Why Top-Performing CFOs Are Turning to Data Warehouses
Not too long ago, a CFO’s role mainly revolved around preparing the company’s financial statements. But today’s CFO is facing many different responsibilities, expectations, and challenges.
Today, the role of a CFO is that of a key business advisor. CEOs rely on their Chief Financial Officer for both financial analysis and general business analysis, to guide direction and decision making as a whole.
To meet these changing demands, CFOs need to gain a big-picture, holistic view of the business. One that goes beyond simple financial statements and delayed month-end reports. As a CFO, you need to keep tabs on the entire business in real-time. And that’s where a data warehouse becomes a key player in the success of a top-performing Chief Financial Officer.
THE CHANGING ROLE OF THE CFO
For CFOs, a data warehouse supports your operational and financial analytics by centralizing and combining all of your key business data.
You have some options when it comes to your data warehouse:
- A cloud-based, done-for-you data warehouse, also known as Data Warehouse as a Service (DWaaS)
- An in-house, do-it-yourself data warehouse
What’s the difference? Compare DIY and “Done For You”
When built right, a data warehouse allows you and your team to be self-sustaining and effective. It enables you to conduct the deep analyses and create the reports you need to be successful. You shouldn’t need to rely on your IT department for the insights and analytics you need to do your job correctly and efficiently. Gone are the days when you can wait several days for critical reports and updated numbers. Time is money, and your data is knowledge.
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 demands and needs of the business.
WHY EXCEL ISN’T ALL YOU NEED
Often, CFOs do all of their financial planning in Excel. It’s got macros and workbooks, and everything links. We get it. It’s the tool you know, and you’re comfortable with it.
Excel is never going away, and we aren’t going to tell you to rid yourself of all your spreadsheets. Excel has its place and works well for certain use cases. The problem becomes when you’re using Excel to do things it wasn’t made to do.
Using only Excel limits your capabilities as a CFO and hampers your productivity.
How exactly? Well, take this example.
Excel vs. a Data Warehouse
A company we worked with had one person running their business’s entire FP&A process using only Excel spreadsheets. Let’s just say, it was a total nightmare.
The spreadsheets were massive. It took 20 minutes to open just a single file! And often, while working in them, they would become corrupted. The analyst would then have to start over from scratch.
During budget season, the company’s executives would throw a what-if scenario out to the analyst. Questions like, “What if next year we grew accounts by 35%?” And then they’d need to wait hours or sometimes days fo the analyst to be able to push the hypothetical scenarios through the formula to arrive at an answer.
Not only is this counter-productive to the leadership team’s time, but it was a terrible and time-consuming process for the analyst! The questions would take hours to answer.
Now, is that business intelligence?
When we were brought in to help fix the problem, we started by pushing all the logic from the Excel spreadsheets into a database. We built the data warehouse to manage all the data prep heavy lifting, and we kept Excel as the reporting tool. With our new setup, the executives now have access to real-time, instant answers to all their what-if-scenarios.
The Need for a Source of Truth
So again, we’re not saying to get rid of Excel. Rather, we’re pointing out the limitations of Excel as your core data solution. Your business will start to run into issues when you use Excel for something it wasn’t built for, like being a database. It was never meant to be a stand-alone, end-all-be-all BI solution.
But the fact remains that many CFOs are still relying on Excel spreadsheets to be their core database when that logic should live in a data warehouse and be pushed to Excel for visualization and analysis.
How a Data Warehouse Helps CFOs
… Become more efficient and productive
Not only does a data warehouse let you answer questions faster, but getting these results also requires significantly less time and resources.
As shown in the scenario above, the Excel reports were slow and unwieldy. Preparing them was an arduous, manual process. That’s because creating these reports in spreadsheets requires hours and hours of daunting and time-consuming manual data prep. It’s tedious. It’s inefficient. It destroys your team morale.
And it’s also highly error-prone.
Your business logic ends up being scattered across multiple spreadsheets, which erodes your business’s source of truth. Every time a change is needed or there’s an error in the data, your VBA gets wilder and wilder. And eventually, this out of date logic leads to conflicting or broken reports.
This setup is simply unsustainable as a long-term strategy. It’s just bad business. You’ll find yourself in a tangle of disparate and disconnected business logic that will become too much to manage.
With a data warehouse, your business logic is defined in a single location for a single, reliable source of truth. 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! Ninety percent of the manual data prep that’s been weighing your team down can be eliminated. Suddenly, you’ll be able to dive into the reporting, analyze certain results and uncover insights. And this is the point of true business intelligence.
… And expand potential
Centralizing your business logic in a data warehouse allows for improved scalability as well.
Using only Excel, you can only go as fast as a single person can build a spreadsheet. This may work in the early phases of your business, but at some point, your growth will exceed this timeline.
When CFOs are being tasked with real-time, up-to-the-minute data and analysis to support the business objectives and executive team’s needs, this simply won’t do.
A data warehouse helps solve this by enabling you to keep a single database and build as many reports as you need in your viz tool of choice.
You’re also empowered to provide more complete, holistic answers to a much wider range of critical business questions. By combining your financial data with your other data sources, your insights are expanded.
WHEN TO Implement a Data Warehouse
With a data warehouse, the CFO can truly fill the role today’s businesses need. You can provide answers that are fast and accurate. You and your team become an indispensable source of valuable and actionable insight.
If you are satisfied with the information you’re getting from Excel, stay 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.
We help CFOs like you get the results they want without the hassle with our fully managed data warehouse solution. Our team of data analysts builds and maintains your custom data warehouse for you so you get all the business benefits without the DIY hassle.
What goes into a successful data warehouse? These 8 key elements.