Finance for the Future
A recent Peloton study revealed that finance professionals spend 64 percent of their time collecting and validating data. Another fourth of their time is spent processing that data, with only the remaining 11 percent available for doing value-added analytical work.
This is due to several factors, not the least of which is siloed processes and a lack of insight into what’s important within the business as a whole. The length of time it takes to plan, forecast and report; a less-than-agile approach; and a static, backward-looking viewpoint rather than a dynamic, forward-looking perspective, all combine to throw up formidable barriers to Finance’s ability to add value to an organization.
An SAP poll revealed that respondents overwhelmingly believe that finance’s dynamic insight into business analytics would create a significant financial benefit, as would cutting back the amount of time spent on manual tasks.
A New Way of Thinking
However, to be able to effect that critical change, there must be a whole new way of looking at the workforce of the future. As automation picks up the traditionally labor-intensive tasks of data manipulation and reporting, the financial planning and analysis team must focus on a deeper, more dynamic predictive strategy.
Instead of backward-looking, budget-driven results, the finance team of the future is forward-looking, focused on forecasting and identifying drivers for improvement. Peloton calls the current state of Finance “descriptive”: it spends most of its time collecting, preparing and presenting data. The desired future state is, however, “predictive”: it uses analysis not merely to report, but to provide insight that will drive enhanced decision-making for the organization.
Predictive Analytics and the Finance Makeover
Aberdeen Research indicates that best-in-class organizations are 79 percent more likely to have an enterprise performance management (EPM) system and 75 percent more likely to use predictive analysis. In addition to doing better risk planning and forecasting, organizations that use predictive analytics saw more than double the increase in operating margins and one-and-a-half times the productivity over organizations without them, measured over the past two years.
There’s a new day dawning for Finance. The old way of looking at financials involves collecting data, putting it in spreadsheets, and using that to create reports about what happened in the past. Finance of the future will expend significantly less time collecting and crunching data, instead dedicating that time to deeper analysis, interacting with decision makers and working on strategic initiatives for the future.