Despite the proliferation of new cloud solutions and growing talk of predictive analytics and big data, there’s still a significant gap between where financial planning and analysis (FP&A) organizations are today and where they want to be when it comes to the use of technology, analytics and access to data. Those are the findings of the upcoming 2016 AFP FP&A Benchmarking Survey. That’s not a reason to feel disheartened, however. On the contrary, this presents a great opportunity for finance teams to gain a competitive advantage. By investing more in technology, analytics and data management and discovery tools, FP&A can greatly enhance its efficacy and help the organization improve its financial performance.
The survey proves a key point: organizations that invest more in finance technology, analytics and access to diversified, real-time data already see or expect to see big paybacks in terms of competitive advantage and cost savings.
The impetus is twofold.
- First, technology investment can significantly reduce the cost and cycle time of core processes and the amount of time staff spends on grunt work; that frees up professionals to focus on higher value work like business partnering and decision support.
- Second, investing in analytics and data integration means FP&A has the tools to provide higher-level services to management and business partners and build stronger organizational competitive capabilities.
Getting core processes under control
First thing’s first—according to the survey findings, companies that invest more of their total FP&A budget on systems show a strong relationship with shorter budget and forecasting cycle times. For example, companies that spent less than 10 percent on technology took an average of almost 90 days to complete the budget and 23 days to build the forecast. In contrast, companies that spent between 20 and 49 on percent of their budget on systems completed the same processes in 75 and 16 days, respectively.
At the same time, the average number of days FP&A staff spent on collecting and processing data at companies that spent less than 10 percent of their budget on technology was over 384, or more than a full FTE. In contrast, companies that spent between 10-20 percent on systems cut that number in half. Clearly, technology dramatically reduces the amount of time staff spends on grunt work.
The analytics equation
But technology goes far beyond process efficiency. It goes to the core of FP&A’s mandate—providing operations and management with data-driven decision support and foresight so they can prepare for what’s coming around the corner and remain competitive in an increasingly digitalized world. That’s impossible without greater access to real-time data and advanced analytics, including predictive models.
Certainly, FP&A still has a long way to go.
According to AFP’s FP&A Benchmarking Survey, three out of 10 finance professionals report that they are at a high level of analytics and data access maturity. They look at both traditional and unstructured data from various enterprise sources. They deploy both historic analysis, as well as predictive algorithms. Such companies feed models with data to help forecast what lies ahead, so they’re not waking up surprised every morning. They can buy their companies’ time to adjust course and become more successful.
However, 56 percent of survey respondents strongly believe that to remain competitive, they need to up their analytics and data access game to include real-time access to internal, external, structured and unstructured data, and rely on predictive models to glimpse the future. They know they need to make data-driven decision-making part of their organizational DNA.
For finance teams, greater investment in analytics, data access and core technology is not a question of if, it’s a matter of when. The survey demonstrates that the sooner, the better.