As the role of the finance function continues to become more complex, proactive CFOs are recognizing that obtaining a real-time view of all business operations is no longer “nice to have,” but imperative. Gone are the days of living and dying by the spreadsheet and waiting for monthly or even yearly figures to make financial projections and operational course corrections.
To act as a strategic business partner within the C-suite, finance needs advanced, robust data and analytics capabilities. In fact, a recent survey by Oxford Economics found that having a strong influence beyond the finance function and improving efficiency with automation were paramount in boosting performance. When using the right tools, finance executives can measure overall performance, shape strategy, and look for opportunities to grow.
While the importance of data intelligence is felt, many CFOs and finance teams still hold common misconceptions about what advanced analytics really is. When speaking with customers and CFOs, there are three misconceptions that seem to be most prominent:
- Advanced analytics is expensive
- Advanced analytics takes a long time to deploy
- Advanced analytics is complex
Misconception 1: Advanced analytics is expensive
Most business are sitting on a gold mine of data but have yet to uncover its transformative value. This is because many financial leaders think investing in analytics is too costly. Advanced analytics however, does not have to be expensive. Finance teams just beginning their digital transformation journey have a ton of reliable, inexpensive, and free options available. Modern ERP platforms can connect freely to statistical libraries, so finance executives do not have to “reinvent the wheel.” The best solutions provide the functionality needed to embed advanced analytics on raw data levels, which improves accuracy of the models used to predict revenue forecasts and profitability of customers/products.
Once implemented, the benefits quickly outweigh the initial costs, as advanced technologies can replace timely tasks to optimize time, value, and money by standardizing some aspects of financial reporting. Cash forecasting is one such example – leveraging insights to look at trends to identify slow and fast payers and address and improve receivables management. With less time spent reviewing spreadsheets and more time spent leveraging insights, finance teams can become more cost effective. Also, this is the base for an effective and efficient use of machine learning technologies to drive performance.
Misconception 2: Advanced analytics takes a long time to deploy
For most analytics tools, implementation is typically quite fast – a matter of weeks, in most cases, regardless of the existing IT infrastructure. Once deployed correctly – on a transactional level within ERP and not as a separate data mart on higher levels – the benefits are rapidly evident:
- Advanced analytics can group customers and products to see what makes them profitable and define what drives their growth. With this, finance can analyze and identify outliers.
- Predictive analytics can help finance professionals forecast mid-period to avoid surprising events, which is especially crucial amid today’s global economic volatility.
- Advanced analytics can optimize receivables processes and collect overdue amounts faster by setting alerts when customers deviate from past payment patterns.
Misconception 3: Advanced analytics are complex
While the backend technology that powers advanced analytics is sophisticated, complexity in use would defeat its purpose. The goal is to put data at a CFO’s and controller’s fingertips and make assessing information easier than ever.
Technology companies want to ensure that their customers get the most out of their technology investments, which is why they build dedicated teams responsible for preparing, developing, and deploying solutions in close collaboration with the customers’ finance teams. These teams, typically composed of finance experts, technology experts, and data scientists, help each customer streamline the process of solution deployment and user adoption. They are available to teach executives how to use the new solution and to answer questions as they arise. Deployment teams take the complexity out of the technology to ensure that their customers are optimizing its value.
The biggest benefit of advanced analytics is that CFOs no longer have to live and die by the spreadsheet. Truly successful CFOs are embracing their position as strategic thinkers and understand that insights and foresights needed for making high-level decisions cannot be realized without advanced analytics. It’s time finance leaders move beyond traditional misconceptions. Armed with previously untapped insights, the CFO can provide unmatched strategy and insight to support informed business decisions, and ultimately help sustain and grow the company.
This article originally appeared in FEI Daily and is republished by permission.