CFOs: Do you get your short term forecasts correct?
A survey of 750 global senior finance leaders by Tata Consultancy Services (TCS) indicates that 50% of respondents consistently fail to deliver short term forecasts or make significant errors.
The survey collected respondents from finance leaders who work for companies with annual revenues of US$5 billion or more from a variety of industries in the nine countries of the Australia, Canada, Germany, India, Japan, Netherlands, UK, US, and Switzerland, TCS said.
In addition, only 54% say their teams possess sufficient risk assessment capabilities, TCS noted.
These executives estimate that, on average, 43% of their financial planning and forecasting relies on intuition instead of analytics, survey results indicate.
A small group of finance executives — at 6% of the respondents — have more mature digital capabilities, operate in a more agile manner, and demonstrate greater use of AI and machine learning, TCS said.
These “trendsetters” — the term TCS used to describe this small group of executives — also invest more in transformational financial planning and analysis capabilities to future-proof their respective organizations before the next big disruption, the firm added.
While 91% of these trendsetters say they can reallocate resources quickly when business demands shift, fewer than half (48%) of followers can say the same.
In addition, 78% of trendsetters believe they can develop budgets effectively, compared to only 43% of followers.
According to survey results, 83% of trendsetters say they are planning to increase investments in artificial intelligence and machine learning capabilities throughout the next year, compared to 55% of followers.
Despite the divide, current finance planning and forecasting shortcomings are driving organisations across the board to boost technology investments. Survey results indicate the followings:
- 69% of all respondents plan to increase investments in cloud-based systems over the next 12 months
- 63% say they already increased investments in cloud-based systems throughout the past year.
- 67% plan to increase investments in data and analytics over the next year while 61% already did so within the last 12 months.