Real-time analytics brings immediacy to all enterprise activities, including the identification of growth markets and products. With the most up-to-date information available, CFOs stay abreast of all that is going on in the enterprise, giving them an edge in an increasingly competitive market. Clearly, real-time analytics is the way to go for improved profitability.
What does real-time analytics mean for finance?
One of the main focus areas of finance is improving analytical insights and reducing costs through scalable models that are also centralized by creating a center of excellence. The COE is where the data mining, collection, synthesis, and modeling occur. Other functions such as building and translating analysis into business terms and project scoping are handled outside the COE. Enterprises that develop a scalable partnership model between the two can sustain high-quality customer service, directly impacting the bottom line. Let’s look deeper into what real-time analytics mean for the finance function.
- Real-time analytics means faster and immediately accessible reporting. AI and ML functionalities enhance support by leveraging advanced analytics and data visualization to improve data modeling capabilities and deliver deeper insights using future-state reports.
- Real-time operational data and intelligent platforms and viewing ERP as more than an IT asset enable real-time planning, closing, and budgeting, through standardized global processes across the enterprise. CFOs can respond faster to the continuous flow of updates, shortening the disruption cycles.
- AI strategy and planning are foundational components that help deploy AI and ML-based insights to reduce costs and friction in all finance-related activities. Deploying an ML algorithm to automate budgeting and forecasting can offer greater accuracy in financial forecasting and save several hours of time and labor-intensive work.
- Real-time analytics ensures accuracy through data consolidation and a unified view of data, metrics, and insights. CFOs are better able to find trends and patterns and perform root cause analysis.
- Real-time analytics helps mitigate supplier risks proactively and closer supplier relationships. For instance, close partnerships with suppliers can help CFOs identify potential acquisition targets or acquire additional strategic capabilities. It also helps drive growth and innovation.
How can CFOs use real-time analytics?
Digital transformation requires increased dependence on data, automation, collaborative models for decision-making, and making changes in business operations. Real-time analytics empower CFOs to make and drive decisions in direct response to digitization.
Business Intelligence systems continuously collect, process, and analyze data from various sources laying the foundation for real-time processing and analysis of data. It is proactive, alerting users about events as they happen. According to Gartner, real-time analytics applies logic and mathematics to the received data to provide insights enabling quicker decisions.
4 ways in which real-time data analytics can be leveraged
- Profit & Loss analysis includes the current margins, current operational costs, and how to reduce them for better margins.
- Balance sheet analysis provides asset turnover ratio, improving the equity ratio, and evaluating historical data with financial forecasting.
- Payables analysis uses predictive analytics to identify potential shortfalls and how to improve cash flow.
- Receivables analysis helps to understand the trends in collections to decide whether to expand operations or increase revenue.
While real-time data and analytics are still relatively new, CFOs continue to innovate ways of using them to add value to their roles in the enterprise. CFOs are learning to harness advanced analytics to enhance efficiency, agility, and productivity while managing performance and associated risks with the help of data-driven insights.
Questions that every CFO must ask while using real-time data analytics
CFOs can identify rapid finance-related business insights and generate accurate reports with advanced analytics through financial management and reporting dashboards. And, when choosing the right dashboard, CFOs must ask themselves if the following key elements are being addressed.
- Does it offer an analysis of financial capabilities and operational reporting?
- Is high-level financial planning and structuring of the enterprise possible?
- Does it provide a basis for informed, strategic financial decisions?
- Can the CFOs stay connected to multiple data sources?
- Can they create a financial report that’s customized to business needs?
- Can it help evaluate the enterprise’s financial performance against relevant data from its competitors?
CFOs process and query new data even as it is collected from sources, including the ERP, different business units, third-parties, Internet of Things applications, etc. They also make informed decisions in real-time. And these decisions include efficiency optimization, product delivery, and customer services. Today’s CFOs need to connect the dots between customers, revenue, key indicators, and the enterprise’s financial outcomes. These factors drive business strategy and increase visibility among all the stakeholders.
Understandably, the connection is made by harnessing real-time data. The future of Finance relies on real-time analytics as CFOs go beyond transactional activities to broader and all-encompassing strategies using valuable insights derived from data analytics.
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