Finance leaders are transforming the Finance function and extending the value they offer their organizations by leveraging the converging capabilities of digital technology to take advantage of predictive analytics. These technological capabilities provide new access to multiple sources of the vast data within organizations, foster the ability to interpret that data and provide tools that advance Finance transformation.
By leveraging these technologies, Finance leaders are expanding their sphere of influence with Sales, HR and Supply Chain. They’re also strengthening business partnerships and trust while providing deep operational insights and guidance for their organizations. How? By speaking in the language of the business and analyzing key business drivers such as pricing and sourcing that drive profit margin and cash flow.
Many Finance leaders successfully navigate part of this Finance Transformation journey with three steps that enable them to employ predictive analytics to provide both strategic and operational guidance:
Let’s examine these steps in a bit more detail to see what’s necessary to ensure success.
Step 1: Integrate Financial and Operational Data
To provide actionable insights, Finance leaders must have access to operational data. Additionally, they must have the capability to examine operational data alongside, and within the context of, financial data (see Figure 1). Sophisticated organizations generate vast quantities of data, so both Finance and business-unit leaders require digital technologies that provide access to these various data sources. For effective decision-making, this access must be efficient.
Access must therefore not require team members to waste valuable time moving and managing data. Additionally, the access must be timely so that up-to-date information is readily available for operational business decisions that have an impact before month-end.
Organizations that fail to align financial plans with granular operational plans will ultimately struggle with forecast accuracy – because they operate in silos. Financially, the impact of that can take many forms and impact both profit and cash generation. Here are just a few examples of impacts:
Step 2: Align Predictive Analytics Directly into Planning Processes
No matter where the Office of Finance sits in its Finance Transformation journey, predictive analytics can help focus on collaborating with business partners, find new ways to ask “why” and drive performance. Here are just a few of the top use-cases for organizations thinking about adding predictive analytics and machine learning (ML) into their financial and operational planning processes:
Access to raw data is ultimately meaningless without the capability to interpret that data. Finance notably lags other functions in the adoption of advanced analytics, according to Dresner Advisory’s 2020 Wisdom of Crowds® Data Science and ML Market Survey (see Figure 2). But modern corporate performance management (CPM) solutions offer capabilities that can empower Finance and business-unit leaders with self-service tools for predictive analytic forecasting. With the ability to apply predictive forecast models to data, Finance teams can leverage their organizations’ vast data to guide critical decision-making – and do so at the speed of the business.
Step 3: Deploy Predictive Analytics Across the Organization
With powerful predictive models at their fingertips, Finance teams can take advantage of visualization capabilities to collaborate with business partners. How? By creating and distributing dashboards with easy-to-use charts, graphs and reports that bring forecast data to life.
Sophisticated and modern visualizations also provide interactive access, enabling users to change variables to see real-time results of those updates to models, plans and forecasts. These visualizations and dashboards provide leaders across the organization with not only the ability to access data but also the capability to interpret that data – which helps guide critical decisions and informs organizational plans.
Unleashing Finance with Built-In Predictive Analytics
OneStream’s Intelligent Finance Platform empowers Finance teams to lead at speed by unifying predictive analytics with core CPM processes, such as planning, budgeting and forecasting; financial consolidation; reporting; and financial data quality. And with built-in predictive analytics (see Figure 3), OneStream™ is unleashing Finance transformation to take budgeting, planning and forecasting processes even further – allowing teams to plan, analyze and predict with confidence.
Plan, Analyze and Predict with Confidence
OneStream’s Predictive Analytics 123 solution, which can be downloaded from the OneStream MarketPlace™, automatically cycles through multiple predictive algorithms to determine the most accurate forecast type. Results are then graphically displayed and deployed across all aspects of the budgeting, planning and forecasting processes.
Finally, with OneStream’s reporting and visualizations, Finance and business users can bring key financial and operational metrics together by combining tables, charts, graphs and other visualizations. Users can then not only turn insights into action with the ability to see the real-time results of changes to models, plans and forecasts, but also share insights and collaborate on critical analysis and decision-making. With direct integration to data sources, users can drill down into the underlying causes, all the way back to transactional details, to quickly understand business trends.
To learn more about leveraging predictive analytics for budgeting, planning and forecasting, view our interactive solution brief, “Leading at Speed with Predictive Analytics 123”.
Well 2020 was a year we all won’t soon forget. While it was a year of disruption for many, the OneStream engineering teams were busy delivering a steady stream of innovations to the OneStream Platform and MarketPlace solutions. Here’s a quick recap of what new capabilities were delivered in 2020 and how they are helping our customers conquer new challenges and lead their organizations at the speed of business.
As the “go-to” strategic advisor to the lines of business and key functions, Financial Planning & Analysis (FP&A) teams are a natural choice to lead the long-range planning process. Why? Simply put, no other team, with the exception of the CFO and CEO, has the vantage point and capability to understand how detailed operational plans and metrics impact financial plans and forecasts.
As a strategic blueprint for organizational growth, long-range planning helps prioritize strategic initiatives such as M&A activities, new product investments, manufacturing optimization and capital sourcing – all of which are vital to achieving financial goals.
Whether it’s the global pandemic, US-China trade wars, Brexit or the 2020 US presidential election, finance teams are keenly aware of what many pundits hate to admit; uncertainty IS the new normal. And though COVID-19 is a black-swan event, navigating through uncertainly is nothing new for finance leaders. Navigating uncertainty is why long-range planning and rolling forecasting are so vital. But not just to forecast the numbers. Long-range planning and rolling forecasts help facilitate collaboration throughout the organization and increase business agility. How? By sharing insights and exchanging ideas across functions about business risk and opportunities. And of course, by leveraging those to make more effective decisions. You know what else corporate finance leaders agree on?
That predictive analytics and machine learning (ML) can take this to the next level.
While FP&A teams often serve as “the guardian” for organization-wide financial plans, many Finance teams struggle to transform key processes like budgeting, planning & forecasting. Why is that?
One key reason is that FP&A teams have more coming at them than ever before. They, of course, have core responsibilities like budgeting, management reporting and strategic planning. Those are the table-stakes. Beyond the basics, though, the FP&A playbook is wide open.
For many FP&A teams, there’s nothing more exciting than jumping into the trenches with business partners. Why? Well, like our friends in Sales, Marketing and Operations, FP&A folks love the action too. Some enjoy helping drive strategic initiatives like new product innovations, acquisitions and evaluating capital investment decisions. Other FP&A folks like the budgeting, planning & forecasting processes that transform “big picture” goals into tactical plans.
What’s the common thread? In short, most FP&A teams want nothing more than to help to deliver value to their organizations. And to help them get there, many FP&A teams would jump at the chance to leverage predictive analytics to help their business partners improve decision-making.
With all the buzz in the information technology industry around artificial intelligence (AI) and machine learning (ML) you’d think that every organization was using these tools or planning for how they are going to use them. After all, the promise is that AI and ML will help organizations harness the ever-growing volumes of data being generated by automating and augmenting human analytic processes and decision-making.
Do you work with a financial planning & analysis (FP&A) team? If so, then you’ll know there’s excitement in the air. Why? First, because there’s no other group within an organization (other than the CFO and CEO) with a view into the operations and the financials like FP&A. Next, as CFOs continue to unleash the true value of finance, FP&A groups are destined to expand their roles as trusted advisors to business partners. And don’t forget, FP&A teams play a critical role in driving innovation for the Office of Finance.
Predictive analytics, artificial intelligence (AI), machine learning (ML) – oh my. By now, you’ve heard all the buzz. You know, how technologies like these will forever change the office of the CFO. Or so “they” say.