Laura Timms is Product Strategy Manager at MHR Analytics and a ‘data maturity’ advocate, supporting organisations to advance their data journey. Here she shares with FinTech how adopting analytics can help organisations successful undertake finance transformation.
Finance transformation is all about improving the overall value that finance provides, but with finance teams under increasing pressure to do more with less, this is something that is becoming increasingly difficult.
It’s estimated that 81% of finance teams are currently undergoing finance transformation, yet research by Gartner reveals that seven out of 10 finance transformations fail.
This article, based on the new finance analytics guide from MHR Analytics, will reveal the benefits of adopting analytics to supercharge your efforts and help ensure that your finance transformation is a successful one.
Finance strategy that’s aligned with future business needs
Transformation is more than simply hitting a financial goal. It’s about being able to respond to the current and future needs of the organisation – something that can only be achieved when finance is connected to the wider business.
Unfortunately, with all of the demand that finance teams receive, it can be easy to fail to recognise how financial activity translates into everyday business.
This can lead teams working introspectively, which can quickly translate into silos, with poor communication of information, lower levels productivity and consequently a less valuable finance team.
To prevent this from happening, the financial strategy needs to be aligned with activity across the business, and analytics provides the platform to do exactly that.
Using a data warehouse, data from across the organisation can be synced to give finance teams real-time insights into how changes in one area of the business will impact the course of action they take.
This means that finance teams are able to steer away from getting caught up in metrics like historical spend and industry benchmarks, and are instead grounded in how the finance strategy relates to the unique needs of their business.
Focus on high-value tasks
According to Gartner, 56% of companies are in the evaluation phase of adopting AI to automate accounting & finance processes. By 2020 it’s estimated that 31% of companies will have actually implemented this into their business and 26% in “operating” mode, where AI is actively used in accounting & finance processes.
But what does this mean for finance transformation?
Well, AI technology is providing a platform that is changing the role of finance teams at a rapid pace. Through automating tedious financial processes, finance teams no longer have to spend their time buried in spreadsheets.
Everything from cash disbursement, revenue management and general accounting could be automated through leveraging analytics – in fact, it’s estimated that up to 40% of financial activity could be automated, and another 17% mostly automated.
Research goes on to reveal that for an accounting team with 40 full-time employees, with an average salary of £60,000 would save around 25,000 hours and nearly £72,000 that would have otherwise been wasted on team members carrying out repetitive tasks.
This time saved can instead be spent on higher-value tasks that facilitate business transformation and allow finance to act as a trusted strategic partner to the business.
Understand where to allocate resources
Sometimes it can feel like finance are caught in the middle, with demands left, right and centre of the business. And with eloquent justifications from each department explaining why their project should be prioritised, it can leave finance teams stretched under the pressure to please everyone.
Analytics works to hand back the power to finance teams.
Through interactive dashboards that display performance across the business, finance teams are able to easily identify the key value drivers of financial growth.
This means that they’re able to present stakeholders with “the facts” and justify financial activity, only spending resources on activities that generate the most financial value, whilst cutting unnecessary costs.
On top of this, finance teams can look internally to see what they’re spending their own time and resources on. This can help them to define their list of roles and responsibilities as a department to ensure that they don’t get caught up in low-value tasks.
Make faster, more reliable decisions
At the core of any finance transformation is the need to adapt finance practices to meet increasing business demand.
Despite this, many finance teams are still relying on outdated methods to carry out financial processes.
Relying on spreadsheets to communicate and understand what’s going on in the wider business is a common theme amongst finance, but using manual methods alone leaves room for human error. In fact, research shows that nearly 90% of spreadsheets contain errors, and this can make it tricky to make decisions with confidence.
This approach also means that teams are often forced to spend hours analysing data and pulling reports. This can lead to lags in getting all-important insights, which delays decision making and can result in “in hindsight” discussions with stakeholders.
Analytics works to streamline financial processes to provide teams with fast and accurate insights at the touch of a button. Through real-time data and automation of once tedious processes, teams can see bumps in the road way in advance and have greater confidence in their decisions.
To learn more about how analytics is impacting finance teams, read MHR Analytics’ ultimate guide to getting more out of your finance data.
For more information on all topics for FinTech, please take a look at the latest edition of FinTech magazine.