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Q&A: Accounting for data: a major CFO challenge

Chief accounting officer, Patrick Villanova oversees BlackLine’s own global accounting operations. Despite having over 20 years of experience, it has been his four years at BlackLine which have given him a front-row seat to one of the most challenging and dramatic step-changes in the finance industry: the rise of big data

How would you analyse this rise of data from a finance and accounting perspective since joining BlackLine in 2015?

One statistic I like, which aptly defines the world we live in when it comes to finance and accounting, is that 90 per cent of all data globally has been created in the past two years. That presents a staggering challenge. You have volumes of data being produced throughout the world by vendors, customers and internally. You need a network of systems that speak to each other and work interchangeably to process all of it. It’s simply unsustainable to continue hiring people and throw bodies at the deluge. You’ll never catch up and will always be chasing. And that means, as an organisation, you’ll never be scalable or efficient.

How has this proliferation of data presented challenges for the chief financial officer (CFO)?

We’re in our fourth industrial revolution. We’ve migrated out of the age of computers and into the age of information. That’s where we are today and in the early stages of any revolution there are going to be growing pains as a global economy. What we’re seeing now is that every company is great at generating more data, but among all the data there’s not a lot of information. Corporations have various systems implemented and are generating an unsightly amount of data, but is that data actionable? Can it be synthesised quickly and efficiently to make an ultimate business decision? Finance and accounting departments are often proud of their data-cherishing capabilities, but very little of the data is actually actionable.

Is this responsibility a CFO issue or a company-wide challenge?

If you have an accountant undertaking a highly manual process for ten hours a day and over the course of three years the organisation grows by 30 per cent a year, the company will have doubled in size over that period. At that point, the accountant either has to work 20 hours a day, you hire another accountant or you find a highly automated system, which can process millions of transactions at the same rate as it does one. Thus it’s the responsibility of CFOs and other executives to support technological investment, understanding that their businesses need to go through a transformation. Then you have to drive this theory throughout your organisation so they can embrace it themselves. In addition to technological investment, there has to be a shift in hiring practices. You now need to look for candidates who are much more tech savvy, embrace new systems and think about the world differently than we have in recent decades. If you address the challenge through investment and hiring individuals with this open, dynamic and embracing mentality, then you’ll end up with a culture that is always looking to find a better way to process data and provide information to the business for strategic decisions.

Will such actionable information and data differentiate companies from competitors in the years to come?

It’s virtually impossible to predict how fast data is going to grow. We don’t know where we’ll be, but that’s exactly why you need to have scalable systems in place. Once they’re integrated into your enterprise resource planning and financial close processes, with data moving seamlessly throughout, you have a network of products talking to each other. And, better yet, in the case of cloud solutions such as BlackLine, they’re being improved and upgraded constantly by vendors. Even as data continues to grow at an exponential rate, the systems will be improving in tandem and growing with it. What CFOs have to think about is a foundation that is systematically driven and based on automation, as it’s the only scalable method in this environment at the rate we’re growing. Failure to do so will mean drowning in an overwhelming tidal wave of data. Conversely, strategic investment in systems and people will provide a tactical informational advantage over the competition.

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