Harnessing the Disruptive Power of Big Data and Advanced Analytics

1. The Strategic CFO Harnessing the Disruptive Power of Big Data and Advanced Analytics
Jack Klinck
EVP, Head of Global Strategy and New Ventures
Tom Barkin
Global CFO, McKinsey & Company
MIT CFO Summit
November 20, 2014

2. 2
Big Data and Advanced Analytics as a Disruptive Technology
A Leadership Role for the CFO
State Street Case Study: Global Exchange
A Discussion with Tom Barkin, Global CFO, McKinsey and Company
Questions
Agenda

3. 3
Used with permission of eQuest
Do we really need more data and analytics?

4. 4
So what is “Big Data and Advanced Analytics”?
Advanced Analytics
: an accumulation of data that is too large and complex for processing by traditional database management tools
Merriam- Webster
: use of techniques which are impossible to replicate in scale, accuracy or scope with traditional methods
McKinsey & Company
Volume
Variety
Velocity
BIG DATA
Big Data
Reporting
Analysis
Monitoring
Predictive Analytics
Prescriptive Analytics
This information is for illustrative purposes only.

5. 5
Technology shifts in the last 30 years
Big Data has been identified as a disruptive technology
Image courtesy of Significance (significancemagazine.com) © 2012 The Royal Statistical Society. Republished with permission.
© The Economist Newspaper Limited, London (February 27, 2010)
Used with permission of Popular Science Copyright© 2014. All rights reserved.
Source: Harvard Business Review, October 2012
Image Credit: Dion Hinchcliffe via ZDNet
This information is for illustrative purposes only.

6. 6
Gartner, 2014 Hype Cycle
Are we are near the “Peak of Inflated Expectations”?
Prescriptive Analytics
Big Data
Data Science
Innovation
Trigger
Peak of
Inflated
Expectations
Trough of
Disillusionment
Slope of
Enlightenment
time
expectations
As of July 2014
Quantum Computing
Speech Recognition
Cloud Computing
Enterprise 3D Printing
Virtual Reality
Smart Robots
Internet of Things
Source: Gartner 2013
Plateau of
Productivity
This information is for illustrative purposes only.

7. 7
Investment is climbing with the exponential growth in data
Source: IDG Enterprise Big Data Survey, 2014

8. 8
Survey Results
34%
54%
12%
MIT Sloan Management Review: The Analytics Mandate, May 2014
Analytically
Challenged
Analytical
Practitioners
Analytical
Innovators
Used with permission of MIT Sloan Management Review. All rights reserved. Sloanreview.mit.edu
My organization treats data as a core asset
The use of analytics has changed the way we conduct our business
There is pressure from the senior management to become more data-driven and analytical
82%
82%
75%
MIT CFO Summit Survey

9. 9
●Traditionally responsible for providing data and insight for decision making
–Experience and controls to provide high-quality information (garbage in, garbage out)
●Understand how to manage and protect an asset
–Proprietary data and analytical models
●Responsible for key management processes that need data and insights
–Performance management, forecasting, allocation of capital, challenging assumptions
●Finance considered an objective, independent source of the truth
●Oversight of other corporate functions – risk, compliance, strategy, technology
CFOs are uniquely positioned to take a leadership role

10. 10
CFOs can be more strategic and add more value
Internal + External
Structured + Unstructured
Historical + Real-Time
MORE DATA
Social Media
Text / Video
Market Data
3rd Party Data
BETTER ANALYTICS
Statistics
Predictive Models
Machine Learning
Prescriptive
•Business Insight
•Ability to Challenge
•Forward Looking
•Agility
ENABLES
VALUE CREATION
Optimize the Business
•Decision Support
•Forecasting
•Resource Allocation
•Cost Management
•Pricing
•Risk Management Grow the Business
•Capital Allocation
•Investment Decisions
This information is for illustrative purposes only.

11. 11
State Street Case Study: Global Exchange
Delivering Solutions to Manage & Integrate Data, Optimize Investment & Trading Strategies and Strengthen Insights, Reporting & Analytics
Big Data
Electronification of Trading
Information & Insights
Investment Analytics
Strategic Growth Themes
Getting insights from a new, data-driven investment paradigm
Improving insights through enhanced reporting and analytics
Managing an unprecedented scale of data
Accelerating effective investment decision-making
Client Needs
This information is for illustrative purposes only.

12. Tom Barkin CFO, McKinsey and Company

13. 13
BDAA provides opportunity to dramatically enhance Finance function’s capabilities
Forecasting & scenario modeling
Enhance near- and long-term visibility into performance
Working capital optimization
Reduce working capital levels
Capital and resources allocation Make better informed growth & project prioritization decisions
Revenue maximization
Take on a more active revenue manager role
Risk management
Enhance near- and long-term visibility into performance
Cost management
Implement more rigorous cost management techniques
Human capital management
Maximize return on human capital investment
Visualization and transparency
Arm the organization with the right tools for decision making
Source: McKinsey & Company

14. Q & A

15. 15
Important Risk Disclosure
Investing involves risk including the risk of loss of principal.
The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor. All material has been obtained from sources believed to be reliable. There is no representation or warranty as to the accuracy of the information and State Street shall have no liability for decisions based on such information.
The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without State Street's express written consent.
Survey results featured on slide 8 are from a survey of 2,037 individuals conducted by MIT Sloan Management Review and SAS Institute Inc., the results of which were published in May 2014. Used with permission of MIT Sloan Management Review. All rights reserved.
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Expiration Date: 11/30/2015