The "2021 Agility in Planning, Budgeting and Forecasting Global Survey" by Prophix Software, conducted in collaboration with FSN Research, is based on a survey of more than 500 global finance executives in 23 different industries to assess their “agility” in financial planning and analysis and gauge the state of the industry. The survey’s findings revealed sizable gaps in the abilities and outcomes in nearly every survey category, underscoring the need to accelerate digital transformation initiatives and adopt more agile, cloud-based planning, budgeting and forecasting technology tools in order to be better equipped to navigate an ever-changing business environment.
“Businesses are increasingly relying on their finance teams to guide them through constant change, whether that’s in the face of global crises like COVID-19 or ongoing market shifts and events,” said Alok Ajmera, president and CEO of Prophix, a global provider of mid-market corporate performance management (CPM) software. “The business imperative for greater speed and nimbleness comes through loud and clear in our ‘Agility in Planning, Budgeting and Forecasting’ survey findings. This benchmark report underscores the need for digital transformation to help fundamentally change the role of finance from reactive to proactive, better anticipate change, and take a stronger role as a business advisor.”
The survey showed most finance departments still face challenges in their digital transformation, he added, but by leveraging cloud-based CPM software, especially with artificial intelligence (AI) capabilities, finance executives can forecast more quickly, more accurately and farther into the future.
While organizations are able to forecast faster than four years ago, the 2021 survey shows accuracy has deteriorated:
- 80% of finance teams surveyed are unable to forecast beyond a year, and over 50% cannot project further than six months
- Two thirds of organizations manage to reforecast their earnings in under a week, but only 39% are able to do so within +/-5% accuracy
- Only 43% are able to forecast their revenue within +/- 5%
In addition, advanced technologies are still slow to be adopted. Only 31% of survey respondents say they have made significant changes to their planning, budgeting and forecasting processes, and only 5% have completely transformed them. Even for those who have transformed their process, tools like AI and machine learning remain out of reach, with just 17% utilizing them.
The pandemic further illustrated how most businesses are unprepared to conduct more nimble and agile budgeting and forecasting, which hindered their ability to respond to changing conditions over the past year. But even as many organizations fall short of agile planning, budgeting and forecasting, the survey found those that have made headway are better equipped to handle change and adopt advanced tools.
Commercial construction is one industry that could benefit substantially from such adoption. “Commercial construction was one of the industries hardest hit during the pandemic, with most jobs stopping virtually overnight due to the lockdown and many projects either cancelled outright or put indefinitely on the back burner,” noted Ajmera. “The good news is construction finance professionals are telling us they’re putting a heightened focus coming out of the pandemic on tools that deliver greater agility and enable them to keep a closer eye on their balance sheets and cash management as the industry returns to normal.
"We expect to see an acceleration of digital transformation in construction finance in the months ahead to help these leaders better anticipate change and navigate any variety of economic waters," he added.
Click here to download the full report.