As we continue with this series of the benefits of analytics and implementing it into your business, we will look at one of the biggest advantages of analytics in this article - forecasting.
Planning for the Future with Predictive Analytics
To make forecasts about future events using data analysis, modelling, and machine learning is to use predictive analytics. Predictive analytics gives your business the confidence to scale up and can validate your decisions in real-time using market forecasts, thus increasing your awareness and likelihood of implementing the right moves in the volatile markets of today. However, analytics processing and the manipulations of data are only as good as the code that creates them. Thus, it is extremely important that whatever analytical tools you use are also reliable.
One of the most reliable and law abiding practices is that of accounting, and as we have seen in “To go Digital or Not to go Digital” . It is also one of the industries that is most under threat with the new digital sharing economy. Due to predictive analytics, it is in one of the biggest periods of change in the industry as predictive analytics can effectively forecast financial data with a degree of certainty. Thus, increasing the accuracy of financial information.
“The predictive view of accounting is the basis for planning, analysis and evaluation”. With predictive analytics being a key tool throughout accountancy practices, it can effectively limit the gap between budgeting, financial forecasting, and outcomes.
Automation in Accounting
“Cloud accounting software, [like Xero,] can already automate 80 to 90 percent of transactions for many clients” and this saves your company lots of time and money. Hence, more and more companies today are moving to automate their accountancy systems.
The fundamental success boils down to the reliability and ease of access to your accounts, and this is where cloud based technologies have overtaken traditional accounting procedures. Xero offers a universal platform for all your accounting needs and is accessible where ever you are in the world. As a result, automation of your accounting procedures makes it cheaper, easier and more reliable. That is why so many SMEs are seeking to automate their accounting.
Cloud technology and accounting automation also moves beyond just transactional automation. It also aids in analysis and provides insights into prospective business opportunities. It can spot trends in the markets and whilst utilizing real time information. It can analyse what competitors and your prospective customers are doing and help you make purchasing, scaling and resource decisions.
The gap between forecasted and reality can thus be further closed with regards to your scaling up decision. In reality, markets may turn out to be in the near future is uncertain. Using analytics, it is less unpredictable and can assist you in making purchasing decisions with a degree of confidence. This has dramatic implications in your cost and budgeting decisions. With the aid of predictive analytics with accounting software, you can make inventory and budget decisions with real-time information on the market outlook.
Automation also gives you more time to focus on one of the most important aspect of your business, which is your customers. Not only does predictive analytics help forecast what your customers may want in the future, or how the demand for your products may be, it also frees your time so you can tailor solutions to them and interact with them more. This enables your business to better tailor your products and services to your customers to match the needs that are most important to them.
Digitalisation of Data and Scalability
In this digital era, keeping accurate accounts and information of your business becomes easier.
Having a system that integrates all your cloud based systems is essential for you to be able to understand your business and see how your business is performing. As your business gets larger, monitoring multiple cloud based systems, such as Google Analytics, Xero and Shopify becomes trickier, and inputting information into each system becomes more time consuming and prone to error. This is where A7 IoB® can greatly improve your digitalisation and scaling up capabilities.
A7 IoB® is a business dashboard tool that allows you to connect data from different business applications and spreadsheet, convert them into KPIs and monitor your KPIs on the dashboard. This provides you with a greater level of transparency across your business and helps you make good operational and product decisions based on real-time market data.
Amalgamating all your data and processing them in the same workspace also gives you the freedom to concentrate on your customer needs. Furthermore, having all your data in the same place means that all your information can be assessed, processed, analysed and accessed by anyone within your organization, making collaboration and decision-making easier.
Potential Problems with Predictive Analytics
The biggest problem with predictive analytics is that the data and the tools used to manipulate the data are unreliable. Lack of good data is also seen as the biggest barrier as to why companies are unwilling or unable to employ predictive analytics. However, software such as A7 IoB® gives you the reliable platform and operating system to extract reliable information and tailor it for your business needs.
The 3 major difficulties for companies wanting to see a return on investment from their investment into predictive analytics are associated with these 3 aspects:
- Technology Trends
- Business Trends
- Organisational Issues
If your company can navigate these three aspects and embrace them, it will be able to reap the rewards of up to 20% returns on investment that predictive analytics can produce.
Navigating the Digital Economy
However, all three of these elements are not just issues for predictive analytics, they are the major challenges for all businesses today. Technology trends have reshaped the competitive landscape and with digitalisation, companies must change far quicker than they ever had. Companies must also be more aware of innovation, as there is a constant need to either keep up or keep ahead of competition.
This has impacted business trends, as with digitalisation and innovation, there has been a growing sense of volatility in the market. With a greater level of transparency to product differentiating characteristics and price levels, customers have gained a higher level of knowledge and choice in selecting products to use. This has all led to greater levels of competition.
While these are external factors, companies must also deal with a huge internal factor, that of organisational issues. The biggest question you must ask yourself when implementing any of these analytical tools: Is your company ready and willing to change? If the answer is no, then beginning to implement any of these analytical tools will be useless and you will not see the returns that you could make from analytics, so stop there and invest in your company and raise awareness of what analytics can do.
Predictive analytics, just like all other analytical tools, be it Operations, Marketing or Sales are only as good as how quickly you can implement them and how well you can implement them into your current business operations.
Understanding your company has never been more important. With a growing amount of business applications, companies can leverage to increase the product targetting and efficiency of their company. It is vital that all these data can be consolidated onto one platform. This can then provide you with the larger picture of how your company is operating, and this is where A7 IoB® can be the perfect tailored solution for you to grow.
Try A7 IoB® now for free to enjoy unlimited features and discover for yourself how utilising it can dramatically improve your company!