Reply To: I’m curious to learn about the benefits of integrating big data and data analytics in the finance sector. Does anyone have insights on how these technologies are contributing to positive developments?

Here are the benefits highlighted:

Boosting Forecast Precision with Big Data: Big Data’s role in financial planning and analysis (FP&A) enhances the accuracy of forecasts by validating the underlying assumptions of business forecasts. This leads to a more accurate prediction of how market and internal factors affect company performance and competitiveness. A data-driven approach enables finance departments to anticipate trends and make well-informed decisions.

Refining KPIs through Big Data: Big Data supports FP&A in pinpointing and comprehending value drivers, allowing for effective management and monitoring of both financial and non-financial KPIs relative to these drivers. Given its essential function, FP&A is uniquely positioned to determine if the fundamental planning and reporting models accurately represent the appropriate drivers and KPIs.

Predicting Working Capital More Accurately: The application of Big Data in analyzing and forecasting working capital marks a significant advancement. Where finance departments traditionally tracked 15 key factors to forecast working capital, analysts can now identify statistical correlations among a broader array of data points for a more precise forecast.

Identifying Opportunities for Growth: CEOs recognize the critical role CFOs play in using financial data and analytics to uncover growth opportunities, as noted in KPMG’s The View from the Top 2015 survey. Although marketing is important, the finance sector, with its superior data access, is better positioned to examine the cost across various dimensions (products, customers, services, channels) and to devise pricing strategies that maximize profitability and growth.

Elevating FP&A’s Strategic Influence: FP&A professionals already possess the analytical approach and multidisciplinary thinking required. By leveraging Big Data and adapting to its intricacies, they can swiftly alter their strategic insights and recommendations in light of business environment changes. Shifting focus from historical analysis to future projections and their implications, FP&A departments are transitioning into strategic advisors to the business and its senior leadership.