Decision making is always tricky. In modern business, when we talk about decisions, we talk about data. We need information to make good decisions and decisions should be data-driven, so big data is important for understanding industry trends and providing financial insights.
But is there such a thing as too much of a good thing? When it comes to data, absolutely. Too much data can lead to “analysis paralysis”. Companies can spend all of their time trying to understand what the data is telling them to do, and none of it is actually doing the thing that moves them forward.
In finance, in particular, analysis and reporting of data insights must be a friend, not a foe. For that to be the case, organizations need to have a plan for leveraging strategies that will serve to promote decision making.
Set Reporting and Analysis to Avoid Paralysis and Gain Financial Insights
Because organizations have access to so much data, reporting on everything can prevent decisions instead of enabling them. Here are the 4 steps to keep your reporting from drawing you into inaction.
Define the question
Reporting should be the tool used to answer important business questions – questions that lead to defining a path toward a company’s strategic goals. To create useful reports that can then be analyzed for decision making, organizations must first start with the questions they want to be answered. These questions should start with “why” and “what if”. From there, you can define the reports that will answer those questions.
Get the right amount of data from the right places
Reporting is useful when it has the right data. In many organizations, that data is spread out across multiple systems. Manually importing the data, however, slows down analysis and can lead to errors. To give a complete picture, create integrations between various systems of record throughout the company into your reporting application. The data can be updated automatically, and finance teams can spend time on focused analysis instead of data mapping and audits.
Timebox the analysis
The ability to drill into data can be helpful, or it can turn into a time-waster. The allure of digging into the information to find an undiscovered nugget of information, or looking for the holy grail that will give you a guaranteed answer, can waste time and delay action. Set a time limit on creating your reports and analyzing the results. Give yourself enough time to be thorough in your analysis, but not so much that you get lost in the data.
Set reporting and analysis structure
Mile markers let you know how far into a journey you are. Similarly, setting up your reports against defined milestones can keep your analysis keyed to what is important. What do you need to know to answer your questions? Define your KPIs based on your initial questions, and then use those to create the structure around your reports.
Data, reporting, and analysis can be cruel mistresses. Without restraint, days and weeks can be spent exploring information that doesn’t provide the financial insights that can move the company forward. On the other hand, a focused analysis that can be formed from a complete 360-degree reporting view of organizational data uncovers opportunities that might have been otherwise overlooked.