2 - Activities of Finance Professionals Flashcards
Stages of info to impact diagram
- Assemble info
- Analyse for insight
- Advise to influence
- Apply for impact
- Acumen (ensures continuing process)
As we move thru stages of info to impact diagram, how does role of finance change?
Finance works in isolation –> work with others
i.e. accounting & governance –> guidance& management
Assembling info involves
collating, cleaning and connecting data into assembled info = reporting role
Analysing for insights involves
Analysing financial and non financial info to draw out patterns and provide relevant insights = questioning role
Advising to influence =
communicating insights to users and contributing to an objective, responsible perspective to influence their decisions = developing solutions role.
Applying for impact =
supporting and guiding actions to help org achieve the desired impact = deploying solutions.
How does acumen help?
Apply it to assemble valuable info and inform consideration of subsequent proposals. Acumen is what connects the different activities together.
Because of tech, finance have to focus more on which of info to impact activities?
Less on accounting & gov i.e. info & insights
More on guidance & mgmt i.e. influence & impact
Define data
raw, unprocessed facts and figures.
define info
Data that has been processed in a way that makes it meaningful for planning or decisions.
Financial data =
standard metrics which are well tracked and understood by org
Enterprise data =
financial data + broad operational & transactional data that bolsters analysis & forecasting - info bis generates internally outside standard financial data.
Big data =
enterprise data + new types of internal and external data which can be unstructured and large in volume but could yield new bis insights.
Why do we need to consider costs of assembling info?
Need to determine if value of info > costs
Quantitative vs qualitative info
Quant = can be given a value, objective Qual = cannot be given a value, subjective
ACCURATE mnemonic for good qualities of useful info
Accurate Complete Cost effective Understandable (needs of end user) Relevant (omit irrelevant info) Accessible (choice of medium) Timely Easy to use
Informal data collection
Goes on all the time e.g. by employees learning from world around them in newspapers, news or meetings with bis associates.
Formal data collection
Org needs specific data to fulfil a particular purpose so goes away and collects it.
IS informal data collection mostly driven by external or internal data sources?
EXTERNAL
Environmental scanning =
Process of gathering external info from a wide range of sources.
IS market research external or internal data source?
External - collect from outside org even if carried ou by org itself.
Examples of informal and formal INTERNAL data sources
Informal - word of mouth
Formal - email or reports
5 internal sources of data
- Accounting records
- HR records
- Machine logs
- Timesheets
- Formally or informally between staff
Data cleansing =
Identify inaccurate or irrelevant data, modify or delete as appropriate.
4 methods data cleansing
- Cross-checking raw data with validated data
- Manual checks by humans
- Automated batch processing or scripting processes
- Data wrangling - convert raw data from one form into another to use in diff system
What does connected data mean?
It means each bit of data is interrelated to every other piece of data in some way, and to achieve this org needs to be data centric.
5 stages of creating a data centric org
- Understand what data is relevant to bis model
- Assess existing data & systems
- Identify quick wins - use existing data to demonstrate valuable insights
- Formal data project - develop bis case
- Create and develop data culture
2 egs of data connection tools
- Microsoft power BI
2. Tableau
Data connection tools have the ability to… + 2 characteristics
connect vast data sources held in various locations & of diff data types. Usually cloud based & substantial processing power.
4 key functions of data connection tool
- data integration - pre built connections to»_space; systems
- Pre built starter kits
- user friendly functionality
- Mobile reporting
Data analysis =
evaluating data by comparison against benchmarks to form some finding or conclusion.
Insights =
More than reporting basic financial info - indications or drivers of value for an org.
So how is data analysis diff to insights?
Insights deeper - identify drivers of value, not just reporting basic financial facts. 1 step further - explain WHY the org’s perf was as reported, what might happen in future etc.
What are the 4 levels of data analysis for insight?
- Reporting - what happened?
- Analysis - why did it happen?
- Monitoring - what’s happening now?
- Prediction - what might happen in future?
In 4 levels of data analysis diagram, as we move from levels what 2 things increase?
Business value low –> high
Complexity low –> high
OLAP used for what level of data analysis?
Stage 2 Analysis. Online Analytical Processing allows users to analyse database information from multiple database systems at one time.
Primary stakeholders =
anyone with a contractual relationship with org
Secondary stakeholders =
still have an interest in the org, but no contract with them.
Another way to classify stakeholders into what 3 groups + some egs?
- Internal = mgmt & emp
- Connected = shareholders, lenders, customers, suppliers
- External = community, competitors, gov
How does internal/connected/external model relate to primary/secondary stakeholders?
Internal + connected = primary
External = secondary
Mendelow’s model shows us what?
How stakeholders can be mapped onto a matrix based on how interested vs how powerful they are –> tells org how to communicate w stakeholder based on matrix position.
Low interest + low power stakeholder
Minimal effort - don’t waste time on them
E.g. Causal labour
High interest + low power stakeholder
Keep informed (on big info) e.g. core employees, small supplier
Low interest + high power stakeholder
Keep satisfied - all good as long as satisfied, if not could disrupt strategy.
e.g. Gov
High interest + high power stakeholder
Key players
e.g. key mgrs/emp/main suppliers
How can org benefit from effectively managing stakeholder relationships? How can it measure this?
Make strategic gains
Measure level of satisfaction through combo of quant and qual measures.
3 communication considerations (relating to stakeholders)
- Audience - who target audience & what are info needs?
- Frequency - how often receive comms?
- Format - how & where receive comms?
Applying for impact role requires…
BUSINESS PARTNERING
Business partnering =
finance embeds itself in org rather than acting as separate function. Provide support & guidance to other functions.
Finance needs close bis partnership with 3 stakeholders = and which most important?
- IT function who capture data
- data scientists who analyse
- Bis leaders who turn insight into concrete action = most important
3 skillset areas for bis partnering + corresponding skills
- Effective relationships = need empathy, good comm, prepared to challenge.
- Contribute insights into drivers = need passion, commercial curiosity, objectivity.
- Ability to integrate, apply & comm = need bis understanding, analytical & accounting skills
5 requirements finance need to support bis leaders in achieving desired impact of decisions.
- Understand data sources & analytical techniques
- Understand bis ops
- Comm skills
- Good working relationships
- Leadership skills
5 ways finance connects various activities of an org
- Bis partnering
- Budgeting for each bis area linked via master budget
- Provide insights
- Implement decisions that impact»_space; areas
- Work with those who develop info systems impacting»_space; bis areas
