Updated from original blog post November 21, 2017
Managing data security and privacy is a significant concern for CFOs, but consolidating data from disjoined data bases is a rapidly growing concern. Resistance to technological changes is a common theme in many companies. Perhaps it’s the question of the reliability of technology. Maybe some just abide by an “if it ain’t broke, don’t fix it mantra.” However, a recent study from Adaptive Insights shows that the race to using cloud technology to create a “single source of truth” is still in its early stages. Concerns about the processes available to gather and consolidate data from multiple sources into the cloud may be an impediment.
In its CFO Indicator Q3 2017 Report, “Jumping Hurdles: Finance’s Race to a Single Source of Truth,” Adaptive outlines the data challenges facing CFOs:
“Arguably, no other team in the organization is feeling the burn of this digital transformation more than Finance. As the chief stewards of operational and financial data, CFOs and their teams are in a race to aggregate rising data volumes from multiple sources, without the luxury of added time or additional resources to get the job done.”
That challenge is growing. The survey showed that over the next five years CFOs expect a data volume increase of 25%-50%. Finance departments nationwide will be responsible for using this expanded financial data to explain financial performance and trends to stakeholders.
And it’s not just financial data. The survey found that, 76% of CFOs say they are regularly tracking non-financial or operational KPIs as part of their forecasting processes, and expect them to comprise nearly one-third or more of their KPIs by next year. Adaptive notes: “Without a single source of truth, the data access problem will likely intensify, leading to an even greater loss in confidence and longer delays in decision making.”
As more data becomes available, CFOs need to come to grips with gathering data from multiple sources and consolidating and validating that data into a single data set that provides that single source of truth. According to the survey: “Our CFO respondents commented that a lack of discipline in using systems in place, in addition to reliance on more than one system for the same purpose, is making it difficult for their teams to retrieve the data. One respondent commented that the organization was using ‘multiple outlying billing systems, inventory and warehouse management systems.’”
It’s not cloud technology that seems to be the issue. Three years ago, Adaptive found that only 33% of CFOs trusted the cloud with financial data. The findings of the latest survey show a significant jump to 73% of CFOs now trusting in the cloud to handle their financial data.
However, that increased trust is not translating into practice. While the survey found that 44% of CFOs have achieved a single course of truth, up from 38% two years ago that positive news is undercut by the realization that 56% of CFOs have either decided to slow their attempts to move toward the cloud (34% down from 45% two years ago) or not even looking at a single source solution (21%).
A key reason is that the perception that achieving a single course of truth is cost prohibitive. More than half of respondents (51%) say it is too expensive, which Adaptive says could mean they have either been burned by a previous data warehouse investment or have a perception that this type of costly IT-managed solution is the only alternative to Microsoft Excel. Adding to the expense argument is a reliance on legacy solutions (41%). Moving from these systems has a significant cost that CFOs don’t want to address.
However, a more troubling reason is that almost four in 10 CFOs (39%) said the number of data sources (39%) presents a challenge for CFOs in attaining a single source of truth.
Now more than ever, technology is available to provide single source data storage. However, the challenge of data consolidation and validation is only going to loom larger when dealing with both financial and non-financial data. Until new processes are developed, a lack of confidence in data consolidation technology may prove to be the real truth that causes CFOs to continue to be reluctant to create a “single source of truth” in the cloud.