To meet the challenges of a fast-evolving business environment, organisations have to navigate a rocky terrain of data silos, regulatory compliance, and changing market demands.
The reward?
The Holy Grail of financial management—a single source of truth that enables accurate reporting and budget planning.
This serves to provide order and clarity to the chaotic world of financial decision-making, spurring growth by offering a comprehensive and consistent view of your organisation’s financial data.
How can businesses overcome the many challenges they may encounter in attaining a single source of truth for financial management?
In this article we’ll uncover the negative impact of data silos and the lack of data integration in financial management.
We’ll then demonstrate how the adoption of a modern cloud solution can help dissolve these barriers, with a single source of truth as the ultimate reward.
We’ll be covering the following topics:
- Data silos – the issues
- The importance of a holistic approach to data management
- The benefits of an integrated cloud financial solution
- Make use of advanced analytics and AI
- Final thoughts
Data silos – the issues
Data silos invariably occur when information is essentially trapped within the various departments or systems of an organisation, which greatly hinders data integration and collaboration.
The resulting fragmentation can ultimately lead to inconsistent and outdated data, inefficient processes, and increased errors.
Poor data integration could mean that finance teams are spending excessive amounts of time reconciling discrepancies and manually aggregating data which, in turn, reduces their ability to focus on strategic planning and analysis.
The importance of a holistic approach to data management
A holistic approach to data management involves taking the entire data lifecycle into consideration, from the gathering and integration of data to its analysis and maintenance, all while considering every element of the organisation, including people, places, processes, and products.
It involves effecting a complete and efficient and data management system that swiftly and safely makes information available wherever and whenever required.
Successful implementation of an all-encompassing approach to data management usually follows three principles:
- Having an iterative approach
- Creating a standard for data that meets the requirements and processes of the organisation
- Recognising that people and culture are equally as vital to a business as technical controls and process design
Holistic data management is crucial for organisations employing data-driven initiatives to spur growth and improve decision-making.
It will enable greater data integration, sharing, and collaboration amongst different teams and systems.
However, this is not what’s currently happening.
According to a 2021 Data & Analytics study by The Foundry, fewer than half of business and technology leaders have a clearly defined strategy for data and analytics.
Such a haphazard approach can result in data silos that hinder sharing and collaboration. What’s more, formatting and update timing issues can lead to inconsistencies.
In addition, manually transferring data into spreadsheets and reports may result in expensive human errors along the way.
In the Foundry survey, leaders identified data-quality issues as the main stumbling block for businesses employing data-driven initiatives.
“Siloed data operates on different schedules, making processes like revenue recognition difficult and hindering your efficiency,” says Scott Freedman, Director of Marketing for Sage Intacct.
The benefits of an integrated cloud financial solution
Part of an organisation’s holistic data management approach should involve the use of an integrated cloud financial solution.
Having all your financial data in one place ensures your information is consistent, up to date, and accurate.
The risk of errors will be greatly reduced when you’re not transferring data between different systems.
Also, employing one solution enables greater collaboration and sharing of financial information across different departments and stakeholders. This results in a more complete and accurate view of the financial health of your organisation.
This data will enable you to make more informed decisions and respond quickly to market or business environment changes.
Furthermore, your financial processes can be automated, reducing the time and resources needed for manual tasks, enabling your finance team to concentrate on more strategic initiatives.
Improving data accuracy can boost business performance
A recent study by Gartner found that breaking down silos and sharing data boosts business outcomes, and businesses that promote data sharing should outperform competitors on most business metrics.
By making the move to cloud financial software, courier service Quicksilver Express halved the time for doing its monthly close.
Quicksilver can reconcile credit card and bank reconciliations daily, reducing errors and eliminating a week’s manual work. As a result. its overall accounting efficiency rose by 75%.
Investment firm Halstatt enjoyed similar benefits after switching to cloud financial software. As valuation reporting previously took over 100 hours, the company only had time to do it annually.
With automation, the process now only takes a few hours and is done quarterly, providing executives with a detailed view of asset value and costs throughout the year.
Make use of advanced analytics and AI
In this data-driven era, having an accurate and up-to-date view of your organisation’s financial health is only the beginning.
Artificial intelligence (AI) and analytics can enable you to project future requirements. Strategies can be adjusted, challenges proactively addressed, and new opportunities exploited.
If you break down data silos, streamline processes and achieve a single source of truth for financial management, you’ll unlock new opportunities to make effective use of cutting-edge technologies.
Project data will play a greater role in business strategy
The Foundry study found that with advanced insights, 78% of leaders predict that data and analytics will fundamentally change the way they do business over the next three years.
The cloud and advanced capabilities enabled by AI and machine learning will allow organisations to be more proactive in mapping the best way forward.
Integrating advanced analytics and AI into your financial management processes can enhance decision-making and reveal hidden patterns, trends, and insights that might otherwise go unnoticed.
These powerful tools can highlight inefficiencies, identify areas for cost reduction, and even predict customer behaviour.
You can make data-driven decisions confidently
Scott from Sage Intacct says: “When you have an accurate view of what’s happening today, you can use AI and analytics to project that data and determine future needs and capacity.
“That helps companies deal with unanticipated surges in demand or adjust marketing campaigns based on their performance. Connecting systems through consolidated reporting makes the whole business run more smoothly.”
Final thoughts
In today’s fast-paced business world, breaking down data silos and adopting financial management cloud solutions is crucial if you want your organisation to grow, succeed, and get ahead of the competition.
With an integrated financial solution, businesses can achieve the Holy Grail of financial management: a single source of truth for all financial data, guaranteeing consistency and accuracy across the organisational spectrum.
Your finance team will be empowered to make well-informed decisions based on real-time data, ultimately resulting in better business outcomes.
