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Saturday, March 22, 2014

Predictive Analytics and KPIs Remain Important to CFOs

A global data explosion is underway. By one estimate, in the next seven years, the world will generate 50 times as much data as it has up to now. That’s exciting. And business executives are eager to harness all this data so they can better understanding the changes that are now and will soon affect the business. So they’re pushing CFOs to move aggressively on supplying that information.

Armanino’s 5th Annual CFO Evolution® Benchmark Survey found 76% of CFOs are feeling the pressure to get on with increasing the role of predictive data.

For CFOs, that process starts with prioritizing which key performance indicators (KPIs) are most important to the business, then finding the right software that can harness the data, analyze it and get the results in the appropriate hands quickly.

Today, 74% of KPIs are based on historical data. But CFOs would like that to shrink to 48%, the survey found. Those CFOs would like to see more use of predictive analytics, with reliance on predictive data-driven KPIs moving from today’s 28% to 47%.

According to the survey, financial KPIs lead the list with 76% considering them effective at signaling future results. Sales KPIs come next at 60%. Other KPI categories all fall below 50%–customer service (42%), employee relations (28%) and internal support (22%).

During a recent webinar releasing survey results, Tom Mescall, Partner-in-Charge of Armanino’s Consulting Department, worked through a short case study involving the software-as-a-service (SaaS) industry to illustrate how new KPIs are emerging. He pointed to the use of recurring revenue, average recurring revenue, churn rate, average cost of customer acquisition and average cost of customer service as valuable measure that can help a SaaS company predict what lies ahead.

Click here to access a recording of the Data, Trends & Tactics for the Finance Organization webinar and download the presentation slides on demand.


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