Why do only 14% of CFOs derive value from their data?

Last January we asked a large group of CFOs in the Netherlands how much they budget for their data projects in 2023, what they will invest in and how much value they are getting from their data now. 44 CFOs gave detailed answers.

With a remarkable insight: CFOs are mainly focused on data driven decision making, see their biggest challenges in the category of people and culture; but they mainly invest in software.

Three statistics immediately stand out:

1. Only 14% indicate that they derive real value from their data.
2. Only 9% have a data strategy on paper and communicated to the management team.
3. Organizations that get a lot of value from their data invest up to 3x as much as organizations that get little value from it

In this article we zoom in on the analysis.

About the survey

All Your BI conducted this survey in collaboration with Greyt, the CFO collective of the Netherlands. The questionnaire was sent personally to the collective network of CFOs. A total of 44 CFOs participated by extensively responding to our questionnaire. This group includes CFOs of organizations between 5M and 25M turnover (44%), 26M and 250M turnover (49%) and 251+ M turnover (7%), from various industries.

How much do CFOs budget for data projects?

The answers vary widely. From 0.01% to 15% of annual turnover. This includes all costs for the Business Intelligence (BI) team, investments to promote a data-driven culture, all BI software, BI license costs plus costs for external BI suppliers.

84% of CFOs invest between 0.1% and 1% of their annual revenue in BI projects. Only two CFOs invest more than 5%. What causes these large differences?

The first thought was that the amount of the investment would be related to having a data strategy. That seemed less obvious after the analysis. Although they invest an average of 6.7%, this is mainly due to two outliers.

By analyzing the available data from various dimensions such as organization size, turnover, objectives and branches, we see a clear relationship on one dimension: Organizations that indicate that they derive value from their data (with the highest score of 4 out of 5), invest on average 3.9%, compared to 1.9% (score 3/5), 1.4% (score 2/5) and 1.2% (score 1/5).

What are the objectives and what do CFOs invest in?

In our survey, we asked the CFOs what the Business Intelligence objectives are for 2023 and what is most invested in.

77% of the respondents have formulated an objective in the 3 themes below:

1. More data driven decesion making 32%
2. Implement and/or scale BI 27%
3. No bojective formulated 18%

If we then look at what is being invested in, we see that here too 77% of the respondents invest in 3 categories:

1. Software & BI tooling 41%
2. Data team expansion 20%
3. No investments, purely maintenance 16%

What strikes us here as a Business Intelligence agency is the enormous focus on software & BI tooling.

Our experience is that it is the other way around. We see that organizations that very successfully extract value from their data and manage the organization on data do not invest more than 10% of their budget in software, BI tooling & licenses. 90% would be in the data team, training people and the culture change within the entire organization. In other words, ensure that everyone uses data to make faster and smarter decisions.

This brings us to the question from the survey: what do CFOs see as their biggest challenge in the coming year?

What do CFOs see as their biggest BI challenge in 2023?

At first glance, the answers seem to vary widely. That is not very special in that respect, organizations differ. But as a BI club, we actually see one major challenge here (shades of yellow): getting people on board in a culture where data is central to decision-making.

Poor data quality? In 95% of cases, this is an indication that processes are not set up correctly, source systems are being misused or that there is no ownership of reports or KPIs by the people who enter data. A lack of data quality is a human challenge.

Organizational support, team capacity, finding and retaining the right people, properly designing processes, realizing the right insight, implementing BI in the organization, training people... all a people challenge.

When we look at these numbers, we see that 91% of all challenges are people challenges. And that makes sense because Business Intelligence affects processes, the way of working, ownership and accountability of people across all layers of the organization. That requires change management, culture change.

What about the data-driven culture?

We asked all CFOs what their most important actions were to promote the data-driven culture.

Only 1 in 3 CFOs have actions planned to promote a data-driven culture. An image that does not correspond to the outlined challenges for 2023. In yellow we have plotted all the answers aimed at working on people & culturally related challenges.

This raises a lot of questions for us, which we will be doing more research into in the near future.

Conclusion: CFOs are too concerned with technical solutions

The amount invested in Business Intelligence does not surprise us. For years we have seen a similar picture of a majority investing below 1% and a small group making more resources available for it.

If we come back to the question of why only 14% get value from their data, we dare to draw a conclusion quite quickly. There is far too little investment in people and culture change. The lack of a clear data strategy probably plays a role in this. Because at the end of the day, the technology makes the data available, but it is the people who have to use the data to actually get value from it.

We close this piece with the golden tip of one of the CFO respondents:

" Business Intelligence is not a project but a way of life. "