The Chief Financial Officer (CFO) role is dynamic and constantly changing. Today’s CFOs must take on not only the traditional financial responsibilities of the role, but also new strategic responsibilities and take part in securing their organization’s future. In order to execute these new responsibilities, CFOs need be able to stay on top of all the financial data and be able to translate it into insightful analyses and actionable advice. Business Intelligence (BI) works to provide CFOs with the tools to do that.
But what is BI?
Business Intelligence (BI) is a process that aims to develop corporate decision-making by helping organizations organize and analyse their data. Often in organizations, the data needed for business decisions is scattered across multiple systems and spreadsheets, which makes it difficult to get an overall picture of the current status of the organization. With BI, relevant data is collected from different systems and is then combined and processed to create a basis for reporting. This way, organizations can utilise financial and operational data to gain insights from current and historic data, as well as future trend forecasts. These insights can be used as the basis for Key Performance Indicators (KPIs). BI systems usually display the data in dashboards that enable real-time analysis and lets decision-makers identify trends and opportunities.
6 benefits of using Business Intelligence (BI)
1. You will reduce the risks.
By using BI, the organization can see if something in the data stands out in real-time. This makes it easier to detect abnormal activities and monitor employee compliance with regulations. The organization can also combine its own internal data with external data, such as current market trends, in order to for example analyse credit portfolios to spot any abnormalities.
2. You will increase profitability.
With BI, the organization can keep track of data on customers and recognize which customers are most loyal and profitable, and therefore the best candidates for marketing new products and services, upselling and increasing lifetime value. The organization can use BI to monitor customer retention metrics in order to see where efforts must be made to keep valuable customers.
3. You will improve communication.
BI enables everyone in the organization to have access to the same data at the same time. Employees don’t need to search for information in different systems or spreadsheets or ask colleagues for pieces of information or separate analyses. This ensures that everyone is on the same page and reduces mistakes made due to communication issues.
4. You will have a competitive edge.
BI can be used to compare the organization’s products and services to those of its competitors and thereby identify its strengths along with areas it must improve to stay competitive. With BI, the organization can also track trends on the market and predict costumer behaviour in order to plan new products and services and make sure that the existing ones meet customer needs.
5. You will increase the successes of marketing.
BI can be used to monitor how much is being spent on advertising and how different marketing campaigns and initiatives are performing. Successful initiatives can be further explored while unsuccessful initiatives can be reworked or scrapped all together. This ultimately increases the overall success of the organization’s marketing efforts and contributes into the return on investment.
6. You will improve operational efficiency.
With BI, your organization is able to analyse data related to operational performance, resource allocation, and employee performance in order to identify areas for improvement. Furthermore, the HR department can use BI to analyse how satisfied, engaged, and productive the organization’s employees are, and use this information to improve these measures.
10 ways CFOs are using Business Intelligence