The chief financial officer and finance department have a growing responsibility in many organizations, thanks in part to the power of tools like predictive analytics. With the ability to better understand many dimensions of operations through the deep and broad visibility business intelligence software provides, the finance office can take on a more central role in planning, forecasting and other critical tasks and actions. By using the large amount of data generated internally by an organization and the external information it collects, financial department staff can generate insight that aids them directly and provides benefits across the enterprise.
“Predictive analytics provides the visibility and insight necessary to identify problem areas.”
Reining in expenses, identifying areas of opportunity
In an article for the IBM Big Data & Analytics Hub, financial writer Tina Orem outlined the many benefits of predictive analytics in terms of finance for a variety of industries and markets. In terms of expenses, she shared the example of a health care facility’s finance department using patient data to find those at the highest risk of readmission. Providing some extra care for those patients avoids return visits that cause financial penalties through Medicare, up to 3 percent of total Medicare revenue received. By taking relatively limited actions with high-risk patients, hospitals can save millions of dollars a year.
While most industries aren’t as highly regulated as health care, predictive analytics provides the visibility and insight necessary to identify problem areas and, with the right input, even propose solutions. An in-depth look at supply chain concerns can reveal inefficiencies in fuel purchasing, fleet maintenance, delivery contracting and other concerns. A comprehensive analysis of employees’ time worked, shift schedules and productivity can reveal overstaffing that isn’t visible in basic review and poor scheduling practices that limit the productivity of employees. Of course, the finance office can also analyze industry- and company-specific metrics to go along with more universal forms of analysis.
Assessing and managing monetary risk is a critical component of finance departments across all industries. With predictive analytics, companies can use the internal and external data they gather to gain insight into operations, spending, costs and efficiency at a variety of different levels. The finance department can grow in its role and become more vital to the business as a whole while ensuring the concerns under its purview are managed successfully.