Mining for Gold; Good Data for Good Business Decisions

Good Data for Good Business DecisionsI often hear people complain that they are “drowning in data but starving for information.” It’s a common problem for both businesses and individuals— and a topic I discussed with IMA® (Institute of Management Accountants) President and CEO Jeff Thomson in a recent interview.

In fact, according to technology research firm IDC, the amount of data in the world is said to double every two years! Defined as a collection of data sets so large and complex that it becomes difficult to process, Big Data presents challenges to organizations seeking to harness it.

You may be wondering how your organization can make the most of Big Data for effective business decisions. I recommend, instead, shifting the discussion from “Big Data” to “Big Value.” Several kinds of tools have been heralded as solutions for harnessing data to make faster, smarter decisions, but what are the differences, and how are they best used?

A Shift in the Conversation

As IMA’s executive-in-residence, I examine business trends and assist with research, and I’d like to offer some clarity on these tools. In the past, business intelligence (BI) software tools have been offered as the solution for leveraging Big Data, but an emerging term, business analytics (BA), is gaining popularity and causing some confusion.

Business intelligence answers basic questions. It summarizes historical data, typically in table reports and graphs, so that businesses can answer questions. But reports don’t simplify data or explain its value; they simply package up the data so it can be consumed.

Business analytics, on the other hand, creates questions. It produces new information. Finally, there’s the concept of predictive analytics, a subset of business analytics. It can display the possibility (and ideally the probability) of outcomes based on the assumptions of variables. In other words, predictive analytics leverages data to drive better and faster decisions, thereby improving an organization’s performance.

Making Sound Decisions

In business and in life, it’s important to use data to make well-informed decisions. There is always risk when decisions are made based on intuition, gut feel, or flawed and misleading data.

In business, it’s important to identify the decisions that matter most to your organization. By understanding the type of decision needed, it becomes easy to determine what type of analysis to use to reach your goal.

Business analytics is the next wave for organizations to successfully compete and make the best use of their resources and assets. The ultimate business strategy, in the long run, may be to foster analytical expertise among an organization’s staff.

What tips do you have to leverage good data in order to make sound decisions?

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Guest blogger Gary Cokins, CPIM, is president of Analytics-Based Performance Management LLC and IMA’s executive-in-residence.

 

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Reinventing the Wheel for CFOs

Business is continually changing and so are the job duties of a company’s top financial exec: the CFO.

wheel_progression

Globalization, the explosion of information, and newer technologies make the CFO’s role an exciting career goal for aspiring professionals. Long gone are the days when CFOs were seen as “number crunchers.” Today’s CFOs are being asked to serve as “chiefs” of leadership and strategy. As diverse as the CFO’s role has become, so too are the career paths for getting there.

As IMA® (Institute of Management Accountants) vice president of research, I closely examine the accounting and finance profession, predict trends, and offer insight to the future of business. One of our latest initiatives, with our strategic partner ACCA (the Association of Chartered Certified Accountants), is “Future Pathways to Finance Leadership,” a study of 750 CFOs.

Changing Gears

blog_quote2Through our research, we’ve learned that tomorrow’s financial leaders will need broader business skills and diverse work experiences to adapt to the evolving needs of business. A new mix of technical and soft skills will be in demand. This goes well beyond the nuts and bolts of financial accounting. In fact, 40% of CFOs surveyed had taken a role outside the finance function in their careers.

The most popular stepping-stone to the CFO role was from financial controller. Obviously, you can’t get away from the need for baseline finance skills, but there are so many more capabilities future CFOs will need to bring to the table, too.

What the Aspiring CFO Can Do

Career up-and-comers can get an advantage by gaining a broad set of skills and work experiences early on. The Future Pathways report offers advice from current CFOs to help others prepare for the path ahead.

blog_graphicFuture Horizon

Imagine what business will look like in 10 or 15 years. I believe we’re in for an interesting ride with the ever-changing business environment. What do you think the future holds for CFOs, and how will you prepare?

Written by Dr. Raef Lawson, CMA, CPA, CFP, CFA

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