Sage VP of finance Jordaan Burger unpacks the magic of financial storytelling.
The past two years of accelerated digitalisation and global volatility have put financial leaders under immense pressure. Sage’s Digital CFO research report found that 83 percent of South African respondents say business is now more complex than before. Today’s finance leaders are expected not only to manage enormous, never-ending flows of data, but also to make sense of it all.
Small and medium businesses (SMBs) typically have limited cash reserves and must respond to market changes with agility. Yet, 95 percent of the Sage Digital CFO research respondents said they suffer from data overload and can’t make good decisions fast enough. Even after Covid-19 lockdowns, we are navigating a volatile world of high inflation, disrupted supply chains and geopolitical tension – and SMBs need vision and clarity to thrive.
Making it easier for SMBs to gain business insights
Robust, cloud-based technology provides SMBs visibility, flexibility, and efficiency in managing finances, operations, and people. With this foundation in place, CFOs are now looking at the role of cloud solutions in financial storytelling. This is all about taking the financial numbers and translating them into strategic narratives.
What began as a means to provide data access remotely can now sync with other advanced tech like automation and AI. In other words, cloud-based software can support finance leaders and their teams with powerful data analysis tools that provide the insights they need to build strategic stories that resonate with the board.
A mindset shift to storytelling
Financial storytelling is being able to explain, for example, a change in profit from X to Y, with rich insights that answer the questions “Why?” and “What next?” This mindset shift towards strategic storytelling requires entirely new ways of thinking. Accountants need to be able to dissect and interpret data to find the meaning in numbers and tell the stories that set their businesses up for growth.
Here are some best practices for using data to tell stories:
1. Understand your audience and refine your intention
A good storyteller knows their audience and what will inspire them to action. They will also tell a story with a clear idea of the emotions and actions they wish to inspire. As a data storyteller, a CFO might need to adjust their message to stakeholders such as the CEO, marketing, technology, sales and HR.
A CFO should also ideally know what they want to achieve by telling the story. Is it to alert people to high levels of wastage in telecom spending? Do they want to make a case for growing the business by investing in more salespeople? Or, do they want to make a case to the CEO and CIO for investing in technology for the finance function?
2. Structure your story for dramatic effect
At school, we learned that every story has a beginning, a middle and an end. But we also know from some memorable films and books that starting in the middle or at the end can sometimes intrigue the audience. CFOs should think carefully about what will resonate most with the audience and begin with the part of the story that hits the hardest.
For a forward-looking CEO, hearing a compelling vision for growing the company three-fold in five years can be a great starting point – start with the end in mind and then work back to what needs to be done to achieve it. Or, if the company is struggling today, start with a view of the metrics, then consider how it can turn the ship around.
3. A picture is worth 1,000 words
Visualisations can be a powerful way to drive home the punchline in the story you are telling. Most modern financial platforms offer powerful ways to bring data to life in graphs, charts and scorecards. However, it’s also important to remember that the CFO may lose non-financial audiences if the visualisations are too complex.
Focus on the numbers that hit the hardest and tell the story in a single chart or graph. For example, the CFO could chart a KPI like customer acquisition against marketing spend to show that costs are rising and threaten to spiral out of control.
4. Ensure you have the data you need to tell the full story
Data storytelling isn’t just about profits, turnover, budgets and forecasts – it’s also about developing a multi-dimensional view of the business, with context of transactions and operational measures. CFOs should therefore consider investing in solutions that enable them to access or create reports that analyse real-time business performance by business drivers. Such a solution should empower them with the agility and flexibility to quickly slice-and-dice the details that matter to all key stakeholders: investors, executives, sales, finance, and other departments.
Focus on the insights and the narrative while automation takes care of the data crunching
After two years that have tested everyone’s resilience, CFOs are starting to take stock of the impact and consider how to build new skills and mindsets from the get-go. With today’s powerful analytic capabilities, AI and machine learning, SMBs can leave the data crunching to the machines and focus on uncovering business insights that will power their growth.
SMBs can’t work through all their data manually; any company taking this approach will fall behind the competition fast. Cloud-based software, enhanced with relevant automated applications, does all the data inputting and analysis work for SMBs. Finance leaders can then interpret and communicate the results in a compelling and actionable narrative.
