Data is exploding at an exponential rate, but for CFOs, translating data into actionable insights that generate improved business outcomes remains a top challenge. Manufacturing organizations have hundreds of thousands of parts across a product portfolio, and when you add market volatility, constantly evolving supply chains, and geographical risks, there is plenty to monitor, which keeps CFOs up at night. Like any C-suite executive, CFOs want to feel confident that procurement and other organizations are making the right sourcing decisions and that the organization is achieving spend intelligence.
The role of the CFO continues to expand, and today many are participating in digital transformation journeys. Robert Bendetti, CFO of Life Cycle Engineering, explains to Forbes: “All businesses are becoming digital businesses, and CFOs need to stay on the cutting edge of technology.”
The question remains: What, exactly, is the cutting edge of technology?
Consultants and big data players often privilege a one-size-fits-all approach to data management with the end goal of having all data stored on packaged reporting suites like PowerBI and Tableau. These tools have proven difficult to glean actionable insights from, often lack context, and come with a large price tag and difficult ROI hurdle. Instead, CFOs should seek to partner with CIOs and other business leaders to “bridge the decision abyss” and develop processes and deploy systems aimed at providing value. This will drive trustworthy insights that deliver the right outcomes and not just a nice-looking KPI.
With so much data to navigate, there’s no doubt that technology such as AI are needed to help organizations realize spend intelligence. Just as we have seen a huge expansion in best-of-breed solutions supplanting ERP functionality, best-of-breed solutions similarly extend to the analysis of direct material spend. A direct material sourcing platform can provide full data visibility to generate substantial cost savings with insights rooted in context.
One such benefit is part-level insights. LevaData’s Head of Product Brian York explains what happens if these insights are overlooked: “Traditional tools lack enough efficiency to enable procurement teams to manage more of their parts spend, so teams often focus on the big-spend items. As a result, cost-saving opportunities on lower-spend parts often get missed. If you’re not monitoring this portion of your spend, you might miss market shifts as prices decline, and you will continue to pay higher prices.”
While CFOs may be aware of cost savings opportunities, they don’t always have the time or tools to take advantage of them. A platform can help accelerate the process. Instead of having finance build a dashboard, CFOs can work with procurement professionals to ensure they are equipped with a sophisticated platform that provides expanded awareness of the breakdown and flow of their spend with robust insights and recommendations that make it easier to accelerate the cost savings journey.
When it comes to the new CFO, McKinsey states that “this time of change represents an opportunity for the CFO to have disproportionate impact, becoming almost a copilot of the business with the CEO.” There are many untapped opportunities that CFOs can take advantage of for the future, but only if they embrace digitization and actively participate in their organization’s transformation journey.