Data-driven finance is becoming an essential function of CFOs and other business leaders who must leverage the power of technology to enhance company insights and strategy. However, knowing how to use and customize your FP&A solutions and other analytic tools will depend on your company's goals. As a result, figuring out where to start can be the biggest challenge for many.
Thankfully we have several pioneers across multiple disciplines from whom we can draw inspiration. Read on to learn how seven business professionals are leading the charge on data-driven finance to help power organizational growth.Key Takeaways:
- CFOs and finance professionals increasingly see the value in using operational and other business data to provide the necessary context to financial data.
- Part of data-driven finance is focusing on the metrics that provide the greatest business insights and result in the greatest amount of financial growth.
- Using FP&A software that leverages automation, data integration and other technology, data-driven finance allows business professionals to proactively make decisions using current data instead of reacting based on data from months (or even years) prior.
1. John McLean: Current Health
As the CFO of Current Health, John McLean understands that other metrics available in today's business environment greatly influence a company's financial state.
Current Health is a healthcare company with the goal of delivering patient care to people when they are away from the doctor's office. John pays special attention to data on customer satisfaction with respect to their wearable devices because he knows the cost of acquiring business. This means he monitors customer use and adherence to their products.
He believes that a strong focus on customer experience and satisfaction takes precedence over sales and growth numbers.
2. David Horan: NextGear Capital
In the automotive industry, raw data can be overwhelming to consume and use for decision-making because of the many points of the business—including vehicle purchase, maintenance, repairs, warranty programs and more.
David Horan is the VP of Finance for NextGear Capital and focuses on strategic planning. He uses an internal-risk scoring algorithm and data visualization dashboards to streamline data for addressing core needs such as determining price points, accurately predicting business risks and finding opportunities in the wholesale automotive marketplace.
3. Kevin Ingram: FM Global
Kevin Ingram is the CFO of FM Global, a commercial property insurance company. Like most companies, profit is a top priority and indicator of success. However, Kevin realizes that the measure of profit requires a nuanced data approach.
The company relies on the combined ratio metric to account for overall profitability by factoring insured loss costs and expenses with the company's earned premium. They review this metric monthly and on three to five-year time horizons.
Source: PwC
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4. John Collins: LivePerson
After an extensive career as a data scientist, in 2020, John Collins became the Finance Chief of LivePerson, a brand-to-consumer messaging company. The company supports businesses by helping them measure the impact of their brand and manage customer signals as they happen.
In the short term, John's focus has been on addressing data connection issues that can offload, extract, transform and load (ETL) tasks for his finance team—most of which automate the reconciliation of accounts for things such as cash flow reporting.
His long-term mission for the company's system layer, however, is to expand the reach of its data. His hope is for people, regardless of skill sets, to be able to explore financial or other data of interest in a conversational way. In other words, they don't need to be data scientists to obtain and understand key business information.
5. Ilan Cohen: The Digital CFO
As a self-described digital CFO, Ilan Cohen has led several different data projects in various applications. For example, he leveraged the access to data from open banking to develop a product that would help lending companies predict a loan applicant's likelihood of funding based on creditworthiness. This data-based approach resulted in a 300% increase in funded loans.
Additionally, Ilan used other data frameworks to help a company intervene in customer relationships to improve retention rates, noting the value of keeping existing customers over finding new ones.
Source: EBizCharge
6. Edwin Ang: Foodpanda
Senior Financial Controller Edwin Ang for Foodpanda, a food delivery company, has seen its dashboard—which provides several data points for addressing profit and loss—as one of the company's greatest internal achievements.
The dashboard's real-time data provides insight into the effectiveness of user incentives, pricing, new customer reach and other metrics. The immediacy of the data allows the company to proactively make decisions instead of waiting for the month to close and relying on old data.
7. Ben Goodband: London Stock Exchange Group
Interim CFO for Data and Analytics Ben Goodband at the London Stock Exchange Group uses cloud-based software and machine learning predictive analytics to increase the accuracy of forecasts on sales data.
Ben noted the adoption transition for this new technology system was challenging because of old processes but said the key was collaboration among team members in traditionally siloed aspects of the company—such as finance and data science. What’s more, Ben believes the CFO is a necessary bridge between these groups, thanks to their ability to frame and contextualize questions around company strategy.
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