The key to operating a thriving enterprise is continuously managing performance.
Measuring and monitoring business performance relies on a process of defining clear objectives, planning and budgeting, and evaluating progress at established intervals to ensure the company is keeping pace with their outlined objectives.
In doing so, businesses can be more opportunistic when leveraging beneficial trends, while also having the ability to mitigate business risk and operate a more successful company. Analytics play a vital role in this mission, and a recent whitepaper by Ventana Research entitled "Analytics Is Critical to Effective Performance Management" delves into this very topic.
The Importance of Analytics in Managing Performance
Analytics are a crucial part of successfully managing business performance. It can help with planning, budgeting, forecasting, and accounting, allowing organizations to identify trends and important relationships with ease, so they can more accurately and swiftly respond to these trends. It also enables organizations to improve the accuracy of forecasts and budgets, while ensuring all budgets and plans conform to the overall goals of the company.
The Role of FP&A in Finance Organizations
Financial Planning and Analysis (FP&A) entails the organizing and updating of budgets and forecasts, while compiling all performance metrics to gauge potential outcomes and monitor performance. It enables executives to determine the various options at their disposal for responding to shifting circumstances, so business decisions contain less risk and each decision can be carefully calculated.
Placing More Emphasis on Analysis
Analysis is perhaps the most critical aspect of FP&A, and yet, it often receives the least attention. Oftentimes, the process of collecting and compiling data, as well as reporting results, is so time-consuming that organizations have little time and resources left over to focus on analysis. However, by neglecting analysis, businesses are failing to move their company forward and greatly limiting the potential of their financial planning.
Using Performance Management Software to Leverage Analytics
Performance management is most effective when organizations utilize enterprise performance management (EPM) software. The software can provide analytic tools to help gauge performance and improve the accuracy of forecasting and budgeting. Analytics can be used to create metrics that monitor various operating conditions, and the software can be programmed to automatically alert the organization any time a condition deviates from the norm, enabling businesses to respond quickly to changes.
One of the main reasons companies are failing to focus on analysis is due to time constraints. With the help of EPM software, organizations can automate a lot of tasks that would otherwise be conducted manually, thus greatly expediting the process. The software also enables companies to improve reporting, making the process more efficient while adding a visual and interactive element to the reports.
The Time Spent on Data Management
Data management is a time-consuming task. In fact, according to Ventana Research, about 68 percent of employees' report spending a majority of their time on collecting, organizing, and preparing data, as well as other non-analysis related data tasks. Only 28 percent reported spending a majority of time on analysis itself.
Improve Reporting and Visibility with Performance Management Software
With the right EPM software, organizations can streamline reporting with the help of automation, while accessing dashboards that clearly present updated information and can improve communication. The software can also enhance data visualization, providing users with a variety of tools to help present data in a visual and engaging manner. This allows businesses to leverage their data to its fullest capacity, while increasing the visibility and clarity of reports.
To learn more about the power of analytics, read the full whitepaper, "Analytics is Critical to Effective Performance Management."