The Power of Information
Some years ago, the CFO of my company asked me to put my best people on our Oracle implementation project. It’s not that he was worried about system security, or that his team would fail to establish appropriate controls. It’s because the project was critical to him and he wanted every possible thing done to ensure success.
He said something to me that made a lasting impression: “I don’t want to keep managing the company through the rear view mirror.”
He was referring to the fact that the information he and the rest of the executive leadership team used to run the company was always old news. The financial information was ‘as of’ the last reporting period, and anyway it took the financial team a week or more to finalize the journal entries and release the numbers. Operational information was also old, and because it came from a different source than the financial results was often inconsistent.
In fact, the inconsistencies in the data meant that the executives were managing through a broken rear view mirror.
I believe that unless you have information that meets the following criteria (and I am sure there are more), it is not possible to optimize performance, understand and manage risks, and remain in compliance:
- Forward-looking, providing insight into what is likely to happen
- Usable: information that can be analyzed and easily understood rather than a mass of data
- What you need: focused on what you need to manage the business, with trivia removed
An article on the critical nature of business analytics to support decision-making was recently published by MITSloan Management Review (subscription required). One paragraph stood out for me:
“I did a study of 57 companies that had improved their decision making in one way or another, and I asked them what they used to make those decisions better. The number one intervention tool they cited was analytics – about 85% said analytics. But right after that was change in culture or leadership, followed by better data, followed by change in business processes, then the education levels of the people doing the decision making.”
- Is your organization making decisions while looking through a broken rear-view mirror?
- Do you agree with the criteria I listed for the information needed?
- Have your internal auditors identified deficiencies in this area as major? If not, why not?