As the economy continues to show signs of strength and U.S. equities markets are hitting record highs, CFOs are seeking new opportunities to drive revenue growth. At the same time, they also want to contain costs and increase the transparency of costs and investments. While a growing number of CFOs are expressing optimism about business potential in 2014, there is an almost equal focus between revenue and cost, according to Deloitte’s Q4 2013 study of 96 finance chiefs.
All Analytics Tools Are Not Created Equal
Because of the multiple requirements that CFOs are trying to address, it’s no wonder that nearly 60% of CFOs say that investing in analytics and IT-led decision-making capabilities is their top priority, according to a joint study conducted by Gartner and the Financial Executives Research Foundation. Still, some analytics tools offer greater potential than others, including those that provide access to real-time data streams and data visualization capabilities. The right analytics tools can enable CFOs to identify and respond quickly to abrupt shifts in business and market conditions, and discover “unknown unknowns” in business.
Three Big Questions Data Visualization Answers For The CFO
1. How do I predict future business conditions? No one knows with any certainty what the future holds. However, visualization tools can help CFOs view emerging economic trends and how they are expected to shape revenues, profitability, and operating expenses.
For instance, CFOs can view the impacts that anticipated job growth and other forms of economic expansion are expected to have on their own companies. This includes the potential impact on hiring, contractor costs, and supply chain activities. Moreover, finance chiefs can use heat maps and other visualization tools to see how market trends are expected to impact both revenue growth for their companies as well as costs.
2. How do I reduce costs through tighter inventory control? CFOs can use visualization techniques to obtain clearer pictures of how demand for products and services are shaping up.
For example, the CFO of an electronics retailer can use visualization tools to anticipate how many new smartphones or tablets to stock when new products are ushered into the market.
Alternatively, a CFO for a discrete manufacturer, such as an automaker, can use visualization tools to better anticipate the numbers and models of vehicles to distribute and make available in different geographies, or even on a dealership basis based on sales volumes and anticipated demand. More effective inventory management can help CFOs better utilize warehouse space, reduce markdowns, and increase profitability.
3. How do I move quickly to identify and mitigate risk? CFOs can also rely upon visualization tools to identify top risks facing their organizations, as well as different layers of risk and how they can affect revenues, profitability, and other economic outputs.
For example, the CFO for a retail bank can use visualization tools to view the potential risks facing the performance of its loan portfolio, including the likelihood of customer defaults, anticipated changes in credit costs, and other factors.
