Information gleaned helps companies understand the needs of their clients and better their position in the market.
 
by Lisa Maio Ross
 
 
In the past decade, there has been a growing sensitivity within organizations to the power and utility of information to help make better, fact-based decisions. From external information (customer feedback, queries, usage frequency) to internal information (employee data and feedback), firms are focused on using information to identify patterns and develop insights that facilitate improved decision-making. Particularly in challenging economic times, companies must understand macro and micro factors impacting their operations and how those factors could affect their ability to achieve business goals.

“Analytics” should constitute an input to strategic decision-making. It involves a combination of tools, methodologies, and domain expertise to provide a wide range of valuable, actionable information to internal teams so they can understand their customers’ and market needs better, the drivers of the current environment on their business, and how to utilize their brand and employee base effectively in designing strategies to create and maintain a competitive position in the market today and in the future.  

The ultimate value of analytics is that it helps companies drive top- and bottom-line business impact, as follows:

• Increased Revenue: If the resulting data/information help them identify opportunities for better pricing and product bundling and cross-sell.
• Improved Operating Margins: If the information helps them to reduce costs.
• Greater Cash Flow: In situations where analytics results in optimization of inventory or other assets in which cash requirements decrease significantly.
• Enhanced Productivity: Through identifying the opportunities and activities that will yield the maximum value/impact from resource usage, as well as measuring and tracking the impact of actions against the metrics/KPI’s that gauge business performance.
• Better NPS: Helping companies understand, via a net promoter scorecard, for example, how strongly their customers would recommend them helps measure customer loyalty as well as opportunities for improvement.

The role of finance and accounting (F&A) within organizations is evolving from a model based mostly on transactional work to a more complex and often higher-value approach to services. More F&A functions are being considered for outsourcing, focusing not just on core accounts work but also on fixed assets, high-end reporting, a greater convergence between finance and procurement spend, and a migration towards analytics and decision support.

Organizations most typically employ analytics through a support system that creates effective, usable information that can be analyzed and then used to facilitate action. From simple techniques of business reporting on performance and analyzing historical data, firms are increasingly realizing the predictive power of information and are migrating towards more powerful techniques, like predictive modeling, forecasting and optimization.

Types of finance projects for which companies are reaching out for analytics include financial planning and analysis of a client’s sales forecast, revenue stream, marketing strategy, demand aggregation, spend analytics, planning and budgeting, accounts payable and receivables analysis, long-range P&L simulation and budgeting, financial statement generations into the future, short- and long-term cash flow forecasting, capital allocation models, cash flow models, revenue modeling, profitability analysis, product/brand wise P&L, tax services and statutory reporting.

Today’s business environment is one of intense pressure on both revenue and cost. Buyers are looking to leverage analytics to react to market dynamics, maximize revenue and cash flow opportunities, and decrease cost through greater efficiencies. A major attraction of analytics is that for relatively small investments, clients yield quick, significant returns that often flow straight to the bottom line.

Advanced quantitative tools and techniques and domain expertise can enable a wide range of comprehensive, data-driven business decision support services across F&A, marketing and sales, risk, pricing, asset management, operations and supply chain, and actuarial functions. Such solutions can provide specialized information by industry segment, like retail financial services, commercial finance and institutional banking, insurance, consumer products, manufacturing, energy, transportation and healthcare.

Moving Forward
Analytics is a particularly powerful tool in today’s dynamic environment. The use of analytics often begins with identifying and leveraging data for solutions that drive end business performance. The most important measure of the strength of analytics solutions is how they directly result in improvement of business performance.

Corporations worldwide are realizing that leveraging analytics is a continuous process and that they must enable analytics to improve business metrics. As organizations go farther up the analytics curve, they are finding that their rewards multiply with minimal incremental investments.