Ensuring Your Advice is Solid When Using Self-Service Data Analytics

Data analytics has moved quickly into the realm of self-service.  How do Finance Business Partners know the models, dashboards and advice they are providing are reliable?  Assistant Professor Gregory Kogan returns to Upside/Downside to talk about integrity of output, and to share insights from a new book he has co-authored, "Self-Service Data Analytics and Governance for Managers" published by Wiley.   Join us!

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Transcript

UNKNOWN: 0:00

Thank you.

SPEAKER_00: 0:02

Hi, this is Matt Cooley, host of the podcast Upside Downside, where we explore what it takes to be the best finance business partners possible. I'm a finance business partner myself by day and former president of the New York City chapter of Financial Executives International. Joining me today is Greg Kogan, assistant professor of accounting at Long Island University and former guest here on Upside Downside. Welcome back, Greg. Thank you, Matt. Thank you. I really appreciate it. Same here. I'm glad to have you back. This past April, we talked about How companies can derive and protect value creation moving towards self-service data analytics. Can you kind of recap the journey for us so far?

SPEAKER_01: 1:08

Yes. Yes. So self-service analytics is a fairly recent thing. And I think it's very popular now because particularly in finance and accounting, it's more popular now because we find that we've had these ERP systems, these big systems that accountants, finance personnel work in. And they're uploading files, they're downloading files, they're using Excel to do the analysis. And even though these big systems automate a lot of the processing, somehow professionals are still ending up having a good portion of their day being doing manual stuff around Excel. So now self-service analytics comes in and this is things like Tableau or Ultrix that automate reporting or analyzing or reconciling or aggregating. And these tools simply allow professionals to automate their processing in a self-service manner, meaning that they themselves can actually deploy this process and oversee it and have it be executed. And at the end of the day, I think it's really taking off because there's a lot of return on investment opportunity here. And I mean that by basically using these tools to reduce the number of hours doing things that can just be done otherwise now. So I think that's where the motivation is. And I think that, you know, the capability is now here in a way. And, you know, and I think a lot of companies are taking advantage of

SPEAKER_00: 2:48

that. Right. That makes sense. What's wrong with our old Excel models? Like what specifically?

SPEAKER_01: 2:55

Yeah. So Excel, you know, and again, I feel like Excel is great and Excel is a tool that has been around around, I think, since the 80s, which is really great. And I think it was really, really good and exciting, I think, having things in Excel when we used to have things in paper. So moving from paper to Excel was very efficient. But now where most of our inputs and outputs are digital, to house some kind of processing in Excel actually seems like a step backwards because you're taking If you're making something that's already digital, you're putting it into manual hands and manual processing, and then you're uploading it somewhere again where if something is wrong, it's going to permeate many other processes. So the issue is really it's sort of like the weakest link in the chain now, even though it used to be probably our strongest link, now has become something that we can avoid by or minimize by having these other digital tools where we get it. Right. You heard it, Microsoft. Manual and repetitive. There you go.

SPEAKER_00: 4:25

Give us some examples of what can go wrong when we don't have proper gut Yeah. So when

SPEAKER_01: 4:37

we don't have proper governance of self-service analytics, what can happen is that, and imagine these things, they start off sometimes small, even at big companies, these analytics programs, or even smaller at mid-sized companies or smaller companies. So the one biggest issue that we've seen is that it actually can bring down the whole analytics program. Because say you don't have governance and people are doing self-service analytics and all of a sudden something goes wrong and it wasn't caught because there was no governance. So somebody can come in and say, hey, look, you guys are doing the wrong thing. You're wasting our money. And the business can come in and say, this is not working for us. This is another one of those fad technologies that we're not willing to pay for. So in one end, it can actually help the success of the whole program. And that's really the goal. Another another end uh what can go wrong without governance is uh you know lack of accuracy of outputs you can't really rely on it because the controls are not there and you know if you're a public company which you know most large companies are you could actually get into trouble with audits because um socks 404 sarbanes oxley actually covers this piece in terms of having internal proper internal controls if it touches your financial reporting So having controls and governance around this is kind of baked into some of those other laws.

SPEAKER_00: 6:10

I was just thinking about the 404 controls around Excel models as you were speaking about that. And so now that it's moving into models that are more automated, that's a super important point.

SPEAKER_01: 6:25

Yeah, that's kind of something that I know it's not everybody's mind, but surprisingly, there hasn't been any regulation or even best practice guidance from the government, either in the US or elsewhere about this. So it's something that companies actually do themselves, or I know that the big four also provide some guidance around this. But since this is all new, I imagine it's going to take a couple more years until we actually get some kind of, say, SEC guidance on how to do this, you know?

SPEAKER_00: 6:59

Yeah, no, fair enough. And And I think that's why your and Nathan's book is important. Thank you. What does a governance framework look like from a practical perspective? And from your experience and research, what percentage of companies already have a reasonable framework in place?

SPEAKER_01: 7:20

Yes.

SPEAKER_00: 7:21

Help us visualize this, please.

SPEAKER_01: 7:23

What is this framework all about? So on a very simple level, and this is where where a lot of companies that are just kind of getting into analytics. So if you think the Fortune 100 or those type of big companies, they've already been there, they've done that. But a lot of companies are jumping in on a deeper level now. And their biggest priority in terms of governance is what we call investment governance. And that is, how do you select processes to automate? How do you find return on investment of processes before you even automate them? And we provide metrics of how many hours you could save, how easy is that process. And you do a sort of a ranking. Say you have 50 processes, you rank them all by how many hours they're going to save you. And then you just automate the best ones first. That way you can prove to management that you're doing a good job. And we call that investment governance. And that is actually something that I think a lot of companies look to first now. Then once you're already in the field and you have a lot of analytics deployments, in your portfolio, what we talk about is two types of governance. We talk about project governance and we talk about risk governance. So project governance is all about the maintenance of your analytics projects. And that means having development standards. It means documenting each process. It means having staff adequately trained, having a governance committee, and also having a sponsor within your firm that supports the program with resources and clout with management, make sure that it survives, make sure it's properly funded. That's project governance. And risk governance is all about, you know, once you have all these processes out there, what we recommend is you go through each process and you risk assess it. And this is something that we, you know, as auditors do, internal auditors, external auditors, and this is is something we recommend, not even from a compliance perspective, but from a strategic risk management perspective to understand where your risk ends. Because if your risk score, all of your processes, what we basically call it is you have this portfolio view of risk. You can start saying, oh, look, I have a little bit of risk here and then stop three. I don't have that much risk in these bottom 20. And then you could stratify it by department. It's basically giving you the ability for strategic risk responses which means that if you do have resources to mitigate risk, which one do you address first? Oh, let me address these top three because I risk for them. Yeah.

SPEAKER_00: 10:12

I love that. I love the portfolio approach too, because we know that we can take more risks if we understand the portfolio impact versus just zeroing in on individual risks. So I think that's really cool. It sounds, just listening to it, it kind of sounds Sounds like a lot, but your book is actually full of a lot of practical tools. And I think that's why, as I shared with you previously, I enjoyed reading it because it includes checklists, approaches to scoring risks, as you're talking about how to prioritize low-hanging fruit like governance of process automation. There's a lot of useful, very practical things in this book. What would you say it offers a finance business partner who's providing decision support and value creation guidance to executives?

SPEAKER_01: 11:06

Yeah, for a finance business partner, I would say one thing is just to be aware of what are the sort of best practices in terms of governance of self-service analytics, because if you find yourself relying on some dashboards for your executive business partner that are being used for decision-making and say, this is a Tableau dashboard, you know, just be aware of, you know, what type of governance goes into making something like that reliable, making, make sure that some of those governance are already in place or somebody, somebody else is taking care of it, but it might be a good conversation to have. Another thing we talk about is the governance committee, which I believe the business partner could contribute to this kind of governance overall because he's close to the business. He knows exactly what the business needs. And lastly, there could be some potential analytics opportunities in the business that the business partner, finance business partner may be more aware of than other people because they're just so close to the business and they're so close to the production of the numbers or the reports. And that is something that could be more so for, wait, is this an opportunity for for an automation or an analytics? Wait, how many hours are we spending on this? So it could be an actually opportunity to improve, you know, to facilitate cost savings to that business as another opportunity,

SPEAKER_00: 12:43

yeah. And I believe that you advocate that these governance committees should be largely staffed by, you know, folks that understand the business. This isn't just the domain of the IT people anymore. It's not about the tools as much as it is about the, you know, the analytical opportunity.

SPEAKER_01: 13:01

Exactly. That's what's so exciting about this is that since the self-service analytics is not that complicated to implement in terms of Alteryx or Tableau or these other tools with Microsoft BI, it's the business people that usually implement them because they're intimately familiar with the process and the question that they're trying to solve. So the governance is also run on the business side with some IT support. So that's what I find is another very intricate thing about this is that it is for the business run by business folks with support of IT. And I think that's kind of exciting because I think it's, first of all, it's creating a lot of opportunities for new roles for people. And I think it's also exciting that it's something that stays in the business because I think that having it all be on the business side makes it a by the business, by business folks. So it's easier that the governance piece also is run by the business.

SPEAKER_00: 14:07

Oh, yeah. No, that's very cool. Just a few years ago, the discussion was really focused on the tools themselves and the new job roles and all that kind of stuff that we would face in a digitized world. Well, it's obviously here now and we're talking about how to govern these powerful capabilities, particularly as things are pushed down to the front lines. How does all this alter the career calculus of a finance business partner and their role in value creation. How do we incorporate this into our professional career development?

SPEAKER_01: 14:41

Yes, absolutely. I think that that is certainly changing now. And I think the big shift is occurring now where we can just teach individuals on how to aggregate reports or how to clean data or aggregate data, which is a lot of finance professionals end up doing. And rather, we're moving to how to automate processes or use analytics to discover interesting answers to good questions. So I think part of it is being tech savvy enough to work with data sets and ask good questions to figure out value generating answers based on analytics and automations. And And another part is you still have to really intimately know the business and you have to really intimately know the accounting and finance that goes into it. I think it's just there's like another layer that we have to train professionals and students on, which is being technology savvy enough to address value opportunities using these updated capabilities.

SPEAKER_00: 15:57

Oh, that's well put. It's very cool as well. Yeah. Greg, thanks for coming back and educating us today.

SPEAKER_01: 16:03

Thanks so much for having me, Matt.

SPEAKER_00: 16:06

I really appreciate it. Awesome. And thank you to the subscribers of Upside Downside. The book is a great resource for managers and you'll find a link to it in the description of this podcast. Thanks so much for listening and have a great day.