The increasing demand for data-driven decision making
Data-driven decision making (DDDM) is a process whereby decisions are made based on data and analytics rather than on intuition or experience. This approach has become increasingly popular in recent years, as organisations have come to realise the potential of big data.
DDDM offers a number of advantages over traditional methods, including improved accuracy, transparency, and accountability. In addition, DDDM can help organisations to make faster and more informed decisions. As the world becomes increasingly data-rich, the demand for DDDM is likely to continue to grow. This trend is already being driven by the increasing availability of data, the declining cost of storage and computing power, and the ever-improving capabilities of artificial intelligence. With its many benefits, it is little wonder that DDDM is rapidly gaining popularity across all sectors.
That is particularly true in the current economic climate when change is happening faster than ever. Making data-driven decision-making a priority, however, is not always an easy task.
Many organisations and their leaders have deeply ingrained ways of thinking, thus it is necessary to re-evaluate the old methods before introducing new. Leaders must take three crucial actions in order to normalise data-driven decision-making and capitalise on the most valuable assets that organisations have.
They must find agents of change, build adaptive systems that will evolve as technology advances, and find ways to extend the influence of data and analytics to all employees and embed data and analytics into every decision.
The growing importance of predictive analytics
In today's world, data is everything. Businesses of all sizes rely on data to make decisions about everything from product development to marketing strategy. And as the volume of data continues to grow, so does the need for better tools to help make sense of it all. That's where predictive analytics comes in. Predictive analytics leverage historical data to identify patterns and trends, and then uses those insights to forecast future outcomes.
The deeper, richer data enables more robust analysis, including the ability to conduct predictive analysis to guide the business into decisions that do not only work now, but will also serve their purposes well into the future. A good way to look at the difference between Enterprise performance management (EPM) and ordinary Business Intelligence (BI) is what kinds of questions you can answer using each method. Using BI, you can answer the question, “What happened?” Using EPM, you can answer the question, “What can happen?”
The combination of EPM and predictive analytics, allows businesses to make better decisions about where to allocate resources and how to respond to changing market conditions faster and more accurately. As companies invest heavily in their data gathering solutions, predictive analytics is rapidly becoming a key part of their Finance Transformation journey. Businesses that fail to embrace it will quickly find themselves at a competitive disadvantage.
The need to invest in better financial planning and forecasting tools
With the right data source integrations, all sorts of data can now be available at our fingertips, much of it even in real time. This not only opens up a lot of possibilities; but it also adds additional complexity. Forecasters must identify the right data, capture that information and incorporate it into their analysis.
It is rapidly becoming evident that companies need tools beyond just spreadsheets to effectively gather, model and consume information. That brings us to dedicated EPM solutions, that allow to automatically collect all the financial and operational data and KPIs in one controlled environment — where all stakeholders can access the same data set, financial forecasting and reforecasting become faster, more accurate processes.
OneStream's intelligent finance platform allows businesses to break away from the limitations of spreadsheets and legacy applications. Unifying financial consolidation, planning, reporting and analysis through a single, extensible platform.
Planful, the pioneer of financial planning & analysis (FP&A) and consolidations cloud software, helps businesses execute critical finance and accounting processes faster, drive more accountability for results across the organisation, and take advantage of new insights to enhance future results.
Both platforms offer a wide range of features and benefits, but they also have some key differences. Ultimately, the best choice for your business will depend on your specific needs and budget.
The Rise of eXtended Planning & Analysis (xP&A)
The business world is always changing, and companies must constantly adapt in order to stay competitive. In recent years, there has been a shift away from traditional planning and analysis techniques, and towards a more holistic approach known as eXtended Planning & Analysis (xP&A).
xP&A takes into account a wider range of factors, including market trends, customer needs, and technological developments. This allows companies to make more informed decisions about where to allocate their resources.
According to Gartner, "By 2024, 70% of new financial planning and analysis projects will become extended planning and analysis (xP&A) projects, extending their scope beyond the finance domain into other areas of enterprise planning and analysis."
As a result, xP&A is becoming increasingly popular among businesses of all sizes. While it requires a greater investment of time and resources, the benefits of xP&A make it clear that this is a worthwhile endeavour.
1. Increases transparency
The days when finance teams had to manually gather and analyse every piece of data across the organisation are long gone. xP&A enables complete performance transparency. It produces a unified, comprehensive view of the performance of strategic plans across all functions. Even better, it does it real-time. As a result, this cross-functional approach to reporting and analysis throughout the organisation results in better and more accurate decision-making.
2. Business alignment
Aligning finance divisions with the rest of the organisation is a challenge for many firms. However, xP&A makes sure that every function has the same outlook for the company's future. As a result, operational and financial plans are aligned, and everyone is aware of what they must accomplish (as well as what other departments) in order to achieve and exceed business goals.
3. Streamlined continuous planning
The ability of xP&A to establish and maintain continuous planning utilising real-time data is one of its key advantages. Supported by the right xP&A solutions, businesses can keep track of plans, rely on technology to perform updates, whilst keeping everyone in the loop. The amount of manual labour is dramatically reduced, providing CFOs and their teams more time to concentrate on other crucial issues.
4. Reliable data management
xP&A enables the consolidation of data across the business in a single repository, meaning that conflicting versions of the truth are a thing of the past. Storing data in multiple locations (such as dashboards, excel spreadsheets, legacy databases etc.) can cause confusion and misalignment across the business users.
The more data that is being captured and stored, the worse the issue becomes, which is why many businesses value the "single source of truth" that xP&A offers. As data can now be conveniently stored in one place, the duties of important decision-makers can be simplified, allowing them to focus on value add activities.
5. Business partnering enablement
Business partnerships are becoming more and more important. The need for all teams to do more with fewer resources has arisen as a result of recent technical advancements and ongoing competitive pressure on organisations. The role of finance teams has changed from being a gatekeeper of financial data to that of a business partner.
However, xP&A has simplified the process by providing the necessary tools to help avoid risks and identify growth opportunities. In turn, it’s become a lot easier for finance teams to step into the role of strategic business partners as they have the necessary insights and data on hand.
The trend towards automation and artificial intelligence
Automation and artificial intelligence (AI) are transforming businesses and will contribute to economic growth via contributions to productivity. The use of automation and artificial intelligence is growing rapidly in both the developed and developing countries. This trend is being driven by a number of factors, including the increasing availability of data, the decreasing cost of computing power, and the need for businesses to remain competitive in an increasingly global economy.
The EPM market is witnessing the rise of many entrants who are adding AI/ML capabilities to their EPM platforms. However, despite the growing capabilities across market players, major challenges exist:
Businesses must make sure that their most valuable asset, their employees, has adequate time and resources to adapt and acquire the necessary skills for the new opportunities AI is bringing.
Moving into a fact-based decision-making mode changes the nature of an organisation. Deploying a structured approach for workforce augmentation is more important that ever.
The key to successful AI deployment is the quality data a business holds. Therefore, organisations will need to exercise stronger data control. Data mining, cleansing, integration, and management are becoming more important than ever.
The need for Finance to take advantage of these trends
It is evident that the finance function is under pressure like never before to provide greater insights, predictive analytics and forward-looking recommendations. The good news is that technology has evolved to meet these challenges, and there are now solutions available that can automate many routine tasks and free up resources for more strategic activities.
PRYZM helps clients translate their strategies into a meaningful framework of metrics to effectively manage performance and strategic alignment. Our EPM specialists work with your teams to design and implement unified, innovative solutions that enable you to analyse past performance, identify patterns, trends and dependencies, report on performance and perform predictive modelling.
Our partnership with OneStream and Planful enables us to support activities ranging from consolidation and planning project delivery to automation of business processes with the use of AI. We are able to do this by leveraging our business and technology expertise and the the use of our partners' cloud-based EPM solutions.
If you would like to find out more about how PRYZM can support your business, please get in touch.