3 Essentials for Using Big Data for Financial Forecasting

At this point, big data‘s impact on the way companies operate is no longer up for debate. Proving itself to be a key player in everything from marketing to retail, big data’s prevalence in business grows every day. Information about exactly how populations spend their time and money is more available than ever before, and it’s up to individual companies to decide how they want to use that vast knowledge.

In 2018, big data stands to make the leap from vague, intangible concept to accessible resource. As new tools store, organize and decipher big data, it becomes increasingly more usable, and the way businesses conduct financial forecasting could be significantly affected. If you’re considering using big data in your own financial forecasting, make sure you have these three things in place to get the most out of your data.

1. The Right Technology

Trying to harness the power of big data without the proper systems in place will leave you lacking a clear direction. While that might seem obvious, deciding on the tool that will work best for your needs isn’t always easy. Fortunately, many software companies know of big data’s potential and are creating dashboards for companies to track analytics more efficiently. Microsoft is just one example ”it recently saw a way to improve its financial forecasting tool’s incorporation of big data. The resulting version of Microsoft Azure includes greatly streamlined analytics and better security.

Beyond just storing the data you already have, you’ll need to find ways to organize data you receive, or clean it, and in some cases, your company may choose to mine for data. To handle those tasks, choose between bigger names like Hadoop and Oracle or smaller startup software, but do your research and make sure you understand what you’re getting. Your company should have a platform that aligns with its needs, so don’t settle for something just because it’s the popular choice.

2. Quality Data

Considering the incredible influx of information that big data represents, mistakenly thinking that all of it is relevant is understandable. However, infinite information can quickly become too much of a good thing. The right tools will make filtering through your data easier, but you and your team should still sit down and determine exactly what kind of data will help your organization‘s financial forecasting before you start trying to use it.

If you gather irrelevant data from the wrong geographic area, or if you don’t even know exactly what data you’re feeding into models, your chances of receiving accurate results plummet. John Murdock, CRO of Centage Corporation, echoes this, insisting that knowing which data matters is key to speeding up data collection and analysis. Low-value tasks can be removed or eliminated, and automation can become part of the operating and data collection procedures. Save time and unnecessary work by informing yourselves ahead of time.

3. An Informed Team

Using big data to your company’s advantage requires careful attention to detail and a strong understanding of statistics and analytics, which aren’t always a part of a traditional finance background. With big data altering the way financial forecasting happens, your entire team may need to learn new skills on the job and change process quickly to keep up. If you’re just beginning to integrate big data into forecasting, be patient with your team and know that an investment in growing their skillset now will eventually pay off in the form of a more streamlined process later.

Joshua Adamson-Pickett of Business.org adds, For forecasting with big data to work, your team will need a mix of appropriate skills as well as the motivation to test different methods until they find one that delivers the right information. With the proper support from management, these goals are attainable for many teams, but it will be a work in progress in the beginning. Support your team with the tools they ask for, whether it’s a dashboard or live-streaming platform, and you’ll all reap the benefits.

Big data’s reach continues to expand every day, and it’s become nearly ubiquitous as it changes the way companies approach everything from day-to-day operations to financial forecasting. It’s also not going anywhere anytime soon. By understanding how it will affect your organization and taking the time to discover what you’ll need to use it effectively right away, you’ll have a better chance at using this powerful tool to forecast financial data accurately.