The traditional finance function is in the midst of a major evolutionary shift. While there will always be a need for budgeting and ROI analysis, real-time data generated from every action, system, and process in modern business have brought about a paradigm shift for financial planning and analysis (FP&A). Waiting for monthly financial reporting from accounting software is no longer adequate to provide the strategic guidance that decision-makers need. The next generation of finance professionals are leveraging real-time analytics and advanced modeling techniques to provide more timely and accurate financial advice to businesses.
Enter – Strategic Finance
Strategic finance is an emerging field that sits at the intersection of business strategy, finance, analytics, and operations. Strategic finance practitioners start with an understanding of the business’ operational KPIs rather than accounting outputs, and use technology to extract data directly from source systems (like POS, ERP, and CRM systems) to build financial models, resulting in a more complete view of performance.
This “bottoms-up” approach to financial management connects controllable inputs to measurable outputs, which transforms a company’s financial model from an afterthought to an invaluable tool in planning and managing the business. Foundational models and analysis built on top of the right KPIs allow business leaders to quickly and effectively conduct forecast-to-actuals, root-cause analysis, manage resource allocation, and hold teams accountable to performance targets. Having timely visibility into analyses like these allows leaders to pinpoint issues, measure the impact of solutions, and iterate on strategy more quickly.
Getting It Right
This approach requires a comprehensive data strategy that involves infrastructure, modeling and analysis, and an understanding of business logic in order to be effective. While difficult to get right, the benefits can be transformational. It’s difficult and expensive to effectively bring together experts in strategy, finance, analytics and operations to collaborate on a common solution. Building a team from scratch can be even more challenging, and for smaller companies, the budget can be prohibitively expensive. As a result, companies may delay or forego the benefits of implementing a strategic finance strategy to their own detriment.
Companies that fail to integrate timely insights from operational data into financial and strategic decision making will react and iterate more slowly and be more prone to strategic missteps.
The Future
Advancements in data storage and processing capabilities have enabled easier access to masses of critical business data in a timely fashion. Ingesting, analyzing, and communicating insights from this data will provide a key strategic advantage for modern businesses. The next generation of the finance function will require familiarity with engineering, analytics, and strategy, alongside traditional financial acumen, in order to maintain an important voice in strategic decision making.
Our team at Blueprint Analytics has decades of experience in strategy, finance, analytics, and operations. We offer analytics and strategic finance consulting services on a fractional basis, helping early and growth stage businesses to develop and implement strategies like these at a fraction of the cost of hiring FTEs. Want to learn more? Check out our website at blueprintanalytics.co or drop us a line at info@blueprintanalytics.co, and we’d be happy to hop on a call to discuss.
Blueprint Analytics is an analytics and strategic finance advisory firm focused on early and growth stage companies.
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