effective analytics is a good process, not technology.
In their book, Piyanka Jain and Puneet Sharma describe a process called BADIR that can be used to accomplish just about any analytics project that the CFO would perform. CFOs, adept at running accounting and financial reporting processes, will need to establish analytics processes in the role of CAO.
The CFO should understand the tools and technologies that CAOs use to run both small and large-scale analytics projects. Those tools can be categorized into three main areas:
Spreadsheets: According to Jain and Sharma, most analytics projects require nothing more than a spreadsheet. Small and midsized projects, with clearly defined questions and targeted at specific business goals, can be performed using spreadsheets.
Business Intelligence Software: The CFO should also understand the landscape of business intelligence software that can be used to aggregate data from multiple sources and used to produce dashboards and insights from data across multiple sources, as noted by Gartner.
Open Source Data Analytics Technologies: When it comes to tackling larger-scale data analytics projects, the CFO will need to understand the big data technology stack, reports CIO. One of the most talked about big data technologies is Hadoop, an open-source data-processes platform capable of processing large amounts of data (among other things), but Hadoop is just one element of the data stack.
CFOs Laying the Groundwork for CAO Role
The number of examples of companies using data analytics to improve a variety of business outcomes is evidence enough that organizations need a role that owns the analytics process. Some companies are not ready to have a dedicated CAO. Analytical CFOs can prepare their organizations for a successful move to a dedicated CAO by taking on the role of CAO themselves and then creating the right organizational mindset, developing analytics processes and deploying the right technology for the right analytics projects.
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