By Dinesh Sharma, Vice President, Internet of Things at SAP
We live in an “always on” culture in which everyone is digitally empowered. It is estimated that by 2020, there will be between 50 and 75 billion connected “things” permeating both the workplace and the home. The networked economy – enabled by real-time data analytics and an exponential growth in the number of connections between people and devices – represents the next economic revolution. This is only set to expand to the point where nearly everything will be connected – from your fridge, to your car, to the office coffee pot. Data is becoming more and more deeply embedded in our lives, and is exploding –on average doubling about every 18 months.
Organisations are churning terabytes upon terabytes of this information every minute, and this has brought the financial industry to a pivotal point. With the explosion of connected devices, consumers are constantly raising their expectations about how they use everyday services – how they manage their money is no different, particularly when it comes to wanting to have the right information available to view and act upon anywhere, anytime.
The role of the CFO is ever evolving. They are expected to do more, and provide input into operational decision-making, as well as business transformation and growth strategies. In order to effectively support this and capture untapped capacity, CFOs now need to understand the IT and infrastructure behind the business as this is inextricably linked to growth.
Many CFOs recognise the potentially transformational impact of the networked economy – real-time visibility of customers, improved decision-making and the ability to strengthen customer relationships beyond purchase points. Yet, few businesses are armed with an effective strategy to enable them to make the most of the opportunities that the networked economy offers.
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eBay is an example of a company that is already tapping into these new opportunities, using SAP’s technologies to monitor and analyse trading in the company’s marketplaces. The analysis can be used for confidence scoring a trade, or detecting unwanted activities. The petabyte scale at which eBay operates demonstrates the potential of real-time big data analytics, as the networked economy gathers pace.
Another example of big data analytics in action is Unilever. The company has streamlined its business processes with faster data analytics, reducing the effort to produce month end close cycles to one day.
Many financial service companies are also using data analytics to free themselves from the complexities that arise from years of hoarding data, by simplifying the analysis and generating more meaningful insights from their data. Through tapping into real-time data analytics, businesses can extract value from operational, transactional and reference data. These analyses can then be used to improve customer service, be more agile in managing risk, and become predictive about how they do business.
So what should finance departments focus on when it comes to data and analytics in the networked economy? With the explosion in the amount and type of datasets now available, on everything from customers to sales, many businesses are drowning in unstructured data and archaic systems.
Those that want to remain competitive should take a close look at their systems and processes to ready themselves for the digital economy. They should digitise and collect data on business assets such as devices, equipment, employees, suppliers and customers. They should analyse this data to enable them to optimize things likecapital, time, infrastructure and workforce to help reduce waste and drive theagility and predictability that is a hallmark of the networked economy.
Ultimately, what will really set the competition apart will be the ability to affect a cultural shift to one of greater collaboration. CFOs should no longer feel constrained by ‘the way it’s always been done’ but to challenge convention in the business, and continually look for ways to transform processes, infrastructure, skills and systems. As businesses rise to meet the challenges and opportunities put forth by the networked economy, CEO’s are going to look to their CFO’s to ensure that investments meet stringent ROI guidelines, so the CFO needs to be “out ahead” of this wave.
Performing more comprehensive analysis of data and, most importantly, avoiding information silos by encouraging integration across the business is where analysis of this data will come into its own. Data should not be segregated as the responsibility of one individual or department.Data is the oil that will lubricate Networked Economy and it should be front of mind for everyone, especially within the financial industry. This will allow businesses to capitalise on the huge growth opportunities that are now on offer, enabling them to gain competitive advantage.
So, why now? As the networked economy continues to grow, the world’s transaction revenue will increasingly rely on technology like data analytics that can decode and monetise the data that we’re constantly creating. Whilst a number of businesses within the retail and banking sector are already leading the charge, other more traditional peers are lagging behind, therefore it is essential that businesses have systems and processes in place that are ready for the next economic revolution.