Let us be clear, there is no such thing as too much data, but the following are all problems:
Having conflicting data is not always a problem and, of itself, too much data should not be a problem.
The problem arises with a lack of understanding on what to do with the data, or the lack of a consistent approach on how to extract insight from data. Extracting value from data requires a structured and disciplined approach driven by a keen understanding of the objectives. Ultimately, “what is it you want to know?” rather than “what can I do with all this data?”
With data, you can extract information and from the way the information is presented, you can gain insight. For the finance function to add value, it needs to provide insight from the data and that requires an understanding of the data along with the data sources, and paring back the data to provide meaningful, value-add insight.
Millions of people around the world drive a car. The modern versions of which are equipped to gather vast amounts of data and present it to the driver and passengers. If you have ever seen the cockpit of a modern jumbo jet, the dashboard is hugely overwhelming at first glance. These are both managed in different ways.
In the car, for example, you are only presented with the data that is important and relevant at the time. The speedometer, rev counter, fuel gauge etc. are all displayed. But driving forward, the side and reversing cameras are not visible, the tyre pressures are only shown when asked or if there is an issue, warning lights appear only when a risk is identified. For the average car driver, you are a passive recipient of the data, it is presented to you only when required and only as necessary.
Step onto the flight deck of a modern airliner and it is a different story. The sheer volume of data is, to the untrained eye, quite overwhelming. In such an aircraft, the data is always available and accessible. The emphasis is no longer on presenting the data only as and when required and at the command of the vehicle, rather it is now for the aircrew to determine what matters and when.
The amount of information presented in a report or on a dashboard is therefore dictated by the needs of the recipient. Regardless of whether it is a simple slide presentation or a detailed document, it should all still have the same data and the same data sources that can be validated and verified to be accurate.
According to CFO.com there is “Too Much Data, Too Little Judgment” but in reading the article it is very much about the over-reliance on data and the under-reliance on analysis and judgement.
Gartner states that, “when you give people too much information, they actually underperform. There is more and more data coming in, but that doesn’t make it any easier for FP&A teams to deliver actionable insight to their business partners”. In other words, the problem is not the data, the problem is people.
Reporting clarity can require different approaches:
Getting clarity in reporting is a simple process of going from many to one. Taking data from silos and aligning it to have a centralised place to start will prevent later errors. As we all become more data hungry, this usually means a large server or cloud-based solution, certainly the days of the spreadsheet to do this are behind us, or at least should be for any medium and larger-sized organisations.
According to MuleSoft, a single source of truth is about “aggregating the data from many systems within an organization to a single location. A SSOT is not a system, tool, or strategy, but rather a state of being for a company’s data in that it can all be found via a single reference point”.
Solving the problem of too much data requires a tool to extract or receive the information and align the different sources to give a single source of truth. Not all tools are equal in doing this, some very specialist, and some more generalist. Finding the right tool that will grow with an organisation or will allow the office of finance to do more is an important part of the selection process.
Starting with the data in mind is the wrong approach. Starting with the current need, too, is the wrong approach. Understanding the needs of the business and aligning it with the future trajectory is a key part of the selection process. Today it may be reporting and in one currency, but tomorrow could see multiple additional needs whether that is through organic growth, company acquisition, produce development or additional needs of the finance department and the wider organisation. Having a clear vision of what is and what will be needed will inform tool selection, and maximise use of current and future data sources.