Analytics for the office of finance: How smart CFOs stay ahead
The office of finance is now taking on a greater role in driving strategic planning and implementation across many organizations. To fulfill this role, finance needs greater insight than ever into not only the business, but also the market and the trends that are likely to shape the business environment of the future. Attaining this objective requires finance leaders to agree on the importance of planning analytics for getting ahead and staying ahead.
The power of forecasting
A recent article in CFO magazine highlights the increasingly prominent role of forecasting analytics in enabling CFOs to meet the expectation of added strategic value for their business. In reviewing key survey data of leading organizations, the article concludes:
“If data analysis and forecasting are integral to strategic planning, then more powerful software tools for those purposes should help finance chiefs contribute more strategic value to their companies. [Leading CFO initiatives] thought to add the most strategic value to an organization, involved financial data analysis or forecasting, with ‘achieving profitable growth through financial data analysis’ at number one.”
The recent IBM white paper "Finance analytics: Seven hows and millions of whys" reports on surveys of nearly 1,000 CFOs and senior finance professionals that reinforce the critical connection between analytics and business performance. Significantly, the surveys found that leaders in the use of analytics also tend to lead, on average, in key business metrics such as profitability and revenue growth. The leaders also take a similar approach to the adoption and use of analytics.
1. Focus on common data definitions
Analytics leaders were 154 percent more likely than their peers to use common finance data definitions, and 62 percent are more likely to use a standard chart of accounts. Common data definitions help set the stage for broad, deep use of analytics throughout the enterprise.
2. Apply advanced predictive and prescriptive analytics
Top finance leaders were 28 percent more likely to use forward-looking predictive and prescriptive solutions. These advanced analytics solutions can be used, for example, to improve revenue collection by segmenting customers on the basis of risk profiles created with statistical data modeling and historic trends for payment behavior and disputes.
3. Integrate financial and operational information
Integrating financial and operational information provides a better understanding of how different aspects of the business are working together—or not working together. Are operational objectives at odds with the company’s financial goals—or vice versa? Analytics can help you spot the conflicts and model alternative courses of action for resolving them.
4. Develop analytical talent and share analytical expertise
Analytics yield the greatest benefits when the people using them have the knowledge and skills to get the most out of their solutions. Finance leaders cultivate talent for analytics 3 times more than their peers and establish centers of excellence to centralize and share analytics expertise 5 times more often than their peers.
Next steps to success
Read the IBM Analytics white paper "Finance analytics: Seven hows and millions of whys" for more insights from IBM’s surveys of over 1,000 CFOs and finance professionals.