What is the Point of Analysis, Forecasts and Business Modeling?

In today’s business world, risk, uncertainty and volatility are everyday realities of simply being in business. Nothing is certain, as someone well-known said, except death and taxes. Yet there is a fine art to driving profitable growth in business, and adapting to emerging risk takes a great deal of experience, information, and agility. While planning and process development may occur at many levels within the organization, it is the FP&A (financial planning and analysis) capability which helps top performing businesses be top performers.

Financial planning and analysis are activities central to enterprise performance management and must necessarily extend beyond finance. Integrating various functional domains in the business (financial, operational and strategic), brings data together from the various facets of the business and uses the information to help structure and guide the organization toward meeting short- and long-term goals. Among the most critical of the duties is calculating the financial impact of potential business decisions. With the right information supporting the decision, it is far more likely to have a positive impact and a level of sustainability.

Everything in business means money, so there is always an impact to a decision.

While many CFOs recognize the importance of performance measurement, planning and forecasting, a great many also believe the process sometimes is not very effective. The cause is frequently the divide between the various domains in the business and the information systems supporting them. Operational data are distilled into summary financial information and fed to finance systems, losing much of the underlying intelligence that might be gained from analysis of the details. Finding ways to integrate the data from the respective domains into a comprehensive model is essential to developing a better and more robust forecasting and scenario-playing capability. With the right information, analytics can be applied to all facets of management decision-making, anticipating and shaping business outcomes far more effectively than could be done without the insight.

Small business owners may believe that things like “predictive modeling” and “enterprise performance management” are not things they need to worry about. But the small business could use this information just as beneficially as a larger enterprise – perhaps even more as the insight could be the key to small business survival and growth.

Using analytics, the owner is able to adjust and re-align strategy in real-time to keep on the right path and goals clearly in sight. Analytics can also help a business better understand what really drives revenue, working capital and profits. Analytics can even help management align compensation with business objectives, preventing cashflow issues from outpacing business benefits.

Bottom line, there is a cost to growing a business. And some strategies might be more sustainable than others. Time does tell, but it is great if the business owner has some business intelligence to indicate what is going to happen before it actually does.

Mendelson Consulting works with a variety of reporting and performance management solutions, and can help your business find processes to streamline and workflows to improve. Using technology to improve our clients’ businesses is a core of what we do as a company.  See what we can do for yours. Contact us today.

originally published on CooperMann.com

Joanie Mann

Joanie Mann

Focus is on Digital business transformation for small/medium businesses. As the principal consultant for Cooper Mann Company and Noobeh's Director of Cloud Services, Joanie Mann provides support and guidance for businesses seeking to implement cloud solutions and hosted services in their IT environments and consults with solution providers to develop or expand application hosting and application delivery service offerings. Joanie is the Director of Delivery for Noobeh Cloud Services (a division of Mendelson Consulting), and is on the board of advisors of ACE Cloud Hosting & MyRealData.com

Leave a Reply

Feel free to give us a call.

We look forward to hearing from you!