Leveraging Predictive Analytics for Finance: The why and how.

No one can capture and analyse data from the future. However, there is a way to predict the future using data from the past. It’s called predictive analytics, and organisations do it every day.

What is predictive analytics?

Predictive analytics can help CFO’s to use the existing data and identify trends for more accurate planning, forecasting and decision making. By using predictive analytics your organisation can predict outcomes, identify untapped opportunities, expose hidden risks, anticipate the future and act quickly.

Every company wants to see into the future. How much will a product sell next month or will the demand drop off? How much will the business have to spend on manufacturing, distribution and other overheads? Does the business have a “next best offer” for a product or an estimated revenue for a newly launched product? Predictive analytics techniques are used to help answer all these questions and to create a better understanding of possible variables to aid smarter decisions.

Gain valuable insights

One of the biggest developments in SAP’s Predictive Analysis Tool has been its integration with SAP HANA. HANA provides remarkable output possibilities by using complex and heavy algorithms run on the in-memory platform.

Big Data which is the large volume of unstructured data from data sources such as external financial reporting systems, RFID sensors, Twitter, Facebook and other social media, can now be used to its advantage by using this powerful tool to forecast future performance and drive strategic decision making.

There are several routine processes that can be improved or enhanced using predictive analytics, including:

  • Target more profitable customers: By analysing the customers it is possible to identify small customer segments which are highly profitable.
  • Cash forecasting: Cash flow management is a key aspect of business to plan its future cash requirements to avoid a liquidity crisis. Leveraging data insights, financial professionals can look at trends to identify slow payers, detect and address system issues and improve receivable management.
  • Detection of financial risks: Financial departments can leverage predictive analytics to establish baseline criteria that makes it easier to identify outliers before they can damage overall company performance.
  • Demand planning: Predictive analytics can be used to forecast the sales over a period determining the demand of the product. This will help reduce returns from the customer and scrapping of the product, increasing the profitability of the company.
  • Company performance risk management: Predictive analytics can also help finance professionals get a forecasted “sneak preview” into the financial mid-period to avoid surprises.
  • Receivables aging: Finance professionals can optimise receivables aging processes and collect overdue amounts faster by setting alerts when customers deviate from past payment patterns.

Digital First for the Financial Times

Financial data analyzing. Close-up photo of a businesswoman's hand writing and counting on calculator in office. Selective focus

An important landmark took place at the Financial Times last month, with a recent memo to staff declaring that the FT is now ready to launch their “Digital First” strategy. In simple terms, this will mean a restructure of the journalism team and the overall operations to enable the FT to transistion from a traditional “print first” focus, towards the faster paced, digital media arena.

The subscription business model at the FT was first introduced with some apprehension – and many critics believed the model would surely fail. The FT produced its first paywall in 2001 and although they experienced an initial dip in online visitors, the revenues have grown steadily – reaching a total of £216m in the first six months of 2012. This figure represents underlying year-on-year growth of 7%. It appears that the need for instant, accessible news stories – on the go – is indeed a market that can be capitalised on, and it is one on which the FT are prepared to focus on for their future growth and expansion strategies.

Can other media giants replicate the Financial Times strategy?

As many market commentators rightly point out, the FT is a very niche media player, whereas the current online news leaders that include the likes of The Daily Mail and The Guardian carry more popularist news stories. This will make differentiation a far more difficult task. Another consideration is whether the Heads of these news publishing companies are prepared for the possibility of a steep decline in online readership which may in turn see advertisers move their ad budgets to those titles boasting a larger share of the online audience.

A “digital first” strategy also requires a strong focus on growing and managing an online subscriber base. Within that strategy news publishers need to think carefully about how to maximise revenues from a much reduced audience. Factors that must be considered include:

  1. How to segregate content – would a reader need to sign up per content area such as sports or female content or have a “one size fits all” model?
  2. How to segment an audience based on diffent consumption habits that suits their lifestyle and interests.
  3. How to deliver premium content that delivers value over and above “the free journalism” offered by competitors.
  4. How to leverage subscription data to maximise revenues, and capitalise on readership trends and audience behaviour.

To help support emerging digital models, a good technology platform is essential – and SAP have been at the forefront of delivering a range of both traditional and digital media solutions for many years. SAP offers a diverse solution portfolio which is specifically designed to help drive revenue and strengthen loyalty by improving digital service capabilities. The result of deploying technologies such as SAP for media is an enhanced ability to deliver the right products and services to the right market – at the right time. With SAP solutions companies can gain a competitive edge with fast, cost-efficient, and targeted paid content, they can deliver and promote cross-media offerings and improve monetisation of their entire rights inventory.

These types of technologies, combined with Invenio’s expertise in the media industry can help news publishers make the most of the opportunities presented by the digital era. Invenio are a SAP Media prefered solution provider, we specialise in delivering cutting-edge SAP solutions that can accelerate and support strategies for a successful multi-platform business model – across multiple asset types. For more details please contact our media team direct.

Analysing the Impact of Smartphones and Tablets in the Media Industry

How Business Intelligence can help you analyse online reach and increase revenue opportunities.

Content monetisation has long been a challenge for media companies and for years, business intelligence solutions like SAP BusinessObjects have delivered insight to uncover trends and analyse consumption patterns that help improve monetisation strategies.

But the ever-evolving ways in which consumers access content online is adding yet another dimension to how media companies can use business intelligence to help increase revenues and secure a bigger slice of the online audience.

Ofcom’s recent Communications Market Report 2013 shows that mobile devices are rapidly becoming central to the way people consume media in the UK.

Here are 5 key findings we took from this report – and how business intelligence tools can be used to capitalise on these trends:

1. Smartphones are becoming ubiquitous. Just over half of UK adults now own a smartphone, with 49% using a mobile to connect to the web. The way we interact with a smartphone versus, say, a laptop is very different. And so to create compelling content for smartphones requires a good understanding of how content is being accessed and consumed. Business intelligence can help you better understand how smartphone users are interacting with content – meaning you can create experiences that are more attuned to the needs of a mobile audience.

2. One in five people said using their mobile was the media activity they would most miss if it were taken away. Significantly less than the 43% who’d miss TV the most – but certainly a lot more than the 4% who’d most miss newspapers and magazines. Although the decline of print is not a new trend, business intelligence can help publishers that are migrating to online channels to improve their chances of success. For example, Business intelligence tools can help you analyse online performance versus print – and fine-tune strategies that will help you capture a bigger share of audiences who access mobile-based content.

3. Tablets are becoming mainstream. The number of households with a tablet such as an iPad rose to 24% in Q1 2013, up from 11% a year earlier. Like smartphones, tablets can open up even more opportunities to engage with an online audience. From apps to micropayments to subscription-based models, business intelligence can help you to understand what, where and how an audience consumes information, to make better, more informed decisions on pricing, delivery, format and platform.

4. The consumers of tomorrow are more mobile. Among 16 to 24 year olds, theMobile Tablet proportion owning a smartphone is now 77%.
Young people are also far more likely than any other group to use mobiles for social networking activities such as Facebook and Twitter. Media companies can use business intelligence to tune into how an audience interacts with them on a variety of social media platforms and so better inform and optimise their social media engagement strategies. mobile-tablet

5. Mobile advertising expenditure rose to £526m in 2012, growing 148% from £203m in 2011. The growing adoption of smartphones and tablets means a growing appetite for advertisers to reach these audiences on a mobile platform. Media brands can use business intelligence to understand the sales performance of various advertising slots which can help to inform pricing strategies and offers such as cross-platform advertising packages and bundles.

The switch to accessing content via mobile devices is already having a huge impact on media businesses, with audiences now consuming more content on both tablet and smartphones than ever before. However, media brands still have to compete with many other online activities for consumer attention, and so need to focus on getting mobile products absolutely right. And Business intelligence solutions gives media companies a way to uncover trends and inform strategies in this ever-changing environment.