Often deemed as the new currency, the significance of data in today’s world is undeniable. Data analysis allows business to forecast market trends, anticipate risks, and make informed choices. It also aids in evaluating performance to enhance efficiency across various departments and facilitates fraud detection and prevention. In essence, data is critical for the financial well-being of a company.
Given its importance, managing data efficiently is crucial. Any mismanagement can compromise its accuracy, thereby distorting reports and undermining the very purpose of analysis.
In this blog, we explore the drawbacks of mismanaged and fragmented data, discuss how centralised data management can address these issues, and highlight the numerous advantages of establishing a single source of truth (SSOT).
What is a single source of truth?
A single source of truth is the practice of hosting all organisational data, including information from different departments and systems in one central location. This involves the gathering, storing, and analysis of data in one repository, ensuring it is accessible from a single reference point. This approach means that the most accurate, consistent and reliable information is made available, serving as one source of truth for all records.
The goal of achieving a single source of truth is very much possible with effective tools and techniques, such as data centralisation.
What is data centralisation?
Data centralisation refers to the process of aggregating data from various sources in one central location. The focus is on storing this data physically and logically to make its management and access easier, and overcome the challenges posed by data silos. But what exactly are these challenges?
Challenges associated with siloed data
1. Compromised data integrity
A lack of centralisation may lead to different systems or departments maintaining multiple versions of the same information, creating inconsistencies and discrepancies impacting accuracy and reliability.
2. Inefficient processes
To perform analysis, employees often have to manually move or re-enter siloed data across systems. This not only wastes valuable time but also raises the risk of errors.
3. Resource wastage
Storing the same data in different systems and repositories can result in unnecessary costs for software, storage, and the labour required to manage and integrate it.
4. Uneven collaboration
Difficulty in accessing critical information can hamper collaboration between departments on a shared project, leading to duplicated efforts or conflicting strategies.
5. Security and compliance risks
Data distributed across different systems is at a greater risk of security breaches. Varying security levels between systems make it difficult to maintain uniform security policies, manage data access and usage, and ensure compliance with data protection regulations.
6. Hindered growth and scalability
As an organisation grows, managing siloed data becomes increasingly complex. Integrating new systems or merging data from acquisitions is difficult without data centralisation.
7. Poor business decisions
Silos obstruct the full view of the organisation's information, complicating efforts to conduct thorough analysis, generate precise FP&A reports, and derive reliable business insights. Limited access to complete and accurate data can undermine strategic decision-making, often resulting in poorly informed or ineffective choices.
The benefits of having a single source of truth
Centralising company data ensures a single source of truth which comes with many benefits. These include:
Easier access and greater control
Consolidating information in one location simplifies accessibility. Employees no longer need to search across multiple platforms or coordinate with various stakeholders for permissions. Centralisation streamlines the process by designating a single authority to manage access and maintain control. With one point of contact, delays are minimised, and oversight is enhanced, ensuring smoother operations.
Improved quality and accuracy
Data centralisation significantly reduces the risk of errors or discrepancies that silos create. Moreover, storing information in a single location simplifies its management and tracking, making it easier to quickly spot and correct any duplications or inaccuracies. This ensures a higher level of accuracy and consistency across the organisation, wherever the information is used.
Enhanced data security
A centralised repository enhances security by enabling organisations to apply measures, policies, and access controls more uniformly. It simplifies monitoring of data integrity and access and makes it easier to implement protections such as encryption and access restrictions. Additionally, centralisation streamlines the backup process, ensuring regular backups to protect against data loss and mitigate the risk of breaches or unauthorised access.
Simplified data analysis and reporting
Centralised data streamlines analysis and reporting by eliminating the need for complex data collection. Employees no longer need to manually gather and piece together information, as they have access to a unified dataset without any complicated integration or reconciliation processes. It also enables the use of advanced techniques like predictive modelling and machine learning, ultimately driving meaningful insights for strategic decisions. Moreover, the improved accuracy and reliability of information further strengthens the quality of the analysis.
Better collaboration
Centralising data enhances collaboration by making information accessible to all team members involved in a project. When everyone refers to the same dataset, it ensures consistency, streamlines communication, and aligns strategies more effectively. This shared access reduces communication gaps and fosters a more cohesive and collaborative work environment.
Better decision-making
Having a single source of truth enables more informed and timely decisions, delivering accurate and up-to-date information. Centralisation offers a current and comprehensive view of organisational data. For finance teams, it provides insights not only into cash flow and financial metrics but also into the performance and trends of other departments. This holistic perspective is critical for effective budgeting, forecasting, and strategic planning such as investment choices, cost management, and product promotion.
Scalability
As organisations grow, their data increases as well. A centralised system makes it easier to scale up and adapt to such changing business requirements by providing flexibility. It allows for simple increases in storage capacity or the addition of users. A centralised system also serves as a strong foundation for building or integrating new systems and processes. Moreover, it is easier to modify a centralised system to accommodate new data sources and analytical needs compared to managing multiple systems.
Ease of compliance
Conducting audits is more straightforward with centralised data than with scattered data. Centralisation also makes it easier to monitor usage, manage controls, and consistently implement policies. As a result, data management and compliance with regulations and standards are simplified.
Cost savings
Centralising reduces costs that would otherwise be spent on maintaining multiple systems, including additional infrastructure, storage solutions, and complex data management tools. It also eliminates expenses related to redundancy and the manpower required to integrate data.
Enhanced efficiency
By eliminating the need for manual data gathering, sorting, and reconciliation, centralisation boosts efficiency. For finance teams, this means significant time savings that would otherwise be spent collecting data and managing spreadsheets. With this extra time, they can focus on more valuable tasks such as analysis, reporting, and strategic planning. Ensuring easy access to the same, up-to-date information, further streamlines workflows and decision-making processes.
Leveraging cloud-based accounting software for centralised financial data
In today’s fast-paced, data-driven business environment, centralising data is no longer an option but a necessity. Finance teams cannot afford the inefficiencies of manual data collection and integration. A comprehensive financial management system can address these challenges, and Financials from OneAdvanced is designed to do just that. It integrates multiple platforms into a single system, supporting all aspects of financial management and accounting.
This cloud-based solution offers real-time visibility across the entire business, helping to eliminate silos and enhance collaboration. With reporting done directly from the solution, financial data remains up-to-date and centralised, allowing you to focus on strategy and make more timely, informed decisions. By enabling seamless integration with other applications and tools, it promotes a single source of truth, boosts workflow automation, and increases productivity.
Experience seamless financial integration and unlock the power of a single source of truth with Financials.
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