By using data—rather than, say, guesstimates or hunches—to guide decision-making, corporate leaders can drive performance and gain an edge on their competition. However, raw data rarely suffices. Instead, information needs to be assembled, reviewed, and analysed.
That’s where business intelligence software has played a critical role. Companies are now also turning to business analytics, which tends to provide more guidance for the future. In the past, it commonly would have only been the finance and accounting functions using these tools. However, as organisations embrace digital transformation they are increasingly being used to aid decision-making across many departments.
Finance leaders who use these solutions to improve operations can both boost results and demonstrate their expertise to other executives within the C-suite, enhancing their own career prospects.
Business intelligence vs business analytics
Initially, it may seem like business analytics and business intelligence are two names for similar systems. But that’s not actually the case. Business intelligence (BI), the older of the two systems, refers to solutions that enable organisations to organise and analyse information gathered from across the enterprise, generally with a focus on past and current trends and events. BI tends to be descriptive—that is, it lets you know what has happened and, often, how. This allows business leaders to identify which processes are working well and which could use improvement. The goal of BI typically is to improve management of day-to-day operations.
Business Analytics (BA) meanwhile focuses on predictive analytics, generating actionable insights for decision-makers. Instead of summarising past data points, BA aims to predict trends, according to TechTarget. It is a set of disciplines and technologies for solving business problems using data analysis, statistical models and other quantitative methods.
Running BA typically requires aggregating, cleansing, processing and analysing business data to identify trends and patterns. That data will be taken from a range of solutions, including BI, enterprise resource planning (ERP) systems, enterprise performance management (EPM) software and other systems. Many business analytics solutions can incorporate data from sources outside the company, like social media posts and weather forecasts.
BA often uses advanced functions like predictive modelling and machine-learning for its data analysis. Along with evaluating past performance to identify trends and insights, BA solutions can develop forecasts of likely future occurrences and even recommend the best actions to take – also known as prescriptive analytics.
How data gives finance technology leaders a seat at the top table
Finance leaders who understand and have experience with business analytics can drive their organisations’ digital transformation strategy and improve performance—while also expanding their own career opportunities, either within or outside of their existing organisations.
This is because the importance of data in business decisions and strategies continues to grow, and the BA software market is a direct beneficiary of that trend. According to GMI Research, the global business analytics market, which hit U.S. $67 billion in 2019, is expected to grow at a compound annual growth rate (CAGR) of 10.8% through to 2027. The outlook in the UK is similar to the global picture, with the market expected to grow at a CAGR of 9.2% between 2021 and 2026. Driving this growth are the benefits companies are achieving through their use of business analytics. In addition, some BA providers are offering cloud-based solutions that fit the budgets of smaller- and mid-sized organisations, also driving growth.
BA – and to a lesser extent BI – can give finance leaders an even greater say over corporate decisions, knowing that they have the data to back up their observations and recommendations.
Many finance professionals can also share their expertise with colleagues in other functions as they work with BI and BA solutions. For example, a finance leader working with logistics could use a business analytics solution to identify the regions in which the company’s customer base is growing most quickly, and use that information to shift its network of plants and warehouses to better match customer demand. Finance could also use business analytics to determine how these changes will impact profit margins.
All of which helps finance leaders demonstrate the strategic value they bring to the organisation and helps them strengthen their career opportunities through the use of these data-driven tools.