CFO Talk: Data Analytics for Finance Leaders with Prashanth Southekal - Part I
PART I of III parts
Welcome to CFO Talk. I am your host Steve Rosvold, Chief Learning Officer at CFO.University.
Joining us today is Prashanth Southekal, Founder and Managing Director at DBP Institute a boutique enterprise data analytics firm based in Calgary, Canada. Prashanth has mechanical engineering and IT degrees from two national institutes in India, Master’s degrees from Cornell and Northwestern University in the United States and a PhD in philosophy from the University of commerce in Lille, France. When he is not working with DBP clients, he is an adjunct professor at IE Business School in Madrid, Spain and serves as an executive data analytics advisor to several companies. He has also written a two books. Today, Prashanth will be addressing data analytics for finance leaders with our members scholars. Welcome, Prashanth. It is great to have you on the show.
(To find the video to share with with your team go here: Data Analytics for Finance Leaders)
Steve, thank you for having me on your program.
It is great to have you. We just learned about each other over the past couple months. I think we were introduced by Jesper Sorensen. I have really enjoyed the finance related meetings we have had about how data analytics fits into our world today. I am excited to share your word with our member scholars. Let’s jump right in.
How do you define data analytics and why should business leaders today be interested in embracing it?
That is a great question. There are many definitions of data analytics people are talking about these days. The reason we have so many definitions of data analytics is mainly complicated by the technology vendors, based on the products and services they are actually selling. If you look at SAP, they have over 250 different products. Their definition of data analytics covers use in an ERP system all the way to business intelligence and analytics programs. Whereas, if you look at one of the companies which I am advising, they started more from a sophistical background and their definition of analytics is more towards predictive analytics, machine learning and so on. Tableau and Spotfire’s definition of analytics is centered more around dashboarding.
Having said this, the one common theme about analytics which everybody agrees on is that it involves some amount of data processing and deriving insights from it. My definition of data analytics is, using data to answer your business questions to get insights for decision making. If you do not have data, and you do not have questions, there will be no analytics.
Great definition. That helps a lot.
So, why should business leaders be embracing data analytics? I was talking to a leader in the oil and gas company. He was asking, “Can data analytics help me produce more oil from the ground?” The answer is definitely not. The data analytics per se will not help you get more oil from the ground. However, data analytics will give you insights on what you can do to get more oil from the ground. Data analytics is not a replacement for your pumpjack. It also is not a replacement or subsidy for your knowledge. It complements your knowledge with insights so you are better informed on how to get more out of your pumpjack. The power of data analytics is the power of knowledge.
That is great. I like the idea that it is an energy add or a booster to what we’re doing and gives us a lot more options. What are some of the highest return financial applications of data analytics that you see in business today? And how do you see that shifting in the future?
It all depends on the industry type. You might ask me, “Which areas have the highest return on investment?” My first question would be, “Tell me which industry you are operating”. If you are looking at oil and gas, they are very much asset centric. Your ROI would be pretty much asset based. If you look at Telecom, it is mostly based on the customer churn. Your ROI would be centered around how I can minimize the customer churn. Health care? One of the hottest areas in these COVID times, is more about the regulatory compliance. Your ROI in health care is based on how tightly you can ensure regulatory compliance? Inventory management as one of the top areas when it comes to retail. So, financial applications for the highest ROI depends on the industry type.
Where do I see the future growth areas? I would say, until about 10 years back, data was used mainly for internal reporting. Given the explosion of data, which has happened in the last 10 plus years or so, there is an opportunity for companies to monetize the data. That means to take the data which they have and create one more line of service, one more line of business. A few years ago, I was talking about data monetization in a conference. I did not have many takers. Just a few months back, I did a project for one of the biggest oil companies in the world, building data products could monetize. They can take their internal data and sell it to other companies. I am having conversations with one more oil company in the in the Los Angeles area also about data monetization. How do I monetize the data which we have traditionally used for internal users? Can I monetize this data and sell it for external people? Things have drastically changed in the last five to 10 years in the data world. Leaders are not just looking at using data to provide internal reports. They are also saying, “Can I take this data and sell it and make money out of it?”
That is so interesting and so true. There is a company here in Vancouver that just went public called ZoomInfo. They had a very successful IPO earlier this year. They are a 12 year old data management company who screen and create data for people and then sell it. Today the company is worth $15 or $16 billion. It makes sense that as we assemble more data we are creating information that could be valuable to external parties.
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