Finance leaders have had to make critical business decisions faster than ever before, causing an accelerated focus on the importance of big data and predictive analytics. Implementing strategic decisions has become essential for finance leaders while businesses transform their finance systems and adapt plans to continue growing. With this rising pressure, predictive analytics has become an even more vital tool in supporting the current challenges and providing a competitive edge over other businesses.
Businesses recognise that the more use they make of their data in developing plans and building scenarios, the more they can be ready for future disruption and changes. A blend of predictive analysis and simulations will enable clear insights and scenario development. This process is becoming more necessary as unpredictable events, ranging from climate change to geopolitical, continue to disrupt business plans and all need to be accounted for.
Predictive analytics today plays a distinctive role in strategic and operational decision making, with many industry professionals stating that a decision without data input has little or no value. A report by Deloitte suggests that just under 50% of senior executives believe that the main benefit of applying analytics is its influence in driving better decisions.
The responsibility of a CFO has become more focused on balancing resource management and enabling the continued growth of other strategies that may lie outside of standard operations. If a business has access to data, they will likely want to generate insights on what is happening and determine why these activities are happening. Companies want to harness this information and apply predictive models to gain a better idea of future trends.
The pandemic created a seismic shift in the role of the CFO and their importance in business strategy and responsibility in business model transformation. Generally, any transition period involves a drop in initial revenue, followed by a long term plan to improve this. The more analytical support available, the better strategic and operational plans a business can make to reduce the impact of this change.
Predictive analytics is generally associated with supply chains, marketing and HR. In finance, there are many opportunities to improve and automate financial reports. CFOs can utilise automation and predictive systems. They recognise that it is necessary to enhance resources and apply new technology. Those finance leaders that have taken on predictive analytics into particular areas such as cash, audit, FP&A are likely to have a competitive edge over other businesses. However, it isn’t a simple transition and will require upskilling of employees to gain the benefits of this transition in finance.
Upskilling finance professionals and delivering an environment where knowledge is shared is critical. It will reduce time spent on particular activities and strengthen the relations across the business.
Automation analytics will create a competitive advantage for businesses as it creates additional time and resources that work towards high-value activities. With the correct insights and processes, the overall time to value is reduced considerably. It allows for more time to focus on value-added activities and to establish new opportunities within a business. Companies today are working with a range of data sources which means that it is even more vital to have the necessary tools to analyse this information.
Establishing a clear data plan that can effectively combine different sets of information and make it available to decision-makers with the right insights is probably one of the biggest challenges businesses face right now. When a data plan comes together, it can deliver significant benefits to businesses and create a distinct competitive advantage over other companies.