CFO Checklist to Owning Enterprise Analytics
Last month, the CEO of Deloitte said that CFOs are “the logical choice to own analytics and put them to work to serve the organization’s needs”. In my discussions with CFOs, they have expressed similar opinions. Given this, the question becomes what does a CFO need to do to be effective leader of their company’s analytics agenda? To answer this, I took a look at what Tom Davenport suggests in his book “Analytics at Work”. In this book, Tom suggests that an analytical leader need to do the following twelve things to be effective:
12 Ways to Be an Effective Analytics Leader
1) Develop their people skills. This is not just about managing analytical people which has its own challenges. It is, also, about CFOs establishing the “the credibility and trust needed when analytics produce insights that effectively debunk currently accepted wisdom”.
2) Push for fact based decision making. You need to, as a former boss of mine like to say, become the lightening rod and in this case, set the expectation that people will make decisions based upon data and analysis.
3) Hire and retain smart people. You need to provide a stimulating and supportive work environment for analysts and give them credit when they do something great.
4) Be the analytical example. You need to lead by example. This means you need to use data and analysis in making your own decisions
5) Signup for improved results. You need to commit to driving improvements in a select group of business processes by using analytics. Pick something meaningful ike reducing the cost of customer acquisition or optimizing your company’s supply chain management.
6) Teach the organization how to use analytic methods. Guide employees and other stakeholders into using more rigorous thinking and decision making.
7) Set strategies and performance expectations. Analytics and fact-based decisions cannot happen in a vacuum. They need strategies and goals that analytics help achieve.
8) Look for leverage points. Look for the business problems where analytics can make a real difference. Look for places where a small improvement in a process driven by analytics can make a big difference.
9) Demonstrate persistence. Work doggedly and persistently to apply analytics to decision making, business processes, culture, and business strategy.
10) Build an analytics ecosystem with your CIO. Build an ecosystem consisting of other business leaders, employees, external analytics suppliers, and business partners. Use them to help you institutionalize analytics at your company.
11) Apply analytics on more than one front. No single initiative will make the company more successful—no single analytics initiative will do so either.
12) Know the limits to analytics. Know when it is appropriate to use intuition instead of analytics. As a professor of mine once said not all elements of business strategy can be solved by using statistics or analytics. You should know where and when analytics are appropriate.
Following these twelve items will help strategic oriented CFOs lead the analytics agenda at their companies. As I indicated in “Who Owns the Analytics Agenda?”, CFOs already typically act as data validators at their firms, but taking this next step matters to their enterprise because “if we want to make better decisions and take the right actions, we have use analytics” (Analytics at Work, Tom Davenport, Harvard Business Review Press, page 1). Given this, CFOs really need to get analytics right. The CFOs that I have talked to say they already “rely on data and analytics and they need them to be timely and accurate”.
One CFO, in fact, said that data is potentially the only competitive advantage left for his firm”. And while implementing the data side of this depends on the CIO. It is clear from the CFOs that I have talked to that they believe a strong business relationship with their CIO is critical to the success of their business.
So the question remains are you ready as a financial leader to lead on the analytics agenda? If you are and you want to learn more about setting the analytics agenda, please consider yourself invited to webinar that I am doing with the CFO of RoseRyan in January.
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