As April 17 approaches (this year’s deadline), many Americans are scrambling to locate receipts and other financial documents to prepare to file their 2011 income tax returns.
Tax day is also a good time to take a hard look at your company’s financial planning. Are you relying on hastily compiled spreadsheets to manage your sales forecast and pipeline? Or, are you constantly contacting IT to help you slice and dice data from operations, headcount, sales, etc.? Both of these options are just Band-Aid approaches that risk letting revenue and cost-cutting opportunities slip away.
Here are the top three ways FP&A (finance planning and analysis) analytics can help you get an integrated view of critical data from isolated systems so that your company can make informed decisions, instead of relying on spreadsheets or IT to gain visibility into your financial position.
Ditching the spreadsheets. Even in an industry like financial services – which was, in many cases, sent reeling from a lack of visibility into its finances in the economic meltdown – the use of spreadsheets for data analysis is pervasive, according to a recent study from Aberdeen Group. This study of 100 financial services companies finds that 57% of banking companies, 63% of insurance companies and 71% of securities and investment companies are heavy, persistent users of spreadsheets. Not only do spreadsheets open opportunities for risky user errors, but they corral users into a very limited view of budget and expense data, forcing them to examine data from a regional or product line perspective.
Breaking down barriers. Aberdeen also finds that the top performing financial services companies are those that break down departmental barriers when it comes to information sharing. The top-performing companies using business analytics can boast 37% year-over-year increases in operating income compared with 6% at average-performing companies.
To improve decision support and generate more actionable business insight, companies must stop looking at data in silos and instead use analytics to provide a comprehensive view of customer data, account data, sales data and financial data to analyze actual expenses against budgeted expenses and other critical financial planning questions.
Furthermore, Deloitte notes that CFOs and other finance executives are increasingly being called upon to deliver integrated information to business units so that they can effectively compete in a challenging economic landscape. Because natural growth in the economy is limited, many companies can grow only through acquisitions or by taking market share from their competitors, according to Deloitte. Thus, companies need to be able to analyze data from a variety of sources to be able to successfully lure customers from their competitors or identify and plan for potential acquisitions.
Visualizing the answers. For companies to adequately analyze data and identify emerging trends or opportunities for growth, users must be able to quickly and intuitively interact with visual representations of the data, notes Gartner Inc. Interactive visualization technology that displays data using images and visual cues noting different aspects of the data being analyzed allows users to easily filter, drill or pivot data, according to the research. This means that companies using visual analytics can easily analyze larger data sets and quickly spot patterns and outliers that can drive more successful business decisions.
Next Steps: Download our complimentary “5-Minute Guide to Analytics for FP&A,” and learn how visual analytics tools can deliver actionable insights quickly and easily to meet your finance executives’ top priorities.