Enthusiasm is growing among Chief Financial Officers (CFOs) who say they now view predictive analytics as a way to improve financial analysis and the bottom line.
Predictive analytics uses statistics, historical or real-time data and business intelligence tools to make predictions about risks, opportunities, relationships and growth, and to gauge the trajectory of established goals. Business intelligence used to be a function of the IT department and required the skills of data scientists to extract meaningful information from massive quantities of data.
As data analytics and business intelligence tools progressed, so did the ability for CFOs to use them.
Traditionally, CFOs look backward at historical data to produce quarterly and annual financial reports. Improved data analytics tools enabled them to then extract and analyze a company’s historical patterns to examine valuable information such as the top expenses incurred by a vendor or the five expense categories that have increased the most during the previous quarter.
But the days of CFOs relying completely on historical data are over. Real-time information is now allowing CFOs to quickly solve problems and achieve a competitive advantage for the company.
This is great for CFOs who, thanks to powerful cloud
It’s critical that CFOs realize they can benefit from the forward-looking insights that predictive analytics can provide through the use of cloud financial
It’s clear that predictive analytics has the potential to improve financial analysis and significantly impact the way CFOs conduct business. CFOs need to take advantage of the advanced data analytics and business intelligence tools available to move their companies forward in today’s fast-paced world.
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Strategically align goals: By using predictive models based on historical and real-time data, CFOs can align operational goals with the organization’s strategic agenda. This is a highly focused planning tool.
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Save money: CFOs can cement their role in helping the business achieve cost savings and uncover new revenue opportunities. Decisions based on data can positively impact present and future operations. An article on the Forbes website reports that 63 percent of CFOs use predictive analytics to manage their decisions.
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Maximize cash flow: With predictive analytics, CFOs can understand the correlations between financial data and operational data. This allows the
CFO to maximize operating capital and cash flow, anticipate areas or periods of slowdown, and proactively manage company assets. -
Ensure customer satisfaction: Research cited in the Forbes article suggests using analytics to “understand customer satisfaction, profitability, retention and churn” ranks among the most common uses of cloud-based analytics. Half of respondents to the survey cited by Forbes say they use analytics to achieve better customer satisfaction.