Data-driven finance has become a key priority for finance and accounting teams worldwide. However, a new study suggests that only 23% feel they have the data and analytics potential required to generate real-time insights and deliver the strategies needed for their business.
The report, Behind Every Successful Enterprise, There is Data-Driven Finance explores over 200 finance and accounting leaders to determine their goals for the year ahead. Saurabh Gupta, the president of research and advisory of HFS Research, explains that the study finds that data-driven finance has become the main priority as businesses pursue further growth and profitability. The journey toward this includes many challenges, and most finance leaders feel they lack the tools, technology and talent to progress in this environment. For those that are growing fast and have reached the peak of economic performance, it is clear that focusing their investment in data-driven finance is paying off in creating more flexible operations and repositioning finance from a cost element to a more strategic focus.
Some of the key findings from the report include:
Data-driven finance is the future – Nearly 90% of finance leaders believe that data-driven finance is the future, and 87% agree that they must invest in AI analytics, cloud and digital talent to achieve their data-driven finance targets.
The second key finding from the report is that most finance teams stumble on data maturity. Only 23% of businesses already have mature, data-driven functions, while another 77% believe they are still working on creating a strategy for their financial data and analytics. On average, finance leaders think it will take two years to achieve their data-driven finance goals.
The third finding was that the primary drivers behind finance teams desire for data-driven finance are identifying growth opportunities to support business and become a more strategic advisor, as well as reducing operational costs and improving capital allocation.
Of the fast-developing businesses with higher growth rates, 36% have mature, data-driven finance functions, and more than 30% believe the main driver of their data strategies is the ability to be a strategic advisor for their business. The majority of fast-growing companies are actively developing core centres to improve the management of data and analytics. In contrast, only 23% of mid and slow-moving companies are developing these core areas.
With the current economic and geopolitical conditions, technological disruption and continuous changes in consumer behaviour, the finance function has become a critical area for intelligence and supporting corporate strategies. To capitalise on this intelligence, finance teams require sophisticated data and analytical tools that provide them with real-time insights and the ability to determine varying scenarios. Many emerging companies have managed this feat and applied sophisticated data-driven finance functions, but others still have a long way to go.