Peaking Into the Future of Finance Analytics

Finance teams who have been active in harnessing these data sources are in a position to ask better questions, anticipate more accurately, model scenarios and uncover actionable insights that drive enhanced decision-making.

Fremont, CA: The digital transformation in finance has been going on for many years. The ability to automate manual activities and processes using digital technology has helped fund the transition from back-office processing and monitoring of past performance – to forward-looking forecasting and market analysis.

And while most companies use analytics in some way, according to the 2020 FSN Future of Analytics in Finance report, only 14 percent of finance organizations are successfully leveraging the large volume of data produced by transactional systems to generate useful business insights. Finance teams who have been active in harnessing these data sources are in a position to ask better questions, anticipate more accurately, model scenarios and uncover actionable insights that drive enhanced decision-making.

Operational data is often overlooked

Although several companies have concentrated on enhancing their analytical processes, most of them lack a valuable source of insight. With much emphasis on the Record to Report (R2R) process for generating financial results and the Budgeting, Preparing and Forecasting (BPF) process – data from the Buy to Pay (P2P) and Cash Rating (Q2C) processes are regarded as transactional and often ignored. Appropriately leveraged, these processes can provide useful telemetry and signals about consumer behaviour and supplier performance that can expose important business opportunities or risks. In order to provide a full image of the market, data from these and other systems and processes should be combined and matched with financial data to provide actionable information and support decisions that could build competitive advantages.

The Majority of Analytics Are Missing the Mark

Based on the responses from 441 senior finance executives across the globe, the study found that 86 percent of the analytical effort was lacking. Why is it? The main reason is that most companies do not extract true value and knowledge from their results. Consider a few of the results of the study, which are set out below.22% of the organization's survey revealed they do nothing more than producing cyclical reports required to operate the business.

• 34 percent of companies conduct ad hoc analysis only reactively when there is a need to support strategic or tactical decisions.

• 30 percent of companies report the use of siloed/departmental data visualizations.

• The remaining 14 percent are companies with repeatable analytical processes that are leveraged through the enterprise to generate actionable insights and competitive advantage.