Profitability analytics should not only tell a story on financial performance, but provide users credible information to write the next chapter.
With the release of my new book Actionable Profitability Analytics, I have had many conversations with thought leaders and professionals discussing the use of analytics to generate more profitable business behaviors. In each of these conversations a common question is asked; “What are actionable analytics?”. My first response is usually to read the first chapter of the book. But to simplify, I did this whiteboard Wednesday video to illustrate the different types of analytics, their purpose, information value, and intended action.
A recent Gartner report found that only 18% of business decision makers believe their company’s performance data is decision ready, worse yet is only 22% of finance leaders believed it either.
Finance functions are facing a credibility problem with business leaders in their organizations. Large complex companies are composed of many departments and divisions that deal with a dizzying array of products and services sold across multiple channels to a variety of customer segments. Precisely calculating the profitability across all of these data dimensions is a challenge, and deploying these analytics in a manner that drives more profitable behaviors can be overwhelming. But, the effort is top of mind for CFO’s wanting to provide more expansive performance reporting than just the corporate income statement, and their stakeholders have an insatiable appetite for insights that help them improve the profitability of their businesses.
Aggregated financial reporting, such as the income statement at the company level, only tells the story of what happened. Those reports only provide an evaluation of performance of the current business model. The mysteries of why it happened are buried deep within that data. Business leaders want the answers to vexing questions such as: Who are our most and least profitable customers? What lines of business should we focus onto remain competitive? What business lines should we exit? What products and services require re-pricing to account for increased costs? How do we better manage the primary levers of profitable growth?. The rear view mirror of past performance reporting is failing to provide them with insights into the economics of their business in order to improve the future business model.
The arduousness of undertaking these types of finance analytics initiatives is not easily evident. Slick presentations of ‘silver bullet’ analytics applications, ‘eye candy’ charts and visualizations, are usually a company’s first introduction to the field. But the hard challenging work goes far deeper than the implementation of any technology application. Success requires a collaboration from across all stakeholders in defining how methodology, data, and technology will come together to provide Actionable Profitability Analytics throughout the organization. Failure is a likely outcome for the under-prepared and under-informed. But with only 1 in 5 business leaders believing their current performance reporting is decision ready, the biggest failure would be a ‘failure to launch’, because the strategic demand for better analytics from finance is undeniable.
Armada’s 2020 release of Acumen Cost Analytics has several new features for visualizing Cost Fact data from the modeling application. With the cost decomposition tree visualization, users can now navigate and analyze the source of costs from anywhere in the model with complete transparency and traceability back to the source center and GL expense account.
See the new feature in action here – Cost Decomposition Tree video
Armada Solutions was recently recognized as one of the 20 Most Promising Enterprise Performance Management (EPM) Solution Providers for 2018.
As organizations strive to improve their business performance and move to the next echelon, they are in need of robust software tools that can help organizations achieve their set goals by linking organization’s strategies to their plans and execution. The broad umbrella of EPM encompasses strategic planning and budgeting, gathering data for decision making and improvising organization performance.
EPM adds a great value for organizations in not only analyzing and monitoring business performance but also in improving workflow and process control. An EPM solution also provides continuous evaluation, planning, execution, and feedback collection, to bring a competitive edge to enterprises through its ability to identify failures and opportunities.
By integrating with emerging digital technologies, EPM is changing the game for enterprises. It helps enterprises automate manual tasks, accelerate key finance processes, and drive better alignment between Finance and operations. The EPM platform is designed to collect and consolidate data from multiple sources to support business processes, such as budgeting, forecasting, financial reporting, and modeling. Today many EPM platforms are embedded with BI and analytics tools, to address three aspects: knowledge of the past, present, and future of the enterprise.
Although organizations are witnessing a tremendous success leveraging EPM, they face a great challenge when it comes to choosing the right solution provider. In order to help them choose the best EPM solution providers, our distinguished panel of judges comprising CEOs, CIOs, and CMOs have analyzed scores of EPM solution providers in the market, shortlisted the companies that are at the forefront of tackling challenges in the arena.
Click Here to read the article about Armada from CIO Review.
Financial Services companies around the world are being challenged to identify areas to improve expense ratios and profit margins without sacrificing customer service. In order to achieve this, they should be evaluating investment and expense management strategies that align to their profitability objectives.
Our team challenges you to look at how your organization is measuring profitability today and to ask yourself whether you are maximizing that opportunity to its fullest potential.
Fifth Third Bank did just that. Recognizing it needed to improve measuring and calculating their client’s profitability to the bank, Fifth Third Bank transformed its processes and systems to provide greater insight into individual client profitability.
During this webcast, Matt Curoe, Director of Corporate Finance and Optimization for Fifth Third Bank, will share his experience overseeing this transformation and the impact these changes have had on their business and decision making process.
If you have any doubt, curiosity, or question abut how you are measuring profitability, please join us for an industry point of view lead by Armada on the importance of having a detailed understanding of your organization’s profitability.
To view the on-demand version of this webinar Click Here