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How to Reduce Risks with Pervasive Analytics and Scenario Planning

Signpost outside is showing Best Case or Worst Case, for scenario planning

How will CFOs successfully navigate their organizations through economic uncertainty? Through a combination of big data, pervasive analytics, and scenario planning, according to our global surveys of CFOs.

Economic uncertainty is clearly top of mind for CFOs and affects the way they run their teams. The Adaptive Insights CFO Indicator Q2 2016 report found that 86% of CFOs expect market volatility to continue. That’s not surprising in the wake of the confusion surrounding Brexit, the U.S. presidential election, and the Fed’s widely expected interest rate hike.

Watch the webcast, “Scenario Planning Done Right: A Blueprint for Effective Plans”

CFOs know that markets can change overnight, and that’s why predictive analysis is so important. From Brexit to tax changes to how weather will affect retail sales, analytics technology is playing a greater role in finance departments than ever before. If they’re going to accurately forecast and mitigate risk for their organizations, CFOs need to look at the big picture.

Scenario planning instills confidence

Despite their high levels of concern over economic volatility, 85% of CFOs are nevertheless confident in their forecasts, according to our CFO Indicator Q1 2016. But if there’s a market contraction, 48% say they can provide the most value to their organizations by planning for multiple scenarios, while a third will work to turn real-time data into insights to inform their actions. In other words, when the going gets tough, CFOs rely on scenario planning and analytics to manage their business.

However, CFOs aren’t just leveraging pervasive analytics to plan for worst-case scenarios—they’re also using analytics to take advantage of previously unseen opportunities. An overwhelming 78% of CFOs said the initiative that will bring the most strategic value to their organizations is applying financial data analysis to achieve profitability and growth.

Technology and the CFO

As their relationship with data and analytics moves beyond trust to reliance, CFOs will increasingly be on the hunt for technology that can facilitate it. Nearly 60% of the CFOs in our survey identified dashboards and analytics as having the most promise for supporting their strategic initiatives, underscoring the CFO’s role in developing, reporting, and sharing business-critical information across the organization.

As the strategic finance organization evolves into a technology-enabled, analytics-driven function, CFOs are more technically savvy than ever: 93% report they are moderately, very, or extremely proficient in technology.

Clouds on the horizon

That proficiency might explain why the cloud has come onto CFOs’ radars. Cloud computing holds a lot of promise for data analytics. First, it vastly increases the amount of data that organizations can store. Second, it’s far more flexible than physical infrastructure, making data gathering and analytics easier. Finally, it hosts some of the very best analytics platforms, taking advantage of the benefits of software as a service (SaaS).

Perhaps for these reasons, the CFOs we surveyed estimate that while 33% of their IT infrastructure is SaaS today, SaaS will make up 60% by 2020. They’re implementing SaaS solutions, CFOs say, because such solutions increase cross-organization collaboration, reduce their teams’ reliance on IT, and perhaps best of all, save money.

The changing role of the CFO

The widespread adoption of technology and the increasing emphasis on big data and analytics will have a profound effect on the role of the CFO, according to our survey respondents. The majority of CFOs we polled consider compliance their top priority today, but only 62% see this as a top priority three years from now. Instead, they expect to be focusing on talent management (78%), transforming financial data into intelligence to drive growth (77%), and leveraging IT to take advantage of evolving market opportunities (74%).

All signs suggest that big data and analytics technologies will take a front-and-center seat in the finance departments of the future. Progressive CFOs will be quick to adopt these technologies to enhance their roles and lead their companies to success, no matter the scenario.

Watch the webcast, “Scenario Planning Done Right: A Blueprint for Effective Plans”

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