Why Companies Must Upgrade their Financial Analytics Capabilities

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Why Companies Must Upgrade their Financial Analytics Capabilities

CFO Tech Outlook | Thursday, July 29, 2021

Analytics solutions equip firms with the tools necessary to generate relevant reports, monitor key performance indicators in real-time, and gain new insights that result in improved decision-making and performance.

FREMONT, CA: Today's business is data-driven. A few decades ago, the amount of data processed by a single business unit would have overwhelmed even the largest corporations. Fortunately, technology has made organizing and storing data easier. ERP technology has also streamlined management by eliminating departmental data silos. Combining this data into one system gives a far more robust dataset for study.

Businesses need good analytics to fully utilize company data, including reports, KPI tracking, and dashboard design. While many software providers offer these tools, not all are equal. The wrong solution can cripple an organization's ability to utilize data and, as a result, performance.

A company's analytics capabilities may be restricting its success in the following ways.

Rigid reports: Accounting and ERP software suppliers commonly include pre-formatted reporting templates for financial statements and other basic reports. As well, ERP solutions include basic reports such as warehouse management and factory execution. Making regular reports by hand saves time and money.

A report format that works for one organization may not work for another. So, financial statements may need to be reworked to make data more intelligible. The board may be satisfied with a brief income statement, but internal executives demand more. Adding new data to a report should be simple, but it isn't always. Due to the difficulty or impossibility of transforming hardcoded designs, organizations cannot effectively transmit information.

Using the incorrect tools: It doesn't matter how many pre-defined reports come standard with an accounting or ERP system. Example: A sales manager wants to know why a new product isn't selling well in one place. Or, a company may wish to a customized report to track success.

Preparing ad-hoc reports used to require a level of technical expertise that few staff possessed. Because of the enormous demand for their services, it could take weeks to generate a new report. Delegating tasks is no longer acceptable in today's work environment. The more time a company spends producing custom reports, the more opportunities it will miss improving performance.

Spreadsheets are also a popular reporting tool due to their simplicity, although they are inadequate for analytics. The use of static rather than live data is remarkable. Spreadsheet-based reports are quickly rendered obsolete. Their frequent updating creates version control issues and makes it challenging for everyone to stay in sync.

Using spreadsheets also increases the risk of reporting inaccuracies. Spreadsheets are dangerous due to their flexibility. Changing a single formula in a publicly publicized study could have far-reaching consequences, including tarnishing personal character.

Rigid dashboards: Dashboards are helpful for everyone in an organization, not just managers. They display KPIs and notify team members of tasks that need to be accomplished or issues that need to be handled. As a result, time is not wasted searching for reports or features that are regularly used.

So that team members from different departments only view information that is relevant to their task. This eliminates the requirement for each employee to construct their dashboard. Everyone should be able to adjust the dashboard to suit their needs.

Dashboards that are difficult to adjust to specific roles or personalize are unlikely to give the insights and efficiency an organization need.

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