Business Analytics For Corporate Finance Webinar
Finance organizations are increasingly asked to provide metrics, information, and tools for sound business decisions. Coming up with the right information at the right time requires direct collaboration and knowledge sharing across finance, sales, marketing and operations. Traditional approaches to business analytics are too slow, hard to build and maintain, not adaptable, and most often offer information not readily actionable. Recent advances in technology and techniques are affording companies opportunities to leverage business analytics to improve decision making across the enterprise. Webinar content includes best practices and a case study focused on how world-class finance organizations are leveraging new
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Business Analytics For Corporate Finance Webinar
John: Today we've got a lot of things to cover, but the long and short of it is we want to help everyone in the audience today learn more about how to get their hands around business analytics in order to help finance and operating organizations stay on top of and improve company performance. Helping us in this, first up is Alex Ortiz who's the Director of Product Marketing at Host Analytics.
Alex heads up product marketing for Host. Prior to Host, he was Product Marketer for salesforce.com, which everyone knows about. Before that he was a Senior Associate for Sierra Ventures, a top-tier Silicon Valley venture capital firm with over $1.5 billion of investments. Earlier in his
Alex: Thanks, John. It's great to be here today. What I wanted to do over the next 20 minutes is share with you what we've learned through the last decade working with thousands of finance professionals. Really, to paint a picture of how finance organizations are taking their analytics into the next level.
I'm assuming a couple things in this presentation. One is maybe you already have an analytics initiative underway, or that you already recognize the importance of starting an analytics initiative. Really what I'll be doing is sharing a couple best practices. I'll
First, I'd like to start with a 30,000-foot view of what success looks like from the point of view of a CFO. They focus on really getting three colors of success right. Oftentimes it starts with driving accountability throughout their organization. They're looking at ways to make sure that the managers of each business unit is accountable and taking ownership for their area.
This really has meant a shift from a centralized panning process that formerly did involve managers to a really decentralized process, where the manager input in the budget and analysis process is a key step to what the company does and what the finance organization pushes forward.
The next [inaudible 00:02:55] that CFOs are thinking about is scalability, focusing on how to grow their company in a scalable way, both from a systems point of view and from a people point of view, obviously with the goal being to scale and grow without scaling and growing costs at the same rate.
Then the third pillar that many CFOs are thinking about is how do they drive better decisions? Not just within their finance organization and with executives, but across the company. How can they really leverage systems to do that intelligently that focus on really the facts in the company and not just relying on gut intuition. This is, I think, the three areas that most organizations are striving towards, but there are some real challenges to get there. Let's talk about that briefly.
Here's an interesting study by Deloitte. This is their Q1 2012 study. It really uncovers one of the main challenges, and that is finance organizations are struggling to provide the metrics, information, and tools needed to make sound decisions. I think more and more finance organizations are looked to as the custodian of data, and almost all roads lead to finance to be able to analyze finance information and operational information.
Editor's Note: Please take a look at some of the other webinars in Proformative's library: Corporate Financial Planning Strategy Webinar, SaaS Consolidation & Reporting Webinar, Managing Debit & Credit Card Merchant Fees Webinar, Evaluating Accounting Software Webinar and Chief Financial Officers & Cloud Computing Webinar.
What was also interesting about this study is in Q1, there's been a ten point increase in interest or basically the recognition of this being a major challenge point for finance organizations. What are companies doing about this challenge? Next I'll lay out what they are looking to analyze, and how they're going about doing it.
This research is courtesy of Ventana Research. They surveyed 847 finance organizations, and they asked them, "What are you looking to analyze?" Over half of those organizations indicated that they're looking to analyze financial, sales, customer, and employee data. This makes a lot of sense. I don't think this is a surprise to anyone.
Clearly, employee data tends to represent one of the largest OpEx costs in a balance sheet. Then, of course, on the sales side, many companies realize that it's just critical to get the forecasts correct because it drives so much of the rest of the business.
I want to touch on a couple examples of best practices in those two areas. First, in
First is really getting a detailed headcount report by individual, and this report includes all compensation items - base, bonus, plus any benefits - and also includes obviously tax and statutory withholdings. This is really helping it drive more accuracy around kind of the detail aspects of workforce planning.
Next, they'll say that they are looking to compare and analyze compensation on different budget scenarios. Oftentimes in the strategy session with an executive, there's a lot of "What if?" questions, meaning, "If we're hiring for growth, how quick can we hire? If we're not able to fill positions, what does that look like? What does that do to our P&L?" They're really looking for tools to be able to slice and dice different scenarios.
The third top area is really they're looking for an ability to drill down and compare details on different accounts, do a lot of comparative analysis across the business in support of the business. Now we compare and contrast that with what the business unit managers are looking for. We'll take the case of typical operational VP.
Their use cases or their needs around workforce planning tend to be different. First off, they really want to focus on who they need to hire and how they need to manage those teams, and they don't necessarily want to look at how to calculate
The second area is, obviously as they're managing their business unit, payroll tends to be one of the biggest percentages of total cost. They quickly want to understand variances that are happening in their budget and of course workforce planning is a big piece of that process.
The third area an operational VP tends to look at is benchmarks. They want to analyze their payroll costs in their business unit versus other companies. That's usually a key performance indicator on how they're managing their business unit.
What you see here is basically two different views of the same workforce planning analytics process. Of course, there are different requirements by different users of the process. When you think about analytics systems, it's really important to think about all the different people involved in the process and how those people might have different information needs, different timing needs, and different analysis needs.
Let's look at another best practice regarding revenue planning analytics. Many companies today unfortunately are stuck with information that's backwards-looking. They tend to have to rely on historical actuals, and projections that sometimes can feel like guesswork. There are lots of reasons why companies are stuck looking at backwards-looking data, and it usually comes down to the analytics systems and the underlying systems that they have.
What we see with best practice companies, basically World Class companies is they're also incorporating..."
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