Finance enterprise must lessen their reliance on spreadsheets and look to advanced analytics to become more strategic, experts say.
Analytics is nothing new in finance. Chief financial officers (CFOs) and their staffs have been using them for years to crunch numbers and draw insight from balance sheets, income statements and cash-flow statements. But how analytics is being deployed appears to be shifting.
“Finance departments are demanding more self-service analytics, more use of advanced analytics, and easier access to finance and operational data in order to analyze it,”
BFO suppport advances in the tools for analyzing and reporting the data have made it possible to assess financial performance, process quality, operational status, risk and even governance and compliance in every aspect of a business.
One hurdle in the finance department’s adoption of more robust analytics has been an over-reliance on spreadsheets. Long the staple of finance, the research found that the limited analytical capabilities of spreadsheets make it tough for finance executives to get the most out of their data. Reliance on spreadsheets makes it difficult to produce accurate and timely analytics.
Most CFOs are good at the basics: financial statement analyses, modeling, forecasting and planning. Only a relative handful, however, apply economic and market indicators, price optimization techniques or profitability analysis on a regular basis. The result is that the bulk of finance departments are not harnessing predictive analytics in planning and forecasting.