CFO Report: AI and Leading Economic Indicators to Determine Future Performance

Last Updated: May 8, 2019

In an age of digital transformation, the role of the Chief Finance Officer is evolving. Empowered with external insights, a CFO can take a more proactive role in benefiting long-term profitability, rather than reacting to short term fire drills. The “Predictive CFO” can evolve an enterprise to thrive amidst rapid advances in technology, economic volatility, and changing consumer behavior. Download the report and gain access to a complimentary copy of the Gartner Report: Leading Indicators Are a Critical Tool for Digital Business >>>

Combining AI with External Leading Indicators to Drive Strategic Decisions

One of the most promising applications of artificial intelligence (AI) is to assist the CFO in determining the true drivers of business performance. AI can be leveraged to identify leading economic indicators from millions of unique data sets, eliminating the need to manually identify which drivers are most meaningful.

According to Harvard Business Review, only 23% of companies indicated that they completed extensive modeling to determine the cause and effects of what they were measuring. Those companies, however, had a 2.95% higher return on assets and more than a 5% higher return on equity.

By mimicking the methodology of economists, AI-based solutions can rapidly discover and monitor economic and consumer behavior leading economic indicators specific to their business or industry.

According to Gartner, “Leading indicators are critical to: (1) support executive decision making, (2) improve business performance, (3) help manage enterprise risk, and (4) improve the enterprise’s ability to sense and respond (react) to market changes. From an economic architecture perspective, leading economic indicators provide organizations with earlier and greater insight into their customers and markets, more data about the situation, and potentially faster reaction time (agility) when planning digital initiatives.”

AI with External Leading Indicators can Radically Transform Strategic Decisions

CFOs often spend their day analyzing and justifying their business. More often than not, the C-suite spends their days dealing with tactical issues, not leaving much time for strategic initiatives. Traditional analytics solutions are not designed to automatically identify internal and external drivers of business. Manual methods of doing so are time and resource intensive, yielding inconclusive results.

AI can monitor a business plan in real-time and allows CFOs to stay on track, mitigate risk, and capitalize on potential opportunities. By combining AI and leading economic indicators, the Predictive CFO can radically transform the way their company makes strategic decisions in three areas discussed in this report:

Predicting consumer demand and sales – There are few elements of business that are more important than accurately gauging demand, given the direct relationship it has on revenue.
Knowing when to enter or exit a market – This is a hallmark of business success and requires forward-looking insights to make data-driven decisions.
Benchmarking growth against competitors – By using AI and economic leading indicators, it is possible to understand the unique drivers of competition and benchmark future market share changes

“The Predictive CFO” describes these three benefits in more detail, as well as provides case studies to illustrate how other successful companies are using AI and leading indicators to drive their business forward. Download it here and gain access to a complimentary copy of the Gartner Report: Leading Indicators Are a Critical Tool for Digital Business >>>