Research conducted by Dynamic Markets on behalf of Oracle, reveals that large organisations struggle with a lack of visibility into profits that is impairing financial performance, morale and business success The research, entitled “Performance Management: An Incomplete Picture,” also highlights the significant issues with the data-gathering processes that is central in creating a dangerous ‘four-month’ data lag.
The study, conducted by Dynamic Markets, surveyed 1,499 managers in large organisations in 13 countries across the world revealed that 82% of businesses admit to not having complete visibility into profits by line of business. Furthermore, 46% believe this creates potentially erroneous business decisions, 40% feel this can impair financial performance and 38% believe it results in flawed business planning that will hamper business success.
Managers typically spend over a third (36%) of their week number crunching in spreadsheets. In fact, 82% of those involved in scenario planning use spreadsheets to manipulate and investigate data during this task Handling data this way means it becomes outdated quickly: on average, data used to make decisions is more than four months old, worse still is that 28% of managers do not even know the age of the data they use.
Scenario planning fares little better, with data being typically six months old, with almost a third (30%) again not knowing the age of critical data; it is no surprise that 95% of respondents involved in this process encounter problems.
Putting this right takes time, says the study. It can take nearly a year-and-a-half to identify and amend a failing business process or initiative and 83% of companies admit to suffering consequences because of this. One third (33%) see plans become obsolete, 55% incur unnecessary costs and 43% witness a negative impact on employee morale.
John O’Rourke, Vice President EPM Product Marketing at Oracle, said: “Management is clearly struggling to cope with the vast volumes of data being generated by their businesses, which is manifesting itself in a serious lack of visibility into profitability across the entire company. Without enterprise business planning systems to give organisations an end-to-end planning process that links strategic, financial, and operational planning to profitability and cost management, they are going to continue to struggle with fragmentation and have no option but to continue ‘making decisions in the dark’.”
