The Paradox of Sophistication
The more data you have, the less use you make of it
By François Masquelier, Head of Corporate Finance and Treasury, RTL Group and Honorary Chairman of the European Association of Corporate Treasurers
The sophistication of IT systems paradoxically results in a profusion of data and makes it impossible to process or compile it properly. We have to cobble dashboards together in a Heath Robinson manner because the data does not match standard formats and is compartmentalised in its own systems, which are all independent from each other and all different. Since too much is often worse than too little, we may end up submerged in data, or we may just under-use it. The Business Intelligence (BI) challenge is to extract the data, make the formats compatible and process the data to condense it into an appropriate dashboard. In treasury management, we also experience Big Unused Financial Data. This article aims to address that problem.
Drowning in a flood of data
The world of modern finance has become so complex with such a wide range of data that we may end up drowning in the flood of data available. Picking your way through such a flood of data is well nigh impossible. It is like driving an Aston Martin while sticking to first gear. All too often, we under-use available information through having no means of extracting it, condensing it into one single format, and compiling it into a summary.
In my view, today the greatest difficulty lies not in accessing information, but in sorting it and condensing it into a coherent, complete and comprehensible summary. It is important to really understand what you have to hand and to be able to use what you have available to process the data as easily as possible. We are overloaded with information and cannot absorb it in a digestible, palatable and comprehensible way. It is an immense funnel into which we have to compact the substance to extract its very essence. Why access more data if we cannot use it? We should avoid arbitrarily collating data here and there if we cannot do anything with it. Reconciliations, checks and key performance indicators are ‘the’ true goals of treasurers today. To avoid all this being a never-ending story or a bottomless pit, whereby we access ever more data without being able to process what we have already collected, we have to act and put an appropriate solution in place to compile it. That is an enormous project in itself.
Treasury is a world in which there is a profusion of powerful tools. When you buy an IKEA flat- pack cupboard, you get a plan and the tools to enable you to put it together without being a DIY expert. In treasury we are provided with the tools and a box to create reports and dashboards, a sort of consolidator of disparate data in a variety of languages. But a toolbox that comes without the tradesman to help you shape the summary reports is completely useless. Unfortunately, dashboarding is no IKEA cupboard. But nevertheless compliance requirements have done nothing but increase. The number of reports required is sharply on the rise. Reporting systems themselves have kept on growing. The profusion of formats and systems only complicates the treasurers' work, or even makes it Herculean. The real art lies in consolidating it all and producing a summary comprehensible to a CFO or an audit committee.