Gaining Analytic Insights into Trends and Signals in Operational Data

The increasing pace and volatility of global markets is putting more pressure on organizations, and their management, to increase their decision-making agility. Smart line of business managers know they can't do it alone. They need to partner with CFOs and the finance team to gain access to up to date, accurate and consistent financial and operational data. And they need the ability to understand the financial impacts of their operational decisions.



On the flip side, in order to be a more strategic advisor to the lines of business, finance executives must take steps to move beyond the month-end close and reporting cycle and traditional methods of financial planning and budgeting. How can they do this? By using existing data to look at the business from both the financial and operational perspective. By applying financial intelligence to the volumes of transactional data being generated by operational systems to improve mid-stream decision-making and deliver tangible business value to the organization sooner. Here are a few examples:

• Deciphering the financial signals hidden in detailed weekly and daily operational data such as production volumes, new customer orders, revenue pacing and AR trends.
• Developing insight and foresight that informs the financial and operational impact of decision-making.
• Enabling finance and business partners with all the above to take action on a daily and weekly basis so they can impact period-end financial results before the next period-end close.

Unfortunately, most finance teams and line of business leaders don't have the right tools for the job. Operational decisions are being made daily but insight into the financial statement impact of those decisions is lacking until after the financial close. As a result, financial analysis remains a lagging indicator because it is limited to analysis of actual financial performance.

By the time the analysis of period-end financial results is provided, many business partners perceive period-end analysis as out-of-date and reactive when it comes to providing insights for their near-term operational decision-making. This disconnect is reflected in recent surveys regarding the value of current analytics initiatives.

Analytics are Mostly Missing the Mark

A 2020 survey of finance executives performed by FSN found that only 14% of the analytic effort exerted by organizations is considered insightful (see figure 1). Looking at the other 86%, the survey found that 22% of analytics are considered routine cyclical reporting, 34% are reactive and limited to decision-making in exceptional circumstances, and 30% are siloed where operational analysis and decision-making is disconnected from the financial impacts of those decisions.

The 14% minority that consider their analytics to be insightful were focused on broad sharing of financial data, the combination of financial and operational data for decision-making, and the use of analytical tools that consider strategic, financial and operational insights in decision-making.

Source: 2020 FSN Future of Finance Analytics Survey Figure 1 – 86% of analytic effort misses the mark.

Furthermore, the 2020 FSN survey found that operational data sources supporting the "Quote to Cash" and "Purchase to Pay" processes were underutilized and mostly neglected. The survey found that these data sources are mostly viewed as transactional systems and not information systems (see figure 2).

Convert Transactional Telemetry Data into Actionable Insights

Why is this distinction important? Because transaction systems provide valuable "telemetry" data about your business. But it is quickly converting that telemetry data into financially intelligent, consumable, and actionable information that that creates insights into risks and opportunities. Consider the following critical sources of potential risk and opportunity:

• Customer Billings & Collections
• Customer Support Tickets
• New Business Development Appointments
• Information Technology Server Down Time
• Warranty Claims
• Supplier Deliveries
• Production & Quality Metrics

Source: 2020 FSN Future of Finance Analytics Survey Figure 2 – Traditional view of performance management vs. the modern view.

Harnessing detailed operational data to support agile decision-making requires a new generation of financial analytic systems with specific capabilities. Several of these requirements were validated by the 2020 FSN survey, including:

• Support for AI and Machine Learning
• Data visualization for exploring lots of data
• Creation of user-designed dashboards
• The ability to drill-across and drill-down to data sources
• Self-service reporting for end-users

Ultimately, finance teams require financial analytic systems that have the ability to collect and organize large volumes of transactional data and apply financial intelligence to operational data that aligns that data with financial results and plans. Few corporate performance management (CPM) vendors and platforms have delivered on this vision, but the ones that can, are able to support a broader range of use cases and deliver a higher level of value for their customers. OneStream is delivering on this vision.

OneStream's Analytic Strategy

Over 500 mid-sized to large enterprises around the world leverage OneStream's unified SmartCPM™platform to simplify, unify, and streamline financial close and consolidation, planning and forecasting, reporting and analytics in a single application. Through ourXF MarketPlace we are constantly adding additional fully supported solutions to extend the value of our platform to our customers.

However, customers want to go further. They want to become better business partners by providing managers with timely and accurate financial data supplemented with high volumes of financially intelligent operational/transaction data blended together for more informed and agile decision-making.

OneStream's new Analytic Blend capabilities enable customers to deliver on this vision by blending governed financial information with detailed operational data in the same dashboards and visualizations. This enables them to develop deeper insights and understanding of historic results from prior periods – as well as daily and weekly updates of financial and operating results for the current period. It's within these daily and weekly views of the business that managers can identify key operational trends and financial signals that can turn into immediately actionable insights (see Figure 3).

The ability of the finance team to blend financial and operational data enables executives and managers to gain "right-time" insights to the right data and quickly answer detailed questions about the current state of the business. It also provides the foresight needed to take corrective action "mid-stream" that can impact current and future financial results, rather than waiting until after period-end, when it's too late to make an impact.

Figure 3 – Using daily operational telemetry data to identify business trends and signals

In addition, OneStream's new Predictive Analytics 123 solution extends these analytic capabilities by applying statistical models to generate predictive forecasts leveraging the same data within a single, unified platform.

Our strategy is to provide easy access to ALL the data these users need so they can report, plan, analyze, and now predict with confidence in one place. From the beginning, OneStream designed with this in mind, and according to our customers we do it better than anyone else.

Combined Financial and Operational Analytics in Action

Several early adoptions of OneStream's Analytic Blend capabilities are already seeing the benefits to their businesses. Here are some examples of use cases for Analytic Blend and Predictive Analytics across the enterprise.

• High tech manufacturer – daily monitoring of operational metrics related to suppliers and customers to better manage risks and plan purchasing and production to optimize performance.
• Professional services firm – daily detail loaded re: projects, customers, staffing, costs, collections etc. to impact staff utilization and profits by region, practice, manager etc. Also allows them to improve management of DSO.
• DSO example – daily monitoring of customer billings and collections to better manage working capital and impact this metric before reporting at quarter-end

Driving Customer Value with Unified Business Planning, Reporting & Analytics

With OneStream's unifiedSmartCPM platform, customers deliver timelier and more accurate period-end results to internal and external stakeholders. They continue to eliminate spreadsheets and multiple point solutions and enjoy a lower cost of ownership with a unified platform. But now, with the addition of Analytic Blend and Predictive Analytics 123 new benefits are accruing.

They can support agile decision-making across the enterprise with right-time, financial and operational insight and foresight. In collaboration with their business partners they have the opportunity to proactively impact financial results instead of just reporting the results. When finance can leverage more data, with more intelligence and more control - they can plan, analyze and predict where their business is heading with confidence. To learn more, download oursolution brief, or contact your local OneStream account representative.