What are the best ways to analyze financial program performance using data analytics? (2024)

📊 Prioritize data-driven insights! I'd recommend that program managers collect and analyze financial data and ensure they interpret it in the broader context of industry benchmarks and company objectives. Using sophisticated analytics techniques and traditional financial statements enables a holistic view of the program's financial health. Remember, financial KPIs and performance indicators aren't just numbers—they narrate a story about the program and where it could go. Using the latest tools and techniques and keeping a consistent review rhythm can pivot a program from merely operating to thriving.

Forecasting and Predictive Analytics:Use predictive analytics to forecast future financial performance. This can help you anticipate potential challenges and opportunities.Cost Allocation Analysis:Analyze how costs are allocated across different program components or projects. This can highlight which areas are cost-effective and which may need adjustments.

If the data is disorganized, chaotic, and in no form of coherent structure it will not only remain meaningless but will also not be defendable and transparent.When that mess becomes an organized process with identifiable data, it is much easier to seek opportunities for excellence. There will always be issues of concern but seeking solutions from organized data is much easier than dealing with the chaos.

Some of the key ingredients that are critical for collection and organizing financial data are :1. Well defined business processes with clearly defined inputs and outputs in the form of data / information.2. A robust master data management framework with single source of truth clearly defined for each component.3. An objectively evaluated and best-fit ERP platform.4. Data custodians and data quality reviews at regular intervals.5. Development of business datamart and meaningful reports to sanitize business critical data.6. Development and implementation of data classification.

Collection and analysis of data not only help you understand the metrics but also assist in translating these metrics into financial decisions made by individuals. These decisions help you make informed choices, and with the right data analytics tools like Tableau, Power BI, and spreadsheets, you can perform predictive analysis of the next financial choice that an individual is most likely to make based on their financial data, statistics, correlation, and regression. In conclusion, data analytics enables you to conduct predictive analysis with sufficient data and metrics.

In assessing the program's financial performance, the initial step involves comparing actual results to budgeted figures. This process reveals variances, which, upon identification, necessitate a closer look at their root causes. Understanding these causes is essential for effective decision-making. In cases where risks contribute to the variances, risk mitigation strategies should be formulated and implemented. Following this analysis, program strategies and activities can be adjusted to improve overall financial performance, aligning them more closely with program goals and objectives.

This may have been called out already, but forever and always, make sure you truly understand your stakeholders and listeners. To create change or communicate something effectively, it requires a defining look into the individuals themselves, understanding their value or expectations and what you’re providing will help lead to impactful communications.

A financial review of a program’s performance needs to include specific key performance indicators and not a mass clutter of data. The KPIs should also be evaluated to ensure they are what is actually desired in a report. What is it that is important to the members, employees, leadership, shareholders, and public? Meaningless metrics rarely result in supportive outcomes.

Consistency is key for any financial measurement tool where we need to consistently use a single whilst keeping a tab on newer tools for analytics. In the modern world it’s easy to shift between technologies though we need to keep in mind the subjectivities it will bring in. More subjective a tool is less effective it’s in measuring performance.

Using tools like Power BI and Excel Spreadsheets to gather & analyze data and then using those products to present KPIs, metrics and solutions are foundational for an organization and can take financial program performance analysis to the next level. It is a skill set that everyone in the Financial space should be familiar with and be actively building on.