While automated data-aggregation and advanced analytics technologies can be costly in the short term, COVID-19 may have shown many companies that the ability to evaluate decisions’ financial implications in near real-time is well worth the investment.
The turbulence of the COVID-19 crisis put urgent pressure on FP&A to move beyond the traditional finance cycles of monthly or quarterly planning, forecasting, and reporting. Business demand for fast, frequent scenario planning increased dramatically—but was FP&A equipped to deliver? A recent poll suggests that many FP&A organizations may have been hampered by less-than-optimal technology.
As the figure shows, a poll taken at a webinar geared toward CFOs shows that only 11% of respondents said that their organizations centralize financial data and use advanced analytics for scenario planning. In contrast, 37% manually aggregate data and perform modeling offline, a much slower, labor-intensive, and error-prone process. That’s troublesome given that 60% of respondents felt their biggest challenges were the ability to rapidly model business decisions’ implications and to conduct contingency planning for current or future disruptions.
The good news is that digital technologies have come a long way toward addressing challenges in collecting, aggregating, and normalizing data across disparate platforms. Similarly, technologies for predictive analytics have benefited from advances in data science and machine learning. With such technologies, FP&A can be much more agile in providing timely, transparent, meaningful insights—which can enable companies to see very near-term improvements and returns.
So what stands in the way of FP&A taking advantage of these technologies? Historically, it may have been seen as an all-or-nothing, high-cost play with a perceived low ROI. But while it’s true that technology can be expensive, COVID-19 may have shown many companies that the ability to evaluate the financial implications of decisions in near-real time instead of every month or every quarter is well worth the investment.
Read Reinventing FP&A for the pandemic and beyond to learn more about how COVID-19 has provided the impetus to challenge traditions within FP&A, and explore advanced capabilities that will become staples in the new normal.1
CFOs know finance transformation can be difficult and time-consuming. But they also know it’s an effective way to keep up with the changing needs of the business. Whether it’s technology disruption, business model innovation, or a new industry ecosystem, Deloitte helps finance organizations look ahead to what’s next while keeping the ship on a steady course.