Financial Analytics
• There is an increasing use of analytics in many organizations these days.
Today’s businesses needs timely information that helps the business
people to take important decisions in business. Finance plays an important
role in increasing the value of your business. Finance is finding its way as
an important business function and it overlaps with analytics in many
areas. Financial executives are finding out new ways in the field of
finance to increase the value of their organization.
What is Financial Analytics
• Financial Analytics is a field that gives different views of a company’s
financial data. It helps to gain in depth knowledge and take action against
it to improve the performance of your business. Financial analytics has its
effect on all parts of your business. Financial analytics plays a very
important role in calculating the profit of a business. Financial analytics
helps you to answer all your business questions related to your business
and also lets you to forecast the future of your business.
Why Financial Analytics is important
• Today’s businesses needs timely information that helps the business people to take important decisions in
business.
• Every business should have a sound financial planning and forecasting to leverage the business.
• The emergence of new business model, the changing needs of the traditional financial department and the
advancement in technology have all led to the need for financial analytics.
• Financial analytics helps in shaping up tomorrow’s business goals. You can also improve the decision making
strategies of your business.
• Financial analytics focuses on measuring and managing the tangible assets of an organization such as cash,
machinery and others
• It gives a deeper insight about the financial status of your business and improve the profitability, cash
flow and value of your business.
• Financial analytics will help in making smart decisions to increase the
business revenue and minimize the waste of the business
• Accounting, tax and other areas of finance are having data
warehouse which is combined with analytics to effectively run the
business and achieve the goals faster.
Uses of Financial Analytics
Financial analytics helps a business to
• Understand the performance of an organization
• Measure and manage the value of tangible and intangible assets of an organization
• Manage the investments of the company
• Forecast the variations in the market
• Increase the functionalities of information systems
• Improve the business processes and profits
There are four main reasons why financial analytics is
becoming more important these days. They are listed below
1. Business Models
There are three new business models which form the basis of financial
analytics
• Business to Business
• Business to Consumer
• Business to Employee
2. Changing role of the financial department
• Most of the finance functions are automatic and requires only fewer
resources to manage them. This enables the finance executives to
concentrate more on the business goals rather than just focusing on
processing and reconciling transactions
3. Business Processes
Businesses are becoming more complex these days due to the advancement
of technologies. Lot of questions arise in the mind of the business people.
Analytics provide the answers to all these questions. Financial analytics lets
the managers and executives in an organization to have access to more
accurate and detailed financial information of the organization. This
strengthens the relationship of the employee inside the organization.
4. Integrated Analytics
• These days companies use integrated financial analytics to face the
competition in the financial analytics market place. Because of using such
integrated financial analytics companies will be able to analyze and share
the information to the sources inside and outside the organization.
Organizations should use integrated financial analytics to survive in the
new economy.
5. Role of the Data Warehouse
• The data warehousing solutions mainly focus on important analytical
components like data stores, data marts and reporting applications. Data
warehousing in the future will require rich analytical capabilities. Smart
decisions are easily made when the data and business processes are
integrated across all business functions in an organization.
Data Driven Decision
Making
Purpose
• Provide guidelines for using data for team planning
• Provide guidelines for using data for on-going problem solving
• Apply guidelines to examples
Improving Decision Making
From Problem Solution
To Problem Problem Solving Solution
Key features of data systems that work
• The data are accurate and valid
• The data are very easy to collect (1 % of staff time)
• Data are presented in picture (graph) form
• Data are used for decision-making
• The data must be available when decisions need to be made (weekly?)
• Difference between data needs at a school building and data needs for a district
• The people who collect the data must see the information used for decision-making.
Why collect discipline data?
• Decision making
• Professional accountability
• Decisions made with data (information) are more likely to be 1)
implemented and 2) effective.
What data to collect for decision making?
Use what you have:
• Attendance
• Suspensions/Expulsions
• Vandalism
• Office discipline referrals/detentions
• Measure of overall environment. Referrals are affected by 1) student behavior 2) staff behavior and
3) administrative context
• An under-estimate of what is really happening
• Office referrals per day per month
When should data be collected?
• Continuously
• Data collection should be an embedded part of the school cycle, not
something “extra”
• Data should be summarized prior to meetings of decision-makers
• Data will be inaccurate and irrelevant unless the people who collect and
summarize it see the data used for decision making.
Organizing Data for “active decision making”
• Counts are good, but not always useful
• To compare across months use “average office discipline referrals per day
per month”
Using Data for On-going Problem Solving
• Start with the decision, not the data
• Use data in “decision layers” (Gilbert, 1978)
• Is there a problem? (overall rate of ODR)
• Localize the problem
• (location, problem behavior, students, time of day)
• Don’t drown in the data
• It’s “OK” to be doing well
• Be efficient
Interpreting Office Referral Data: Is there a
problem?
• Absolute level (depending on size of school)
• Middle, High Schools (1> per day per 100)
• Elementary Schools (1> per day per 250)
• Trends
• Peaks before breaks?
• Gradual increasing trend across year?
• Compare levels to last year
• Improvement?
What systems are problematic?
• Referrals by problem behavior?
• What problem behavior is most common?
• Referrals by location?
• Are there specific problem locations?
• Referrals by student?
• Are there many students receiving referrals or only a small number of students with many referrals?
• Referrals by time of day?
• Are there specific times when problems occur?
Designing Solutions
• If many students are making the same mistake it typically is the system
that needs to change, not the students.
• Teach, monitor and reward before relying on punishment.
Application Exercise
• What is going well?
• Do you have a problem?
• Where?
• With whom?
• What other information might you want?
• Given what you know, what considerations would you have for possible
action?
