Break down data silos and improve business planning
The amount of data generated by finance, sales and operations teams is vast and complex, making it difficult for everyone to work together, plan and make data-driven decisions. The time spent on extracting data from multiple systems, formatting into spreadsheets and then loading into other programs is excruciating, and the time lost doing it, is taking its toll. Welcome to the world of data silos.
What are data silos?
A data silo is a mass of data held by one business unit that is not easily or fully accessible by other groups in the same company. People in finance, sales, purchasing, and marketing refer to specific information to get their job done effectively and measure specific KPIs. These specialists often store their data in separate locations known as data or information silos, named after the structures farmers use to store different types of grain. As the quantity and diversity of data grows, data silos also grow causing inefficiencies and inconsistencies.
Data silos create barriers to information sharing and collaboration across departments. Siloed data is often not trusted and leads to inaccuracy. When data is siloed, people find it challenging to get a holistic view of operations and are often forced to make decisions based on incomplete data.
What causes data silos?
Data silos have historically come about by the way an organisation has been set-up. The old management thinking was to have separate departments for each specialist area which then made it logical to have separate tools and software for each one to collect specific information. Each department would work on their own numbers and then share the pertinent information at month end and let the finance team determine what is accurate or included in financial reporting.
This data silo system has been in play for many decades and is often supported by manual workarounds and corrections. However, as cloud-based data platforms have become more powerful and can store information in data lakes or data warehouses (and can be viewed on demand), there is no technological barrier in creating a single source of information. The hesitancy is often derived from a company culture, fear or lack of time inhibits the data sharing.
Is there a better way to share information?
When organisation do prioritize better planning, it is possible to unravel the complexity of financial and business data and enhance planning across different departments and business units.
People need to come together and decide on what information you want to include as well as the business rules for the data governance and how often its refreshed etc. This process then helps you to find a business planning and analytics platform to automate the collection and consolidation of data, allowing streamlined business decisions for all. Taking the data from your Enterprise Resource Planning (ERP) and customer data from Customer Relationship management (CRM) systems, as well as other selected sources, everyone can leverage relevant company-wide data in one place — and transform how they work together.
Busting data silos helps democratize finance data
Traditionally, access to financial data has been limited to a few within an organisation, such as the finance or accounting team. This siloed approach continues to be a common approach to financial data management. Phocas has for many years positioned itself as an enabler of the trend towards data democratization. Phocas provides a single platform to manage your data sources and then build your data standardisation around variables unique to your business – so everyone can find what they are looking for and be more productive.
Take for instance, a recent customer that used Phocas to unravel its complex data problems. The Cornell Corporation is a group of five companies that service all aspects of the diesel automotive industry. Cornell uses Phocas to consolidate all its data sources which include SAP B1 (ERP),Xero (Finance) and Zoho (CRM) across the group into one source of truth.
Connect all your financial and operational data and plan better
Connecting all your business or operational data with your finance data can provide numerous benefits. The integration of data from various departments can lead to a more comprehensive understanding of your financial health.
Most often the finance team drives the data consolidation or data democratization process because they often use a different system to others and are keen to consolidate the sales, marketing, operations, and HR data into their numbers. For many, it seems a natural fit for finance team to own the data model within a business and at Phocas, we are seeing more financial controllers and finance teams leading the data strategy which is proving advantageous because they know the numbers and can provide advice and expertise to others within the organisation.
According to global research conducted by FSN – The Modern Finance Forum – The Future of Data in the Finance Function (2022), the finance function has a lot to gain from taking up the ownership of your data. For instance, 58% of those surveyed claim that there are no clear lines of ownership and accountability over the data that they use and only 31% have access to all available data sources within their business.
A core benefit of incorporating operational data ensures that decisions are being made earlier or before they have an impact on finances. Financial reports and analysis reflects the most current information available, and teams are not presenting recommendations based on data that is 30 days old or more.
A significant advantage of data consolidation is the reduction in data downtime or lost hours. Have you ever added up the time wasted consolidating data? Maybe you shouldn’t as it will raise your stress levels. In the same FSN research, it was found that organisations that leverage a modern data platform are x 14 times less likely to experience data downtime and x 6 times more likely to discover and fix data errors when they do arise.
By centralizing data in one platform, businesses can also better protect their information and ensure it is well maintained. Additionally, personalised security measures can be put in place to ensure that sensitive financial data is only accessible to authorized people. In the past, a lack of secure permissions or workflows was often a barrier to data democratization and collaboration.
Furthermore, integrating all business data with finance data can be customized to suit specific business needs. Which is another way of helping the finance team to understand and measure the relationship and interdependences for all their financial and non-financial data which is not an easy task and one that many are trying to address.
Only 41% of finance teams in the FSN survey claim to have a complete understanding of the relationship and interdependencies for their financial and non- financial data and only 44% say they can quickly track the consequences of data errors.
The Phocas platform is designed to merge financial and operational information so business teams can measure many KPIs. Tracking financial KPIs is critical and often a priority for most companies, but non-financial KPIs can also shine a light on different aspects of the business and link more intuitively to certain aspects of your overall strategy, like customer service or customer retention. By measuring both types of KPIs using all available data, you can achieve more alignment of operational and financial goals.
Connecting all your data into a single source of truth also means you can tailor-make your financial statements, providing insights into areas of your organization that are most important. By having a holistic view of the company's financials, you can now customise Income Statements (profit and loss) specifically for different parts of the business. So now that Division C has their own detailed income statement they can take proactive steps to manage their expenses, now they understand how their actions and decisions they affect the company’s overall bottom line.
Customizable data integration also leads to better planning and modelling. In a recent Phocas user poll, 76% of respondents said they struggled to include non-financial data in their budget before using a business planning and data platform. When data is integrated to specific business needs, you can gain a better understanding of how operations, customers, and market trends are working for or against your business. This, in turn, allows people to create more accurate budgets and forecasts, which are critical for effective planning and making better-informed decisions.
Presentable finance brings the numbers to life
Traditional financial reports can be complex and difficult to interpret, making it challenging for the non-finance professionals to understand and make decisions based on the data.
When presented in graphs, charts and visuals you can see relationships and patterns between operational and business activities better as well as:
- create a better understanding of the business for everyone
- identify and act on emerging trends faster
- tell a story with your data
- enhance employee productivity
- provide a better customer experience
When data is all in one place, the opportunity to discover opportunities that were previously hidden within the data of your different systems now emerge for your teams. But this does not mean creating heaps of more reports to review - it’s about allowing people to following their train of thought, especially in Phocas, as you can click down into transactional data from the grid, visualizations and dashboards.
Breaking down data silos and integrating data from different sources requires a multi-pronged approach. Democratizing financial data allows for more informed decision-making at all levels of an organization and connecting all business data with finance data provides a comprehensive overview of operations and will uncover new insights. Finally, presenting finance data in a visual and easily understandable format makes it more accessible to non-financial stakeholders. Phocas provides a single platform to manage your data sources and then build your data standardization around variables unique to your business – so everyone can find what they are looking for, carry out data analysis and be more productive.
Katrina is a professional writer with experience in business and tech. She explains how data can work for business people without all the tech jargon. She is always on the hunt for great customer data stories.
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