Finance analytics to support and drive decision making
New research from Gartner explores how FP&A teams can provide finance analytics that supports planning and decision making.
Analytically focused decision making has become critical for many businesses, particularly during the global pandemic. The key question now is which decisions should the financial planning and analysis (FP&A) team support?
A new report from Gartner suggests that analytics-driven decisions in businesses has increased, but believes that finance analytics should take priority and support this process. Leading companies have embraced a business-focused approach to finance analytics. To enable further growth requires additional financial analytics to support the decision-making process.
Gartner’s studies suggest there has been a 50% increase in analytic spending over the last three years. Gartner is calling for a shift towards finance analytics from the standard passive reporting structure to a more engaged process. As more sectors continue to improve their analytic capabilities, finance analytics governance becomes a little unclear. According to Gartner FP&A leaders are now questioning what role finance analytics should play in the wider analytics arena and how specifically FP&A teams can support these analytics.
Finance analytics reporting and support make up over 30% of spending in the finance function. Gartner emphasises that these investments in finance data do not support modern decision making and managers lack the understanding of how to use it efficiently. Gartner believes that the incorrect use of finance analytics can cost businesses as much as 1% of revenue per decision, mounting up to a major impact on business over time.
Gartner believes that to regain the real value of financial analytics, a business should focus on finance transformation. Business manager and finance teams should work together to define, develop and implement finance analytics. Gartner explains that decision-makers with clear data governance plans can deliver problem economics, collaborate more insights and drive each other’s concepts forward.
Gartner recommends businesses transform their finance analytics from a standard, passive reporting structure to a more relevant and engaging platform that encourages more discussion. This can be achieved by:
-Generating finance analytics based on scenario analysis
-Developing more dialogue and opinion in finance analytics reporting
-Improving the accessibility of finance analytics
Gartner explains that progressive companies are adjusting positions for joint finance analytics decision making. Being with focusing on a business decision first and finance analytics after. Gartner emphasises that finance analytics problem solving can be improved by predicting and planning for failure early.