A new study by Tata Consultancy Services (TCS) reveals that more than 50 per cent of the global financial services leaders have failed to deliver on short-term forecasts and have been making significant errors.
According to the report surveying 750 financial leaders belonging to companies with annual revenues of $5 billion or more, many of the executives relied on their instincts rather than data for their financial forecasting which led to the shortfall in results. This was especially true during the ongoing pandemic. Only 54 per cent of them could say that their teams possessed sufficient risk management capabilities.
Of the total respondents, around 6 per cent dubbed ‘trendsetters’ had more mature digital capabilities, operate in a more agile manner, and demonstrate greater use of AI and machine learning. Trendsetters also invested more in transformational financial planning and analysis capabilities to future-proof their respective organizations.
Almost 91 per cent or 9 out of 10 trendsetters had reallocated their resources when business demands shifted during the pandemic. Almost 78 per cent trendsetters were able to develop budgets effectively for the same compared to 43 per cent followers.
In the coming year, 83 per cent of the trendsetters will be looking to increase investments in artificial intelligence and machine learning capabilities.
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.”
Focus areas
Over the next one year , nearly 69 per cent of all respondents said they plan to increase investments in cloud-based systems. Investment in data and analytics too will see an uptick as shared by 67 per cent respondents.
As per the report, four most crucial areas that are holding back finance leaders in terms of planning and forecasting include adaptability, critical skills, risk & control and data-driven decision making.
TCS 2021 Global Financial Leadership Study: The Next Era in FP&A report covered financial leaders from a variety of industries including energy and resources, healthcare, travel and tourism, technology, insurance, financial services, and manufacturing. Respondents hailed from nine nations: the United States, United Kingdom, Germany, Canada, Netherlands, Switzerland, Australia, India, and Japan.
