How CFOs Can Use Data to Improve Financial Performance
by Brenna Dilger, on August 11, 2022
As a Chief Financial Officer, you’re always looking for ways to improve the financial performance of your company. One of the key components that impacts the financial performance of your company is the strategic use of internal and external data. By using data effectively, you can identify areas of opportunity, create cost-effective solutions, and maximize revenue for your company.
Internal data provides the foundational building blocks for data-driven decision-making, while external data can fill in the gaps and extend the reach of your data-driven initiatives to give you a competitive edge.
External data, also known as third-party data, is data that is collected from outside of an organization. In a recent survey, nearly half of companies reported using external data in their analytics activities, and 92% of data analytics professionals said their firms needed to increase use of external data sources. Additionally, about 54% surveyed said their companies plan to increase spending on it.
Applying external data sources can help CFOs budget, mitigate risk, make better predictions, and plan better when allocating resources and launching initiatives. Sourcing the right external data can have a huge financial impact on your organization, if you know how to use it effectively.
Use external data to improve planning and analysis
External data can improve the accuracy of your financial models by illuminating the blind spots that internal data may miss. By incorporating data from outside your organization, you can get a more complete picture of your financial situation and make better decisions about planning and allocation of resources.
For instance, competitor data can help CFOs identify and avoid the mistakes that their competitors have already lost money on. Transaction data can help CFOs analyze their sales compared to overall market sales and identify missed opportunities. There are many different types of data from many different types of sources that can greatly improve and enhance financial models, planning, and analysis.
Use external data to improve budgeting and forecasting
In a post-pandemic world, uncertainty and volatility are becoming more of the norm than the exception when it comes to business. As a CFO, you must be more flexible with budgeting and resources in order to respond to change quickly and effectively. External data sources can help you better predict and plan for potential future events, and enable you to adapt quickly to anything that may come up unexpectedly.
Forecasting is more accurate and useful when it is powered by a mix of quality internal and external data. Market data can help CFOs predict trends, sales, supply, and demand. It can also help you make decisions when it comes to budgeting and allocating resources. For example, location data can help CFOs make the right financial decisions when it comes to allocating resources toward store locations.
By acquiring the data that illustrates the financial state of your market and your competition, your organization can stay ahead of the curve when it comes to making better financial decisions and strategies.
Use a data collaboration platform to centralize your data procurement operations
You know that the best CFOs are leveraging external data to gain deeper financial insights, create better strategies, and predict mistakes before they happen. All of this can’t be done effectively with just internal data. CFOs need a steady stream of external data in order to build more accurate predictive models and make better decisions in every financial area.
However, finding and acquiring this external data can be a tedious, time-consuming, and expensive process. To acquire the most relevant data and gain the richest insights, CFOs must systematically integrate quality external data sources with their internal data. Using a data collaboration platform will automate, simplify, and expedite this process.
A data collaboration platform connects data buyers with many data providers in one place, so that buyers can purchase from multiple sources at once. It also gives buyers full control of what data they’re ingesting and from whom. You’ll be able to pick and choose the exact data points you want from the exact providers you want and have it delivered to your preferred endpoint all at once, without worrying about duplicate data.
Buying from a data collaboration platform also ensures that you won’t buy duplicate data points or data you don’t need. You won’t have to waste money on buying the same data points twice, or on data that you don’t really need. You’ll be able to filter through and select only the data that will benefit your financial planning needs.
Improve internal data accessibility with data sharing
Data sharing is the act of making data available to other individuals or groups within an organization. Companies that share data make better informed business decisions and provide better clarity across their organization. In fact, 76% of finance leaders say decision makers increasingly have access to important data about business operations and performance through systems/providers outside of finance.
A CFO’s access to data from other departments within their own organization keeps them up-to-date with everything they need to know to make the best financial decisions. The most accurate and successful financial planning and strategy is made when every aspect of a company is taken into account. With direct access to all sales data, product data, marketing data, and more, you’ll be able to put all of the pieces of your financial puzzle together.
A data collaboration platform provides software that would enable you to transfer that important data between internal departments. With a data collaboration platform, everything is automated and data sharing is made fast and easy, even if you have no technical expertise. By setting up internal data commerce between departments and creating an easily usable and accessible data ecosystem for your company, departments can share their relevant data with each other seamlessly. You’ll be able to receive the data that you need from each department quickly and easily.
Sell your own organization’s data to generate a new revenue stream
Just as you’re willing to spend money to get the external data that your company needs to improve, countless other organizations are willing to spend the money to get the data they need from you to improve. It’s a beneficial cycle that keeps the data economy booming. The data monetization industry is getting more profitable each year, and most organizations have already started entering the market or have been formulating a plan to enter it soon.
As a CFO, you’re always looking for ways to generate more revenue. Selling data assets that your company is constantly collecting is one of the best ways to start raking in a new stream of revenue without too much risk. You know there are companies willing to buy your data sources, and that data is already sitting in hard drives waiting to be used. It just needs to be packaged and put into a marketplace.
Turning your own data assets into a new stream of revenue can seem daunting, but the barriers to entry have significantly lowered with the introduction of new technology and more modern methods of data monetization. Nowadays, you can start selling your company’s data with just a few clicks and start generating a new stream of revenue quickly and easily.
How Narrative can help CFOs improve financial performance
Gain access to new data sources for projects and initiatives with Narrative's data collaboration platform. You'll be able to optimize spend by centralizing data procurement, while enjoying the ability to use automatic deduplication and custom filters to buy just what you need and nothing you don’t.
You'll also be able to generate new revenue by commercializing the data you are already collecting. Using our user-friendly apps, you can quickly and easily launch a lucrative data business online, even if you have no technical expertise or coding experience. We automate and simplify every step of the process.
Want to learn how Narrative can help you acquire new data sources, improve operational efficiency, and generate revenue? Get in contact with our experts today to get started!