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August 26, 2013

CFOs Stepping Up in Analytics Adoption

Alex Woodie

CFOs are already quite familiar with large data sets in their roles as overseer of all things financial. They must be adept at using reporting tools, and do a fair bit of financial analysis already, in the form of budgeting and forecasting. But increasingly, CFOs are adopting analytics to streamline individual tasks that fall under their responsibility, which is helping to bolster their companies’ bottom lines.

Some CFOs are using analytics to assist in asset recovery initiatives. By using advanced algorithms that can sift through a decade’s worth of payments–perhaps involving a million or more documents–finance teams can identify duplicate payments and seek a settlement, according to a recent story in InformationWeek. Similarly, CFOs are adopting new data analytic tools that can help accelerate the collections process.

Asset recovery and collections may have been on a CFO’s list of responsibilities before, but as lower priority item. Now, thanks to advances in technology, it’s becoming more cost efficient to execute recoveries, which could make them higher priority items in future budgets.

Other CFOs are finding analytics helpful for streamlining the audit function. According to a recent Wall Street Journal story, the oil giant Chevron is using big data technologies to run audit tests on all of its accounts payable transactions, instead of just a small sample. As a result of the greater efficiency, it has a much better understanding of where it should apply resources to conduct full audits, and this has enabled it to reduce the employee time it allocates to auditing functions by 15 percent.

“This offers a combination of much better quality for notably higher efficiency and lower costs,” says Chevron CFO Patricia Yarrington told the WSJ.

Forecasting is another area of CFO responsibility that is getting a big data makeover. In particular, companies are exploring how they can combine unstructured social analytics with traditional forecasting tools to get a better handle on how customer sentiment regarding products and marketing campaigns will drive demand, according to Oracle’s CFO Market Watch column.

“Big data is a phenomenon that the CFO cannot ignore,” two Oracle vice presidents, John O’Rourke and Karen Dela Torre, write in the CFO Market Watch. “Big data might not have arrived in the finance function just yet, but the writing is on the wall. This is a good time for CFOs to huddle with their CIOs to discuss and develop a strategy for managing and leveraging big data for competitive advantage.”

Related items:

The Transformational Role of the CIO in the New Era of Analytics 

Thinking in 10x and Other Google Directives 

Attention to Small Details a Key to Big Data Success 

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