We recently sent an email to some of our current clients and FOSA (Friends of Skyline Analytics) reminding them to contact us “early and often” in the run-up to budget prep season (go ahead, start singing “It’s the Most Wonderful Time of the Year” in your best holiday tone). I spend the majority of my time with the C-suite, and because Skyline specializes in best-in-class FP&A work, I naturally spend a great deal of my time supporting CFOs, in particular. I am still always a bit mystified – maybe bemused is a better word – that so many really good and really smart finance people wait to the last minute on their budgets. I get it, we are all insanely busy (I am writing this blog post at 4 AM); but something as important as budget planning should be started early and revisited often throughout the budget cycle (if not continuously throughout the year, as a means to dynamically reforecast based on current actuals). In particular, I often see last-minute, “top-down”, “one-and-done” (i.e., difficult to manipulate) models, making quick pivots and scenario analysis near impossible (let’s revisit financial model best practices in a later post).
So, as I was sitting down here today to start our very first – our inaugural! – blog, I thought I’d start this series with not just the importance of getting your budget done sooner rather than later – and for myriad reasons – but the absolute, fundamental, foundational importance of Data Intelligence, and why it is mission critical for an organization to have and use it continuously in the pursuit of greater profitability and growth. Data Intelligence should permeate through the hallways and offices of your organization – it should literally be embedded as part of your culture – and it absolutely should be the foundation for your budget process.
Indulge me, please, as I present some clear framing of what Data Intelligence is, how it is distinct from Business Intelligence, and why it is critical that you have it and know how to leverage it. A lot of people use Data Intelligence and Business Intelligence interchangeably – but they are different. Business Intelligence is a sub-set of Data Intelligence. Here are good definitions of each:
Data Intelligence (DI) is a collection of tools and methods that organizations use to better understand their data. It helps organizations gain insights into their data’s quality, context, usage, and impact, which can lead to better decisions and outcomes. DI also provides a basis for “one version of the truth” when it comes to numbers. Everyone is able to trust the numbers so there can be agreement on the numbers – from the interns to the Board. Everyone has clarity and confidence knowing their data is accurate and, therefore, giving an accurate picture of the financial health and operational efficiency of the organization. Having this kind of consensus also facilitates swift, responsive decision-making.
Business Intelligence (BI) is a broad term that encompasses data mining, process analysis, performance benchmarking, and descriptive analytics. BI parses all the data generated by a business and presents clear, accessible reports, performance measures, and trends that inform management’s decisions.
Again, Business Intelligence is a sub-set of Data Intelligence, so you really can’t successfully have one without the other – critical word there being “successfully” as I very often walk into the situation of an organization with a ton of reports nobody trusts. This represents a scenario of so-called Business Intelligence without Data Intelligence or the more commonly known adage of “garbage in-garbage out”.
Another way to think about these definitions is that Data Intelligence (versus Business Intelligence) is being smart about the data itself. Maybe you have a great Business Intelligence platform with lots of reports, but there are gaps in the data, or some data points you need to start collecting to round out the picture of your operational performance. Essentially, they aren’t the right reports, providing that necessary real-time view of operations itself. That is DI – the zoomed-out view and understanding of you, your organization, and your organization’s data and how it might need to be changed to better suit your needs.
I also want to normalize things for you if you haven’t started your Data Intelligence or Business Intelligence journey yet at your organization. You are absolutely, 100% not alone! In fact, you amazingly still have a lot of company in 2024 with organizations that continue to inefficiently cobble things together from 5-10 different data sources, trying to make sense of it all.
As an example, I was recently asked by a CEO of a large organization to sit in on their weekly Executive Leadership as a fly on the wall to get a better understanding of how data was approached in their organization. What occurred at first was surprising given their size, but also was not unprecedented. Every executive had a different number when asked to report on fundamental business KPIs. Nobody could agree on even basic numbers like leads, conversions, sales. What ultimately transpired was a complete lack of “Data Intelligence,” unproductive in-fighting, and a meeting that, instead of moving things forward, was spent arguing about numbers, and essentially moving things backward. People left the meeting with even less confidence in what was actually happening with the business. Instead of having “one version of the truth” – they had five or more bad sources of “truth-iness”.
What does this all have to do with budgets? Pretty much everything as the highest quality “bottoms-up” style budgets start with flawless operational data at the base level. In addition, sailing into the final quarter of 2024, we’re all going to have to navigate some strong headwinds and considerable chop with the election year upon us – which always causes market fluctuation – and, sadly, more geopolitical turmoil erupting around the globe. If there’s one thing we all learned from COVID, it is whatever is happening “over there” matters because it does eventually impact us “over here.” We can’t prevent the impact, but we can be prepared for it. By getting your budget done earlier and done right, you will have time and runway – room to maneuver, if you will – to not only navigate and – hopefully – avoid threats but, more importantly, put your organization in a prime position to capitalize on opportunities. Some of those opportunities often swim to the surface from proper mining of your own enterprise’s data.
It is undeniable that the role of the CFO has shifted away from being compliance-focused to being expected to drive growth – but still manage cost. Embracing Data Intelligence is a much wiser way to run a business than going with a “hunch.” DI is the “crystal ball” every CFO has ever dreamed of without it being an actual guess – maybe better to think of DI like a cheat sheet to your organization helping you see the real answers to the real problem. With a well-executed Data Intelligence strategy, CFOs no longer need to feel as though they are doing their jobs theoretically blindfolded. DI is your faithful, trusty seeing-eye dog. It can allow you to sort through the noise from the volume of data to get to the right data.
The new dual nature of the CFO’s role of what – on the surface – can look like conflicting priorities of growth and cost control, or cost take-out, can now be synthesized harmoniously. DI can provide a path to top line growth while simultaneously affording you better bottom-line cost management. Having the right data gives you a clearer line of sight and a finer scalpel to cut to the right degree and in the right places (saving jobs or preventing other short-sighted, costly mistakes). In the not too distant “old days,” when faced with the need to cut – those cuts were often taken out in the form of headcount, FTE’s. With the current talent landscape, cutting jobs may not be advisable. DI can present you with a higher-resolution picture of your other options.
Ultimately, doing DI right not only makes your job easier, it makes you better at your job. The better you are at your job, the better your organization will do. Flourishing in ’25 sounds good, doesn’t it? So – get your data organized, get it working for you and get your budget done so you – and your stakeholders – can take advantage of the rest of this year and start 2025 poised for success.
Thanks for taking the time to read this. If you have questions or have a request for other Data Intelligence and/or FP&A-related topics, drop me a note here. I’d love to hear from you.