Finance Professionals Are The Master Of Analytics, Or Are We?

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This article is co-written by Jesper Hybholt Sørensen and Anders Liu-Lindberg

Think of a function in a company that should be masters of analytics which one would you pick? I know I am biased, but I bet that many would say finance and accounting. Why is that? That is because it is about numbers and that is what we have specialized in. However, currently, we are failing and are not able to meet the expectations of the CFO. This is what The Hackett Group identified in their Key Issues study for 2021. 

Somehow the results should not surprise us though since our capabilities have been tested to the limit and beyond. Early in the pandemic we were asked to increase the frequency and depth of reporting and scrambled to deliver. Our reporting and BI tools would often fail as they did not have the built-in flexibility needed to cater to the requirements. We reverted to Excel which albeit solving the immediate need hardly impressed anyone. 

On top of this companies were dying for getting visibility into the future and we were not able to provide much. Perhaps unfair to expect that Finance could predict the future in a scenario where most events were unchartered territory. Still, simply providing scenario analysis and WHAT-IF simulations would have been a big help. We now face an uphill battle to gain (or regain) the trust of the CFO in our ability to deliver analytics, modeling, and reporting. 

How to elevate our analytics capabilities 

To better understand our analytical capabilities and how to develop them let us provide some structure based on the view of the Finance Analytics Institute. In simple terms, there are four levels of analytics capabilities. 

• Reporter: delivering accurate historical reporting and can explain “what happened”
• Commentator: builds analysis on top of historical reporting by explaining where performance gaps happened
• Advisor: analyzes trends and behaviors behind performance gaps and explains “why it happened”
• Strategist: makes predictions about the future and provides a view on “what might happen” 

Essentially the CFO (and business leaders) want us to become strategists that share our view on the future. This involves predictive and even prescriptive analysis and leaning out by accepting that we will never be 100% accurate with our predictions. This feels uncomfortable for finance professionals, yet these are the terms for living up to the CFOs expectations. 

Increasing our analytical capabilities is as much getting better system capabilities as it is about exploring what is possible. Using Excel and BI tools is all great but they will not tell us why something happened and what might happen in the future. This can come through statistical and specialized analytics tools. Hence, you must invest in increasing your knowledge about the tools available and how to use them. Sometimes it is as simple as watching a YouTube video or downloading a tool and build an MVP (Minimum Viable Product) of a predictive model. 

Once you know what is possible and available you can build a community of super users both inside and outside of your company. Likely you also need to make best friends with IT to ensure there is capacity in the company to expand the usage of these new tools. Lastly, it is all about setting aside time to experiment and try to develop both insight and foresight. Let us not overcomplicate it but encourage everyone to take small steps in the right direction. 

Finance is ideally positioned in the company for analytics 

Finance must live up to the expectations of the CFO when it comes to analytics and more. We are ideally positioned in the company to do this. It is because we have a cross-value chain perspective, access to financial and non-financial data, a seat at the table with key decision-makers, business acumen, and a great foundation for analytical skills. No one else in the company has all this. However, if Finance does not step up to plate then other functions will fill the void. 

When asking the CFO, Finance is currently not the master of Analytics in the company. Perhaps no one is but Finance certainly could be if we take closing the gap seriously. We definitely should since it is the third most important issue for CFOs in 2021 and we are far from meeting the expectations. We cannot wait for the world to simply become more predictable even we beat the pandemic. No, we must take a proactive approach to close the gap. 

How well is your company currently delivering on the Analytics agenda? Are you the master of analytics in your company or have others risen to the occasion? The need is clear and as Finance is ideally placed in the company to leverage Analytics it should be a no-brainer to go all-in on this agenda. What is stopping you? Share your thoughts in the comments and let us together determine what we need to do to remove any barriers to success!

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You can read previous articles in my CFO series below.

The Top 10 Priorities For CFOs In 2021

How FP&A Becomes A Strategic Partner To The Business

Eight Ways For Finance To Go Further On Cost Efficiencies

Agility And Sustainability And The 8 Types Of CFOs

CEO AND CFO - The Most Dynamic Duo In Business

The CFO Is The Voice Of Reason In Business

If you want to become a better business partner you should consider taking our online course "Business Partnering Explained - Value Creation Unlocked" to get a better handle on the role. It's accredited for 5.5 CPD hours.

You can read a lot more articles about FP&A, Business Partnering, and Finance Transformation below. It all start's with “Introducing The Finance Transformation Nine Box” where you set the ambition for your transformation. You should join the Finance Business Partner Forum which is part of the Business Partnering Institute's online community where we will continue to discuss this topic and you can click here to follow me on Twitter.

All Successful Business Partners Are "Leaders" (the last article in the series about our new capability model)

Should We Keep Talking About Business Partnering? (part of a 17-article series where we deep-dive on the WHY, WHAT, and HOW of business partnering by putting it on a formula)

Your Journey To Successful Business Partnering Explained

How To Create Value Through Business Partnering

Everyone Can Adopt A Business Partnering Mindset (part of a six-article series about FP&A Business Partnering)

From Business Partner To Working Within The Business (part of an article series where I interview finance professionals about their careers in FP&A and Business Partnering)

Is Your Product Optimized For Value Creation? (part of a toolbox series where we look at what tools FP&A professionals should leverage to drive value creation)

How Business Partners Turn Analysis To Insight (part of case study series where I interview business partners about how they drive value creation using real cases)

The Future Of FP&A: Two Ways To Take The Reins

What Is The Accounting Profession Paradox?

What Defines A Finance Master?

The New Career Path For Finance Professionals

How Finance People Can Be More Successful

The CFOs Roadmap To Transforming Finance

How To Become A Finance Business Partner

Financial Analyst vs. Finance Business Partner

Finance Business Partner Is A Bullshit Job

How Business Partners Keep A Plan On Track

Anders Liu-Lindberg is the co-founder, COO (Chief Operating Officer), and CMO (Chief Marketing Officer) at the Business Partnering Institute and owner of the largest group dedicated to Finance Business Partnering on LinkedIn with more than 9,000 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 55.000+ followers.