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Data is everywhere in our modern world. It’s also one of a company's most essential and valuable assets. Data provides insights about every aspect of a company, from customer preferences and behaviors to market trends, cashflows, and processes. 

When used properly, data helps teams make more informed decisions and find ways to improve. A data focus is crucial throughout the entire organization, especially in finance. Data-driven finance teams grow and scale faster with important metrics on their side. 

Why Data is a Critical Competitive Advantage 

The old saying “knowledge is power” could be replaced with “data is power”. Instead of taking a shot in the dark, data helps companies know they are moving in the right direction and helps them improve processes and experiences for customers and employees. Companies that leverage data have a significant competitive advantage because they’ve unlocked insights and can adjust their plans and processes to be effective and intentional. They don’t waste time and resources on inefficient projects but use data to drive their strategy and stay connected to what’s happening in their company, their industry, and with their customers. 

Companies that don’t fully understand the importance of data often silo it so that each team or department has its own data system or collection that isn’t shared with the rest of the organization. In contrast, data-driven companies (and finance teams) share data to create a comprehensive model that can provide clear and accurate insights. 

According to Accenture, “Key characteristics of data-driven enterprises include a focus on automation, continual improvement and optimization, the ability to anticipate internal and external changes, an adaptive mindset, and, most of all, a culture that fully embraces data and its potential.” 

With a solid set of data to drive decisions, data-driven companies generate an average of 30% more growth annually. The finance department has an incredible responsibility and opportunity to lead the charge for data and use data to impact the company’s growth. A data-driven finance team is a strategic asset that can sort and organize data to benefit the entire organization. 
Using Data to Identify and Reduce Risks 

Data provides many powerful insights, but perhaps its most impactful is its ability to identify and reduce a project’s risk. By looking at historical data and external factors, teams can find patterns and trends to identify potential risks. Data analytics brings together numerous data sources and can highlight connections pointing to risks that may not be noticeable or apparent at first glance. It takes a deeper dive into the data to truly understand a project’s risk. 

Identifying the risk is only half the puzzle; data also helps reduce that risk. When a team is aware of the risk of a project, they can take steps to mitigate that risk. In financial terms, this can lead to significant cost savings. Again, data provides value: teams can analyze various factors, including the largest contributors to the risk, and then eliminate or lessen those factors. Data can provide insights into the project schedule, budget, communication, and other factors and help teams maximize their resources to be more efficient and reduce risks. 
Benefits of a Data-Driven Finance Team 

All roads lead back to finance. The finance team touches the work of every other department in the company. So, when finance understands the power of data and properly leverages it, all teams benefit. 

Here are four key benefits of a data-driven finance team

  1. Risk reporting. Aside from simply identifying risks, finance teams can use data for regulatory reports and to keep the company compliant and on track. 
  2. Fact-based decisions. Instead of sorting through various points of view and records, a finance team with a single sort of truth can make more informed decisions based on facts, not emotions or potential biases. 
  3. Accurate forecasting. Planning and forecasting is as much an art as it is a science. When finance teams lean into data, they have a clear view of the past and how it will impact the future. They can combine internal and external data for a clear view of the future, including the best budget. 
  4. Process improvement. The finance team can use data to find roadblocks or errors in current processes. Data can shine a light on areas that are often overlooked and highlight areas for improvement, both internally and externally. These improvements can boost morale and productivity while also potentially leading to cost savings. 

 5 Ways to Make the Most of Your Data 

Just because a finance team has access to data doesn’t mean it will be successful. To make the most of the organization’s data, teams need to understand data, interpret it correctly, and apply it to the entire organization. 

 Experts suggest five steps to make the most of your data

  1. Improve data quality.

    Strong insights come from strong data. Finance teams need to look at their data and consider the source, collection method, and accuracy. Surveys can be misleading if they don’t collect answers from an entire sample. For accurate data, aim for quality over quantity — a dozen reliable data sources can paint a more accurate picture of the company than data from 100 questionable sources. 

  2. Link different data.  

    When examining data, don’t just look at it through one lens. Consider related data from another source that might tell another part of the story. For example, a finance team may be able to track how much money the company spends on materials and labor. Linking different data means measuring how much money the company saves by reusing materials when possible. Both data points tie to the same result but get there in different ways and help teams see the full story. 

  3. Analyze the data.  

    At first glance, data might not tell you everything you need to know. In many cases, data can be linked together for causation but not correlation. For example, a finance team could measure that when their crews spend less money on a project, the project is finished faster. Those two data points are related, but that doesn’t necessarily mean that spending less is what causes projects to finish sooner. Take advantage of data analytics tools to dig deeper into the data and find real connections. 

  4. Add theory to the data.  

    After looking at the data, you may have an idea of what causes certain metrics to change or react. Test those theories and try to find the why behind the numbers. You might not find the right answer right away but continue digging into the data. 

  5. Make changes and track outcomes.  

    Data analytics is ultimately to help companies grow and improve. Use the data you’ve collected, analyzed, and tested to find opportunities for improvement. You may find that you can cut back on the size of your teams or expand your marketing in a new area. As you adjust your strategy, track the outcomes to test your hypothesis. Continue paying attention to the data to drive your decisions and future strategy. 

Ready to take your finance team to the next level with data? Turn to hh2, a leader in cloud-based construction management software. Click here to learn more and schedule a free demo.  

Grow and Scale Faster with a Data-Driven Finance Team

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