Setting the pace – Cognitive financial planning and analysis for business agility

Published On : 09/24/2016

By Paul Campion, Director, IBM Global Financing, UK&I

The pace of change within, and without, a business is ever increasing as global competitors race to streamline processes, uncover ways of saving costs and innovate their product portfolio. No function is immune from this upheaval, and as the hub of it all, the finance team feels the impact more than most.

Finance departments are being asked for more and more analysis and modelling within a tight deadline to support growth of change ambitions of other business units, putting pressure on staff time, budget and process. Through intelligent management of data, automating manual tasks where possible and realising the benefits of cognitive computing, the quick and detailed answers finance teams are asked for as part of an agile financial planning and analysis (FP&A) process now can be delivered to match the pace demanded by modern business.

IBM research has found that just four percent of CFOs are leading teams where proper advantage is being taken of the capabilities advanced data analytics has to offer. These teams all have a robust infrastructure with common standards, data definitions, finance processes and planning platforms combined with superior analytical powers. They are ones to watch in the financial department peer group, being 55 percent more likely than other finance teams to enjoy outstanding revenue growth and 57 percent more likely to be highly profitable.

Those in leadership positions here are generally required to keep their fingers on the pulse of not just their own company, but their competitive sector. The latter is also expanding, as start-ups and other businesses previously outside that competitive sphere come crashing in as technology and funding for “disruptors” becomes more available. As CEOs increasingly look to CFOs to play key strategic roles in company direction, this is a matter of no small importance.

Why isn’t everyone doing this?

Where once the information was either not available (siloed or unstructured and so not usable in traditional datasheet analyses) or the analysis was so complex it could only be completed at highlight points of time (quarterly results), we’re now looking at a new world for the CFO.

Finance directors recognise the importance of breaking down those data walls, but to do it manually is expensive and tricky, and it’s been difficult for most to commence these programmes. Using unstructured data and analytical programmes looking through separate data buckets in the form of media notes, analyst reports, presentations, emails, customer service interactions and a host of other items, as well as the regular structured data flows from supply chains, financial accounts and market prices, today’s company leaders can use analysis not just as a way of checking how the business is performing, but also quickly see how it might perform in any number of scenarios in the future.

The day to day benefits

Automated reporting, advanced analysis and forecasting, and support for daily strategic decision making all come to the fore with a cognitive financial department. Leaving analysts and managers to analyse and manage, rather than calculate and complete manual and time-consuming data tasks. This leads to that aforementioned strategic input into the company, with the leading CFO departments looking at customer relationships, product decisions, internal technology decisions, as well as business models and new partnership opportunities.

Even regular management issues can be addressed. One UK-based manufacturer has been using this technology for years to ensure that across multiple offices and global regions, managers all have access to centralised information on company sales and accounting information, while giving local users individual control of their local reporting requirements. This re-invented the company’s monthly close, reporting and re-forecasting capability, and when needed the information can support daily financial and business planning decisions in near real-time.

Another example is the London Stock Exchange Group (LSEG). As a diversified international market infrastructure and capital markets business that sits at the heart of the world’s financial community, the Group’s annual and interim reports incorporate data from multiple sources, which is used to file company accounts for many different entities, incorporating multiple currencies and reporting to a number of local financial services regulators.

After using automated reporting technology to successfully manage financial reporting for a number of years, LSEG recently decided to go a step further by using a powerful reporting and process automation solution that supports the last mile of financial report production. With automated, standardised reporting processes and a single, consistent version of financial data, teams at LSGE can work more efficiently than ever before. The result is that the Group can easily meet increasingly demanding reporting requirements as the business grows.

The AI CFO?

While algorithms and code can be used to great effect in analysing data and providing recommendations, there will always have to be a finance director’s department there to, well, direct. As finance departments evolve and become that strategic powerhouse of their organisations, it opens up new areas for the skilled members of the department to provide more analysis and thought than ever before. As we’ll be discussing in more detail at this year’s Business Connect, the technology opens up the path for teams to provide even more value to the company than they already do, surely something a CFO can get behind.

Wanda Rich

Wanda Rich has been the Editor-in-Chief of Global Banking & Finance Review since 2011, playing a pivotal role in shaping the publication’s content and direction. Under her leadership, the magazine has expanded its global reach and established itself as a trusted source of information and analysis across various financial sectors. She is known for conducting exclusive interviews with industry leaders and oversees the Global Banking & Finance Awards, which recognize innovation and leadership in finance. In addition to Global Banking & Finance Review, Wanda also serves as editor for numerous other platforms, including Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.