The Roadmap to an Analytics Culture
This is the second of four articles describing the Finance journey towards becoming a world class strategic partner. In this article we describe the Roadmap for implementing an analytics culture that enables business leaders to take data driven decisions.
Much has been written about improving Finance business partnering and how Finance should move from the trusted scorekeeper in the back office to a front-line strategic partner. Finance wants and needs to have a seat-at-the-table for strategic and operational decisions. To get there requires a disciplined, step by step journey that is benchmarked along the way to assure focus and prove attainment.
Gaining a seat at the table requires delivering insights; that is, to tell the business something that it both does not know and when known could influence or change a decision. Even more value is provided when foresight is delivered; that is, an often-reliable prediction of the future. As such, insights influence decisions, and foresight impacts the strategic direction. The former provides knowledge about the past and the latter a forecast of the future (with all things being equal).
Building the culture to advance Finance from average to world class has four key components: (1) Mindset, (2) People, (3) Processes, and (4) Systems. These components, when aligned, institutionalize the practices about data driven decisions for business optimization.
Creating a “culture” of data driven decisions with analytics requires a Roadmap to advance Finance to the world class strategic business partner. Depicted in the Figure below, illuminates the four components of culture as a tightly integrated and interdependent framework.
Mindset
Mindset regards Finance participation in the decision process. Each Mindset has a corresponding “Persona” and is related to a step on the stairs of Next Generation Finance (discussed in the previous article). We encapsulate four Mindsets with its Persona in the table below:
In short, the Reporter focus is on “What happened”, the Commentator on “Where it happened”, the Advisor on “Why did it happen” and the Strategist on “What might happen”
People
People is about Finance, as a group, and how each individual views his role in participating in decisions. To go beyond a Reporter, there needs to be a “sufficient” number of people for analytics and an aligned Mindset to establish a culture of data driven decisions.
Processes
Processes regard the written procedures needed to institutionalize data driven decisions. Process are in two main groups of Data Governance and Decision Governance. The former is about assuring data used in decisions is accurate, complete, timely, and accessible. The latter regards the decision-making process itself to identify the decision-making participants, steps, and authorities.
Systems
Systems is the hub of analytics and regards the technology employed by each Persona in the application of the Mindset, as follows on the table below.
The Roadmap
The coordinated combination of the four components of Mindset, People, Process, and System is crystallized on the figure below. This is the Roadmap to build an analytics culture for data driven decisions that enables Next Generation Finance to become world class strategic partners.
The X axis is the Mindset to contribute to decisions, and the left Y axis the analytics intelligence for each Mindset/Persona. Above the Reporter is routine reporting that supports decisions but has no analytics intelligence to Contribute, influence or impact decisions. The right Y axis links the System to the Persona.
Analytics starts from the Commentator and becomes more advanced as Finance progresses towards the Advisor and Strategist. The two latter Personas provide insight and foresight to influence and enable business leaders to take better decisions to impact the execution and strategic direction of the company.
With the Persona of a Strategist, analytics intelligence becomes predictive and Finance needs access to advanced analytics tools of Discovery, Visualization & Analytics. The two Z axis engage the People and Process, noting there needs to be a sufficient number of people and written processes to build, institutionalize, and sustain a data driven decision culture.
If the four components are not aligned it is lowest stage of any of the four component that determine your persona. If you want to impact (Mindset) by providing Foresight (Analytics Intelligence) and you have a sufficient analytics skillset (People) combined with sufficient data governance (Processes), but your analytics toolbox is Excel (Systems), then your four components are not aligned and the lowest stage of one of the component, in this case Systems, determine your persona. As such, you are "only" a Reporter and you need to invest in Systems to advance you persona (and your career) towards becoming a Strategist or strategic partner.
In our next article we will dive deeper into the component ‘Mindset” and its different personas to understand the Next Generation Finance Skillset for each of them on the journey towards World Class Strategic Partnering.
If you are interested in building an analytics culture, Analytics for better forecasting and how to use analytics for data driven decisions then join us at the Analytics Academy in San Diego from September 18-19th 2019. For more information visit www.jpkgroupsummits.com/analytics/sdacademy2019/
Authors
This article is a collaboration between Robert J Zwerling and Jesper H Sorensen from the organization Finance Analytics Institute (www.fainstitute.com) and is an excerpt from their book, Implementing an Analytics Culture for Data Driven Decisions - A Manifesto for Next Generation Finance.
Mr. Zwerling is also Managing Director of Aurora Predictions (www.aurorapredictions.com) and Mr. Sorensen is Senior Finance Director with a Fortune 100 company.
Copyright 2019 Finance Analytics Institute, Robert J Zwerling & Jesper H Sorensen. All rights reserved. No part of this document may be reproduced without this copyright notice.
I am 65% interested and 35% interesting.
5yThanks for the share
Business Finance Manager at Shell | Expert in Financial Controlling and Analysis
5yNice one. Both the articles are very interesting and is the reality, with data flowing everywhere in a organisation unless finance ups the game they would be replaced for FP&A. Looking forward to the rest of the two articles.
Nicely summarized 4D view of the roadmap for financial analytics culture
Built to Optimize: Business performance, Strategy, Data platform, and Decision support
5yPredictive is mathematical. Also need a layer for strategic influence. It may be there, if so,I apologize. Where can I find your roadmap schedule to enlarge. Thanks, Bob G.
Operations Manager at AdvisorRoadmap
5yVery concise. Thanks Jesper! Can't wait for the next article.