According to the 2020 Vena Industry Benchmark Report, most businesses don’t have an early warning system in place to put them ahead of change on the horizon.
The new report is based on a recent survey of 350 business leaders and finance and operations professionals from various industries across the globe. The findings shed light on how prepared businesses are to pivot in the face of today’s unprecedented change.
The report revealed that 56% of organizations don’t have an early warning system in place to provide weekly and monthly operational and financial health reviews while only 44% do. Early warning systems are the tools, functions and processes that allow you to identify leading indicators, assess the impact of performance trends and modify your plans quickly in order to keep the business on track. Key components of early warning systems in practice include predictive dashboards, frequent scenario modeling and analysis and detailed reporting cadences with both financial and operational data.
With an early warning system in place, your finance and operations teams can plan with confidence and ensure your business is on the right path—especially during periods of change. Even in more predictable times, your budgets, forecasts and performance metrics will always fluctuate. You need to stay ahead of that change to guide your business effectively, and that’s why early warning systems are so important to adopt.
By honing in on your most important KPIs and their impact on your long-term business outlook, early warning systems maintain a proactive, data-driven approach to finance-led business planning. If you can identify potential business threats before they become an issue, it’s a lot easier to right the ship quickly and build strategic, well-informed business plans going forward.
Early warning systems are different at every organization depending on your business model and the specific indicators you measure. But in any case, developing an intuitive warning system requires having the right tools for the job. If your finance team still operates using offline Excel spreadsheets, manual data collection makes it difficult to aggregate the information you need for reporting. And if you can’t pair your planning templates with predictive KPI dashboards, you’ll find it hard to pick up on trends that might be harming your business.
They may not be able to predict the future completely, but early warning systems are powerful forces that every finance team should leverage. If you notice key performance trends, measure their impact proactively and steer your business away from danger—all with the right tools and agile processes in place—you’ll always empower your stakeholders with the information they need to plan confidently for today and tomorrow.
Learn more about how to adopt an early warning system so your finance team can plan for the future proactively and keep your business on track.
Download Vena’s 2020 Industry Benchmark Report here.