Businesses are inundated daily with new challenges and opportunities. From Brexit to economic fluctuations, new market players and changing technologies – it’s fair to say that businesses have several factors to consider in their daily operations and strategies when looking to grow. An area that businesses may underestimate at times is the power of using data to drive that growth strategy. Businesses need to understand that they operate in a real-time world, and consequently need real-time information; this is where financial leaders can truly drive the business forward.
For decades, businesses have used specific data sources to make decisions involving risk. Companies House for instance, provides a raft of information on businesses which is invaluable when assessing their credit risk. However, to rely purely on such sources would mean businesses are ignoring the fastest-growing source of data – the public web. Fast forward to the here and now, and companies require a wealth of data from different sources to make sound financial corporate decisions which will affect the growth of a business.
The challenge nowadays is both that there is a massive influx of data from a variety of sources—and that analysing that data is growing ever more challenging. Increasingly, organisations not only want access to more data but an ability to use it properly. Businesses are struggling to amalgamate all of it into one place and have little knowledge of how to harness and use its insights for the business.
Blind businesses behind the times
For many years, businesses have had to depend on internal databases for information that offer the level of information and knowledge needed to make decisions. The downside with this approach is that it no longer fits the fast-paced, technology-led world that businesses inhabit. Data-inspired insights can, and ought to, be implemented throughout the company – particularly to assist the financial decision-making process. The pressure to constantly succeed is vast and successfully leveraging insights from data can be the game changer between taking on bad business and identifying new chances to succeed.
The modern-day finance leader must drive a business’ data-led approach and look to modern data sources to help drive this strategic outlook. Long-gone are the days where the finance leader is tasked to deal with simple balance sheets and the finances of the business. In fact, we recently found more than a quarter of financial decision makers say that data analysis has become an increasingly vital part of their responsibilities, with many suggesting that it is now one of their day-to-day tasks, that said, 56% say that their employees don’t have access to the tools and technologies that could help them either. As data becomes richer and even more accessible, firms must identify the doors it can open. Data leads to growth, but only if it is harnessed, and it cannot properly enable business growth without the correct application.
Going against the tide
Non-traditional data can provide businesses with automated, contextual insight from a variety of sources; from premier news publications, periodicals and online sources from across the globe, to business publications, government and regulatory agencies, blogs and commentary, and social media.
The growth of digital information has meant that real-time information often goes online before it reaches official sourced. This may be 24-hour online news sites such as the BBC, which is often given exclusive news by businesses – some of which could impact their risk assessment. Or it could be social channels like Twitter where news of a natural disaster or serious event now usually breaks. These provide either real-time or recent information which should be used by financial decision makers in their assessment of a business.
The emergence of these non-traditional sources has made immediacy more important. Businesses must now use a platform that enables speedy decision making and unlocks progression, whilst managing risk simultaneously. Data is everywhere and the need to use it to make informed decisions about compliance and credit is a key part of every business.
Not all businesses however embrace this, and this thinking needs to change. As firms look to technology for the next step in their natural life cycle, data will become the bloodstream for all successes.
The impact of digitally-led services and the quick emergence of raw data go together. Intelligence from social media can hold so much weight now because of its instantaneous nature. Crucially, businesses must recognise the opportunity that this offers. Internal database information is important for digging into the history of a business, but Twitter might uncover an employee issue within the organisation, which otherwise would have gone under the radar. If one company is considering working with another, finding out the information could potentially prevent a damaging financial decision. If it’s not clear yet, finance leaders really must sit up and understand that data courses through every single good strategy.
It’s all about perception
While size matters in the data world, connecting the data is equally important. To ignore non-traditional data is to misunderstand the power of data. Some of the most influential data sits outside closed doors in the public arena. A risk strategy, or offering, which does not encapsulate this is likely to miss out on opportunities, and indeed fail to identify risks. A fusion of non-traditional and traditional data will see the future Finance Leaders assess all opportunities and make the necessary bold decisions, in a business world that is becoming increasingly difficult to survive and thrive in.
Tim Vine, Head of European Trade Credit, Dun & Bradstreet