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50% financial teams fail on short-term forecasts, or err majorly: TCS study
Only 54% say their teams possess sufficient risk assessment capabilities. These execs estimate that on average, 43% of their financial planning and forecasting rely on intuition, not analytics
The pandemic has made businesses aware of the role that technology can play, but the lockdowns and complete change in the way businesses are done has made many financial teams struggling to grapple with reality. According to a study conducted by Tata Consultancy Services (TCS) Global Financial Leadership Study: The Next Era in FP&A, many of these executives admit they rely on their instincts rather than data, and their financial forecasting falls short—and it’s especially true during the ongoing pandemic.
The study reveals 50 per cent of respondents say they consistently fail to deliver short-term forecasts or make significant errors. What’s more, only 54 per cent say their teams possess sufficient risk assessment capabilities. These executives estimate that, on average, 43 per cent of their financial planning and forecasting relies on intuition instead of analytics.
However, a small group of finance executives are leading the way. TCS’ study dubs them financial ‘Trendsetters’. Making up only 6 per cent of the total respondents, they have more mature digital capabilities, operate in a more agile manner, and demonstrate greater use of AI and machine learning. Trendsetters also invest more in transformational financial planning and analysis capabilities to future-proof their respective organizations before the next big disruption.
The clincher: Trendsetters are clear leaders in agility, effectiveness, and investments while others (Followers) are simply trying to keep up.
Krishnan Ramanujam, Business Group Head, Business & Technology Services, TCS, said, “Today more than ever, financial leaders wear many hats—from crisis manager to growth officer. If they can supercharge and make the most out of their digital investments and insights, they will help their organizations become more agile, scalable, and proactive—and ultimately take on whatever challenges and opportunities that come their way.”
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