Whether you’re a big corporation or a smaller company, making forward-looking decisions based on facts and data is becoming more and more difficult. This can have serious consequences: management representatives are increasingly having to revise revenue or profits downwards compared to earlier expectations and predictions – which causes negative consequences for the company value.
Stock market data from the last 20 years show that downward revisions to business results to an average loss of enterprise value of 158 million euros loss in its value.
Companies that succeed in bridging the gap between performance of the finance function and the expectations of its stakeholders therefore have evident advantages. CFO office, corporate steering plays a crucial role in closing this gap: using data-based facts, it can play a significant part in answering key industry-specific questions. Key insights gained using state-of-the-art digital technology – especially AI and machine learning – are more useful for CFOs than ever before.
This means that corporate management of the future is directly linked to the finance function’s overarching task: namely, to enable the best possible decisions. Purely relying on past data and financial indicators is no longer adequate for predicting and controlling future company performance.
“Above all, corporate management means taking suitable measures to react as necessary to the internal situation and external factors, and ideally having an idea of which direction the company needs to take in the near future. A majority of today’s reports only show us outdated data which are used as the basis for limited financial planning that bears no relation to the actual drivers.”
We are industry experts, mathematicians, data scientists, economists, econometricians and predictive gurus. Our combined expertise allows us to achieve predictive excellence, far above the standards of simple forecasting tools.
Targeted collection of data to help understand current problems is now more crucial to business success than ever before. The increasing globalisation, international linking of value chains and markets, the growing number of political trouble spots, and constant crises are leading to high volatility in many markets and strong heterogeneity between industries. This increase in uncertainty makes corporate planning and steering more difficult. One way to confront this is to use leading indicators. Early assessments allow potential risks such as decreases in demand to be identified in good time, enabling companies to avoid overstocking and address markets differently.
“Early warning systems, which aggregate information from various leading indicators, can create forecasts for selected countries and industries, allowing the anticipation of developments over the next three to six months. Thus, companies can reassess their strategic outlook. Projections for specific sectors allow us to provide accurate early warnings for individual lines of business at an early stage, which in turn enables efficient corporate steering in those lines of business.”
Successful companies use their corporate management strategy to ensure that their business decisions are directly linked to their market performance. They do this by:
Having the right data in an aggregated format is an essential prerequisite for any further analysis, and for reporting and management. By analysing this data based on specific KPIs, companies can identify whether they are meeting their goals; and, if so, how effectively. Our industry-specific KPI framework forms a structure for this analysis, including all relevant KPIs and their respective dependencies.
Our framework takes your corporate strategy as the starting point and uses it to derive a series of key business questions (KBQs). These KBQs define the relevant KPIs to allow for fact-based answers to the company’s key questions. The KPI framework reflects the relationships between the KPIs, and uses both internal and external information. This enables your company to gain a holistic understanding of all relevant factors influencing your business.
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