Finance beyond the spreadsheet

Financial Performance Management Strategy Executive, IBM

Gone are the days when finance leaders spent their days with their heads buried in spreadsheets. As many as 88 percent of spreadsheets might contain errors, but modern data tools can help finance leaders leverage analytical insights from organizational data to shape their organization’s strategy. Indeed, top-performing chief financial officers (CFOs) study industry trends, analyzing the competition and spotting opportunities and threats, then take action on their insights.

Building a value-adding infrastructure

Finance leaders who aim to focus on long-term strategy must eliminate activities that add no value. In studying CFOs, IBM researchers found that a group of high-performing finance teams, dubbed “performance accelerators,” are 55 percent more likely than other finance teams to show outstanding revenue growth and 57 percent more likely to be highly profitable. All these teams had a robust infrastructure that featured common standards, data definitions, finance processes and planning platforms, and they combined financial, operational and external data, subjecting it to rigorous analysis. In short, by integrating data from multiple sources and leveraging powerful analytical tools, these top-performing finance teams moved beyond the numbers to focus on the big picture.

The primary role of centralizing data is widely accepted among finance teams; 75 percent of CFOs studied emphasized its importance to financial planning, allowing integration of information and resources from across the enterprise. Even so, fewer than half thought that their teams were up to the job. By combining data from disparate parts of the business, finance teams can answer increasingly complex questions, evaluating the revenue growth potential of specific customers along with product profitability, staff utilization, supply chain vulnerability and the like. By doing so, they can uncover insights that help drive operational and capital investments.

Driving finance with modern technology

Cognitive systems, which refine their own behavior over time by using their collected experience to build a starting context for each new inquiry, can support particularly proactive insights—identifying, for example, types of consumers likely to spend more than others or to become repeat customers, even predicting which deals are particularly likely to close. Such insights can inform marketing strategy, enhancing cash flow projections and allowing the enterprise to adjust expenditures as necessary. Cognitive systems can also be used to assess mergers and acquisitions and refine a firm’s pricing and promotional strategies.

Spreadsheets are an old favorite of financial officers, but modern technology is making financial reporting ever more reliable, efficient and agile, allowing CFOs and finance teams to focus less on the numbers and more on driving long-term business strategy. 

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