Hong Kong finance departments are beginning to see the potential of enhanced data analytics. In a recent study, 46% of finance functions across industries are looking to invest in analytics in the next three years.
More than one in three surveyed (38%) said that they are investing in data analytics to improve efficiency and reduce costs. It was the most-cited reason for adopting data analytics. It was followed by 20% who are motivated to understand business drivers and 16% who seek to use these capabilities to develop new products, markets, and channels. Other reasons were a better understanding of customers (13%) and driving innovation (9%).
"Amid current global economic uncertainties, organizations need to move more nimbly to survive, and this means being proactive rather than reactive. Leading organizations clearly use data analytics to their advantage. It is critical that companies in Hong Kong continue their investment in analytics capability and technology, and embrace the power of data to be fit for the future," said Isabel Zisselsberger, partner and head of Financial Management, Customer and Operations, KPMG China.
Tracy Shum, director, Management Consulting, KPMG China, noted that the results show that senior management is beginning to see the value in advanced analytics. "CEOs and boards are increasingly aware of the possibilities that data analytics generates. They expect faster and more accurate insights with which to make decisions at a pace that matches that of business changes. Organizations that invest in forward-looking data analytics stand to benefit from early-mover advantages and find themselves ideally positioned to thrive in this new environment," she added.
Willingness to invest does not mean organizations have already invested fully. In fact, the report found that only 6% of participating financial functions have invested in advanced data analytics systems, with 51% remaining heavily reliant on manual processes and spreadsheets to do data analysis. This has led to the surveyed professionals spending two-thirds of their time on descriptive and diagnostic analytics, while only spending one-third of their time on predicting future trends.
There are many reasons for this holdback. A lack of awareness of what advanced data analytics can do and what products are available were widely cited as factors slowing down investments in this space, with 19% saying they need support to help enhance their awareness. There is also a lack of trust at the C-level, with management teams at many companies still uncertain about data analytics insights due to a lack of understanding of how the science works. There are also concerns among the C-suite about the usefulness of past data and information integrity.
Besides, 14% of the financial professionals stated resistance to change as a critical hurdle to investing in data analytics. Twenty-five percent noted "cultural change" was the most critical factor needed to invest in forward-looking data analytics.
Another stumbling block identified by finance professionals is the increasing need for the right talent with the right skill sets. Organizations that cultivate ties to those studying data analytics could go a long way in addressing their challenges.
A short-term mindset is another hurdle. When combined with the other barriers, this explains the current low levels of data analytics investment commitment. Only 19% of organizations have a dedicated annual budget for data analytics, according to the survey, and 20% have an overall budget for technology initiatives that include data analytics. That said, about one-third (34%) say that although they lack a dedicated budget, they can get their budget requests approved upon request.
However, time is ticking when it comes to advanced analytics. According to the survey, some 32% of respondents say existing reports are unable to meet their needs, necessitating ad hoc reports. Without a constant review of current report inventory or the use of emerging technology and interactive dashboards, the workload is likely to increase.
The report suggested the following steps to tackle the challenges:
Eunice Chu, head of Policy at ACCA Hong Kong, said, "Despite all the hurdles, companies are undeterred in investing in data analytics. Many organizations have decided to increase investments in the next few years. A greater understanding of technology, a change of mindset, and finance professionals being armed with a wider range of related skills through continuing professional development together offer a path forward. ACCA offers regular training opportunities to help finance professionals stay up-to-date with technological trends and detailed knowledge they need to advance their careers. This multifaceted approach could pave the way for more rapid adoption of technologies, which are widely available in the market. The next step is for an organization to successfully navigate data analytics implementation."