Every day, we’re faced with millions of decisions. We make most of them instinctively, while others require some thought. But, when those decisions involve multiple variables, we feel like we want extra information and, above all, some help, in figuring things out!
Investment decisions, for instance, involve multiple elements and require analysis of many different scenarios. The amount of data, the organization’s history, external factors, the decision’s potential impact – all of these can play a role. And, as the number of data sources increases, decision-making become increasingly complex.
An analytics tool provides much-needed support to organizations by enabling them to visualize all the variables and constraints associated with the problem.
Learn how an analytics tool can become an integral part of your organization’s decision-making process.
Are decision support solutions a must-have for your Finance Department?
When making financial decisions, organizations who rely solely on intuition risk falling behind! Instead, they should base their decisions on information from their operational and financial systems. Yet, despite the reams of data these systems generate, analyzing it remains a challenge.
Take analyzing scenarios for the annual budget - already a complex undertaking. When the time comes to develop a long-term budget with optimal investment planning, the task becomes even more challenging. Especially since the priorities in that long-term budget must take into account each cost centre’s needs.
The analysis is a high value-added, high-priority activity that no organization can afford to ignore. Fortunately, decision support tools are on hand to help with this complex task.
Analytics tools are able to test a wide range of financial and fiscal scenarios, analyze cost behaviour and develop dashboards. They can also provide significant decision-making support, while also offering your team critical time savings.
Because it's fully customizable, you can: integrate statistical analysis models; choose the best performance indicators; address data gaps and estimate future data; and segment data by project, department, budget program, cost centre and investment type. You can also add in any analysis constraints that might arise from your financial priorities. Decision support solutions provide a clear picture of your financial reality, and turn it into valuable management information.
Decision support solutions based on BI tools
As defined by Professor Guillemette, Director of Business Intelligence Strategy Training Programs in the Faculty of Administration at the Université de Sherbrooke, business intelligence is, “a way of utilizing the information that is all around us, but that exists in such huge quantities that we humans are not able to analyze it. By finding different ways to synthesize and manipulate information, we make it more intelligible.”
So, we see that analytics tools rely on business intelligence data to do their work, as the tool seamlessly integrates with your internal systems – operations, finance and HR management. By consolidating the large amount of data provided by these different systems, the tool not only helps you plan your long-term needs, it also enables you to meet your accountability requirements.
Artificial intelligence's predictive analytics capabilities complement business intelligence. Wikipedia says that the term “artificial intelligence” is “used to describe machines (or computers) that mimic cognitive functions that humans associate with the human mind, such as learning and problem solving.” So, decision support tools not only allow us to analyze past data, it also enables us to extrapolate that data into the future, based on a variety of factors.
Take an organization that owns a number of properties. Ownership entails long-term repair costs, but it also means the organization will benefit from these costs through an increase in value. The organization might ask itself which buildings need to be repaired first. It might ask itself how much it will cost to repair the buildings. It might ask itself at what point the buildings will reach a critical point when repairs will be mandatory, which buildings will generate the most long-term value, and which 10-year investment scenarios would provide the best return. As long as you import the right data into the decision support tool, it can answer to all of these questions, including graphs comparing the urgency of repairs to their potential ROI.
Substitute your IT infrastructure for the buildings in the previous example, and see how easy it is to figure out your organization’s IT needs and costs.
No matter what decision you’re currently working on, a DST helps you organize the information, integrate all the variables and present it as graphs, dashboards and diagrams. These visuals make your information more comprehensible and will quickly become a vital part of your decision-making process.
What can you expect from a financial analytic tool?
From among the many types of decision support tools, it’s important to choose the one that’s right for you. Finding a supplier who understands your needs is the first step in getting the specific features that will address your needs.
Here are just some of the features you might want to have in your financial analytic tool :
These features focus more specifically on financial performance management:
Because these systems offer a wide range of features, you should create list of your needs based on the issues you want to address and the information your organization wants to understand.
When choosing a solution, remember to look beyond the software’s features to the skills and experience of the implementation team, the company’s cloud computing services, how it integrates with your other systems, and many other factors.
After reading this introduction to analytics tools, will your organization be making any changes to its strategic decision-making process?