An Analytical Future Requires An Automated Approach

Les Smith

The emergence of real-time and predictive analytics technology gives finance an opportunity to reinvent itself as the analytics hub of the organization, enabling the entire organization to make fact-based decisions faster while taking finance out of day-to-day transactional activities to become a strategic partner to the business.

But how can finance adapt to provide these dynamic new capabilities without disrupting day-to-day operations?

While this future state might seem highly desirable, it must be achieved without degrading or endangering finance’s core activities. The solution may be in automation, which will allow finance to shift staff away from repetitive and low-level tasks to be deployed into those areas that truly add value to the business.

In 2017, Oxford Economics surveyed 1,701 finance professionals across multiple industries and four global regions, including 300 leaders from Australia & New Zealand, to uncover their attitudes towards their function’s changing requirements and challenges, and understand what it takes to become a finance Leader.

It found ANZ finance professionals are lagging their global counterparts in embracing the benefits of real-time and predictive analytics, although they are warming to the idea that automation might provide some benefit to driving efficiency and allowing finance to take on value-added tasks.

Analytic benefits are not being grasped

Despite significant industry buzz, the benefits of real-time and predictive analytics have yet to see result in their adoption into the mainstream of ANZ finance professionals—especially in New Zealand. Real-time analytics enable finance – and the business units it supports—to make decisions at much faster speeds, based on the most up-to-date data. But while 83% of global finance Leaders rated real-time analytics as important to the finance function’s successful performance today, this fell to 50% for Australia, and just 20% for New Zealand. For those respondents that rated real-time analytics as critically important, the key benefits were improving finance’s collaboration with the business, optimising risk management and compliance, and evaluating the financial viability of strategic growth initiatives.

If real-time analytics is all about speed, then predictive analytics is all about the future, and the potential for finance to stop just looking in the rear-view mirror and provide greater guidance on where the organization should be heading. Leaders understand this, and when questioned about the importance of predictive analytics, 80% saw its benefit today. But again, this dropped to just 42% for Australia and to an alarming 12% for New Zealand. Those who did see its benefits listed them as improving efficiency across the organization, optimizing procurement, optimizing risk management and compliance, and driving strategic growth initiatives.

The lack of regard for the importance of these two technologies may belie their future value. When asked about the importance of real-time analytics two years from now, both Australian and New Zealanders showed greater enthusiasm (72% and 48% respectively), while the importance of predictive analytics/modelling also increased (66% for Australia and 42% for New Zealand).

But while these forward-looking results brought Australia in line with the rest of the world, it is clear that New Zealand still has some way to go to embracing these emerging capabilities.

An automated future

If finance is ever to embrace the new world of analytics, it must first free itself up from the many of the lower-level and more manual tasks its currently finds itself handling. Indeed, if finance is to reach its full potential as a strategic business partner, automation will be critical, lest it be buried under the avalanche of requests it receives from other business functions.

Automation was determined as one of the key attributes of finance leaders, and is proving to be a key tool in the battle to free up capacity. Australian finance professionals are warming to the idea, with 68% indicating that it is improving the finance function’s efficiency and allowing it to take on value-added tasks. But just as with real-time and predictive analytics, only 42% New Zealand respondents have tapped into the benefits of automation.

Curiously, when asked whether improving efficiency across the organization was among the top three goals for the finance function, 60% of New Zealanders indicated as much—well ahead of respondents in Australia and the rest of the world (47% and 52% respectively). This could perhaps reflect the fact that the adoption of automation in Australia has already led to efficiency gains. But manual processes were not seen as a significant obstacle to achieving business goals, with only 26% of New Zealanders and 20% of Australians indicating so. This perhaps suggests that some respondents are simply not aware of the benefits that automation can bring.

Building the analytics hub

Market volatility means companies have to make fact-based decisions faster—possibly even in real-time—to compete effectively. Real-time and predictive analytics provide a toolset to enable responses that are both faster and take into account future scenarios, and deliver the added benefit of reducing risk in decision-making by ensuring that they are taken with the most up-to-date information available. For risk-averse organizations in ANZ, investment in these capabilities should be standard.

But the benefits of real-time and predictive analytics can only truly be realized if finance frees itself from manual processes using automation. Investment in analytics and automation must go hand-in-hand if finance is to achieve its true potential as the analytics hub of the organisation.

Explore the Oxford Economics CFO Global study and ANZ insights now. Download here.

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Les Smith

About Les Smith

Working with organisations across the Asia Pacific region for over 20 years, Les holds a wealth of experience in Finance Transformation. As the Centre of Excellence lead for Finance & GRC in SAP, Les works with organisations to bring transformation theory up to reality with solutions from across the Office of the CFO (OoCFO) portfolio. Prior to SAP, Les specialised in performance management and Business Intelligence solutions, Health Checks, and Industry benchmarking on key performance indicators. During this time Les and his team delivered more than 50 strategic projects across 10 countries. With such a wide range of experience and strategic customer insight, Les understands how the Finance function can enable themselves to succeed in the Digital Economy.