Accurate and timely financial data is a key requirement for any business.
It allows the finance department to review performance to date, to have a clear picture of where the business is now and to forecast and predict what’s likely to be in store in the coming months. This in turn enables finance leaders to understand what’s working and what’s not, and when the organisation needs to course-correct.
Unfortunately, for many businesses, managing data can often be a headache and an obstacle to decision-making, rather than a boon to the business. Challenges include difficulty collating data from disparate sources, lack of accuracy or a time lag in the availability of up-to-date figures, or the lack of an efficient system for processing the data to arrive at meaningful insights.
All of these challenges lead to inefficiency in financial planning and reporting, with a knock-on effect for the wider business. This is enough of a problem under ordinary conditions, but in uncertain times such as the last 12 months, the additional pressure to perform and manage the business through a crisis period exacerbates existing issues.
A recent survey asked 350 business leaders, finance and operations professionals across industries and around the globe to identify their biggest data challenges. Here are the results—listed from most challenging to least:
- Multiple disparate and disconnected data sources
- Spending too much time fighting over data
- Difficulty arriving at meaningful insights
- Lack of effective data management
- Excessive amounts of data
Multiple disparate and disconnected data sources
Collating and standardising financial data across a range of sources was the biggest challenge for the companies surveyed. 57% of respondents said that the bringing together data from various business silos posed a serious obstacle to producing meaningful financial reports and insights.
Achieving a unified view across the business is a key requirement of effective financial planning, particularly as the activities of different departments and areas of the business can have impacts across the whole organisation. It’s also important that the latest data is available in a timely manner, especially in a fast-changing business environment. If 2020 has taught us anything, it’s that agility and speed in financial planning are of central importance.
Increasingly, businesses are turning to innovations in financial planning technology to enable this agility, streamlining the collation and standardisation of data by taking much of the heavy lifting out of human hands.
Spending too much time fighting over data
The second biggest challenge among study respondents? The amount of time spent fighting over data – with 51% of respondents highlighting this as a key issue.
It’s no surprise, really. Selecting, collating, cleansing and ordering data to generate useful insights can be an arduous task – and different departments will have different views on which stats are important, how they’re gathered and what insights they provide – leading to multiple, conflicting sources of ‘truth’. The financial planning function needs a single, unified view across the business, in order to have any chance of producing accurate reports and forecasts.
It can often be difficult to put robust, agreed standards and processes in place, with so much of the work being done manually, opening up room for disagreements and misinterpretations. However, these issues can be circumvented by implementing a dynamic, automated platform, allowing teams to come together to agree the process and standards during the set-up phase, then leave it to run itself without having to revisit the issues every reporting cycle.
Difficulty arriving at meaningful insights
Raw data amounts to nothing until it’s organised in a meaningful way to transform it into actionable insights. However, 48% of survey respondents had issues doing precisely that. That implies that almost half of all companies aren’t utilising the information available to its fullest potential to drive effective financial planning and decision-making.
The right financial planning and intelligence tools can quickly transform large volumes of data into meaningful insights that fuel smart decision-making. This frees up valuable time for finance teams to forecast, plan and make decisions that will maximise the financial performance of the business, rather than getting stuck in the weeds of generating reports.
Lack of effective data management
41% of survey respondents cited lack of effective data management as a headache for their financial planning processes. Inaccuracies, missing and misplaced data all cause huge problems for effective forecasting and reporting – and once again, it’s often a case of relying on suboptimal manual processes to do the job. Lack of effective data management can also lead to compliance issues, in this age of heightened regulations around data security and privacy.
Developing an effective data-driven financial planning function requires information accuracy, transparency and instant access to that data to generate reports and insights. The more that this process can be automated, the easier it is to ensure standards and effective data management are adhered to, as human error is minimised, and people are freed up to perform higher level analysis.
Excessive amounts of data
22% of respondents identified data overload as another source of frustration. The exponential growth in processing power of IT has led to an explosion in data gathering over recent years, and this presents a challenge all of its own, as it becomes increasingly difficult to cut through the noise to find the information that matters.
Setting up a system that can process high volumes of data quickly, and home in on the key data points to produce summary reports, is a vital process in reducing the data-handling burden on financial decision-makers. What’s needed is a platform that can be set up to intelligently process data according to a set of rules and principles set out by the finance team, freeing up time thereafter for your people to make the kind of decisions that can’t be left to automated systems. It’s all about maximising the value your finance team can provide, by taking away as many of the programmable tasks as possible.
The way forward
In difficult times, the financial performance of a business has to be managed very closely – which puts financial data challenges high on the priority list of problems to solve. In a constantly changing world, finance teams need to pull in accurate, up-to-date data on an ongoing basis in order to effectively plan and manage their business in both the short and long term.
In response, leading businesses are increasingly turning to agile financial planning and reporting technologies to take the sweat out of these key processes, by automating much of the work of bringing disparate data sources together and turning large volumes of financial data in concise reports and actionable insights. Especially for larger businesses with multiple arms and activities, this is no longer nice to have, but a vital component of their financial capabilities stack. Putting the right solution in place frees up valuable time and resources for your finance team to do what they do best – analyse the reports and forecasts to make the best financial decisions to take the business forward.
To find out how Axiom’s innovative EPM software can take the pain out of your financial data management and processing, allowing you to streamline your forecasting and planning processes so you can react faster to change, get in touch today by calling +44 (0)1932 548 465, or email us at hello@verostone.com for an initial consultation.