THE CHANGING ROLE OF THE CFO
In the not too distant past, a CFO’s role was limited to preparing financial statements for the company.
Today, the CFO is seen as an important business advisor. Often, the CEO relies on the CFO for both financial analysis AND general business analysis.
To keep up, it is essential for CFOs to have a holistic perspective, one that goes beyond simple financial statements. They need to keep tabs on the whole business.
That’s where a data warehouse comes into play. For CFOs, a data warehouse supports operational and financial analytics by centralizing and combining data.
You have some options when it comes to your data warehouse:
Built right, a data warehouse allows the CFO and his/her team to be self-sustaining… Able to conduct business analysis and create reports on their own.
You don’t want to rely on the IT department for analytics. That’s the old way of doing things. It worked back when IT was under the management of the CFO and the financial department.
But now, IT is busy supporting the entire company. When you ask for help, you get put in the queue and the IT guys get to your request when they can.
This doesn’t work when you have time-sensitive business intelligence questions you’re trying to answer, or when you have critical reports that need to be fixed.
By having direct control of analytical and reporting tools with a cloud-based data warehouse, the CFO can have the speed and agility needed to respond to the CEO’s requests for information.
WHY EXCEL ISN’T ALL YOU NEED
Often, CFOs do all of their financial planning in Excel. It’s got macros and workbooks and they all link to each other.
We get it. It’s the tool you know, and you’re comfortable with it.
Excel is never going away, and it works well if you use its correct purpose. But using only Excel limits your capabilities and hampers productivity.
Here’s an example.
One company we worked with had one person running their entire FP&A process using only Excel spreadsheets. It was a total nightmare.
The massive spreadsheets were too big. It took 20 minutes just to open a file. Often, while working in them, they would become corrupted. And the analyst would have to start from scratch.
During budget season, executives would throw a what-if scenario out to the analyst, questions like, “What if next year we created 100,000 accounts?”
They would sit in the room and expect the analyst to be able to push this scenario through the formula. They’d have to wait hours to get an answer, or even until the next day.
The analyst would be up until all hours working on trying to move this scenario through the worksheets.
This is bad business intelligence and just bad business in general.
When we were brought in to help fix the problem, we started by pushing all the logic from the Excel spreadsheets down into a database.
We let the database handle the data prep heavy lifting, and kept Excel as a reporting tool.
With our new setup, the executives get instant answers to all their what-if-scenario questions during meetings.
Again, we’re not saying to get rid of Excel. We’re just saying you’ll run into trouble when you try to use Excel for something it wasn’t built for, like being a database.
It was never meant to be a stand-alone end-all BI solution. One of Excel’s strengths is how compatible it is with other tools.
For example, you can build a dashboard or working model in Excel and then pin that report into a viz tool like Power BI, which makes the report mobile-friendly.
Many CFOs use Excel as a database, but that’s the less effective way to utilize this program. You should use a data warehouse as a database and use Excel for visualization and analysis.
Push your logic into a database.
MORE EFFICIENT AND PRODUCTIVE
Not only does having a data warehouse let you answer questions faster, getting these results requires significantly less energy from you and your team.
For example, in the Excel scenario above, not only are the reports slow and unwieldy, preparing the reports manually is also a highly time-consuming process.
This is because building reports in spreadsheets requires hours and hours of soul-crushing manual data prep. It’s a tedious and inefficient process that kills team morale. It’s also highly prone to human error.
Your business logic ends up being scattered across multiple spreadsheets. Every time a change is needed, or a mistake is made, your VBA gets wilder and wilder.
Eventually, out of date logic leads to conflicting or broken reports.
This setup is simply unsustainable. The tangle of disparate business logic sooner or later becomes too much to handle.
With a data warehouse, all your business logic is defined in a single location. If the logic changes or there’s an error, you only have to update the code once in one place.
Best of all, centralizing your data prep in a data warehouse means it can finally be automated! 90% of the manual data prep that’s been weighing your team down can be done away with!
You suddenly have time to do things you’re passionate about, like conducting analysis, uncovering insights, and starting special projects.
SCALABILITY AND EXPANDED CAPABILITY
Another key benefit of centralizing your business logic in a data warehouse, is scalability.
If you use only Excel, you can only go as fast as a single person can build one spreadsheet. You only get one report at a time. It might work at first, but if your business grows, you eventually won’t be able to keep up.
With a CFO’s mandate to provide up-to-the-minute data and analysis to the CEO and executives, this won’t do.
Again, with a data warehouse, the problem is solved. Having a database handling the processing-intensive work frees you up to build as many reports on top as you please.
A data warehouse also lets you combine your financial data with other sources. This allows you to give complete answers to a much wider range of business questions.
In the past, a CFO would be focused on what the margins are for a certain product. Today, a CFO with a data warehouse connected to your HR, inventory, and CRM can tell you how a specific sales rep is performing… all the way down to the lifetime value of a customer.
WHEN TO MAKE THE SWITCH
With a data warehouse, the CFO finally becomes the person the CEO and the rest of the organization turns to when they need answers that are fast and accurate. You and your team become an indispensable source of actionable insight.
If you think Excel is good enough and you’re satisfied… stick with it.
But if you’re a CFO who wants to be instrumental in achieving greater growth and profitability, a data warehouse is the tool for you.
At Xerva, we help CFOs like you get the results they want without the hassle with our Done-For-You Data Warehouse. Our team builds and maintains your data warehouse for you. You get all the benefits, without doing the work.
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Nate McMurtrey loves using data to solve business problems. He is a Business Intelligence expert, data warehouse wizard, and pioneer in Done-For-You data warehouse solutions. He has worked as a BI manager and freelance BI consultant. In 2014, he co-founded Xerva with Nate Allphin.