Decision-making can simply be described the process of making a choice. But in an organizational context, decision-making is often not easy and can be particularly complex based on the problem at hand. It involves gathering data or information and assessing alternative solutions. A school of thought suggests that a decision-making process in a business environment must consider stakeholders’ views since their interest is at stake. A decision is expected to result in measurable improvement in some indicators, be it customer satisfaction, improved revenue, efficiency or cost reduction for profits.
According to a Gartner survey of business executives, it came to light that in recent years, decision-making has been perceived by them as more complex than it was in the past. Those complexities are due to the dynamics of rapid changes in business, which also requires a quick reaction to adapt and stay ahead of the competition or the needs of consumers. It has also been established that one of the key element in dealing with those growing complexities is to rely on technology.
Technology can optimize a wide range of processes and generate a huge amount of data to improve decision-making. For instance, data can be scanned or obtained from the environments of customer consumption habits, market trends, competitor analysis, and an organization’s employees. Technology can also provide a platform to centralize and process a vast amount of data and ease analysis for the decision-maker. Thus, when a digital tool is applied on available data, the decision-making process becomes more streamlined, faster, and less error prone.
Financial Decisions
Financial decisions are critical to businesses and always given priority attention. You will agree with me that financial decision-making requires a managerial skill for the reason that it allows a business to take risks to drive performance. The crux of the matter is that decision makers need technology to process up-to-date data which will empower them to make complex financial decisions at the right time.
That said, it is a common-place knowledge that in every organization, the finance function is responsible and accountable for making three key financial decisions relating to investments, financing options for projects and the dividends decisions regarding whether to distribute profits, retain a portion of it, or plough back the entire profit into the business again. Apart from these major financial decisions, the finance function is also responsible for making day-to-day operational decisions involving cash inflows and outflows. Accounting data and financial statements provide key inputs to managers regarding the current and expected financial performance.
Traditionally in respect of that, managers used to extract numbers from financial statements and put them into formula-filled spreadsheets to establish key trends. But this process is not only time-consuming but also provides one-dimensional data that may not be as relevant as you assume in a few days later. Data changes constantly, so if you wait for the month or year end to analyze a financial report, you may lose out on capitalizing on new opportunities or plan appropriately. But when you produce them in a dedicated financial data analytics solution, you can delve deeper into the facts behind the figures, observe liquidity positions, spot any red flags, and respond to future challenges with some measure of assurance of positive outcomes. Indeed, technology can enable people to adopt modern financial reporting and visualize data at any time.
Innovative Insights
Businesses can leverage on modern finance-embedded technological applications to earn income from different streams as a result of the advanced financial complexities. Top investors can trust in digital applications to determine the potential benefits of various investment options in real-time. A clear is example is the mortgaged-backed security (MBS) where investors could invest in different revenue streams within their risk tolerance.
In this regard, cloud technology can be a central tool for the decision-making process by enabling faster number crunching and more accurate event probability calculations. A part from that, it can provide color-coded graphs, charts and analytics where individuals can overlay patterns to gain better visual understanding of decisions and outcomes. In effect, cloud-based computer programs can create a three-dimensional graphical display of potential statistical possibilities.
Furthermore, decision-making can no longer must be subjective with the availability of valuable tools for the generation, centralization, and analysis of data. Business executives can now rely on these indispensable support systems to make faster and timely decisions which will have a positive impact on their companies. Some of the technological platforms in vogue are Big Data and Artificial Intelligence (AI), Blockchain and Cryptocurrency and Robo-Advisory Services. Blockchain technology has advanced a whole new digital finance sector.
The technology has further strengthened the entire financial technology ecosystem and has become a powerful tool for investment decisions and wealth management. In the case of Robo-Advisory Services, they are digital investment and wealth management service providers that deploy algorithms to give clients investment advice that is hinged on lowering costs and increasing accessibilities. They utilize robotic process automation to allocate assets optimally and maintain rewarding investment portfolios for clients.
Technology & the Human Factor
To arrive at a meaningful decision requires an interpretation of data with support systems. Hence, we should not lose sight of the fact that those cutting-edge technological applications are designed and programed to perform tasks mainly based on “garbage in garbage out” where an input invariably determines an output. Therefore, the data is only as useful as the human being who consciously inputs, aggregates and then analyzes said data. As a result, an over-reliance on technology can leave you grasping at straws.
You need to carefully plan which data is relevant to use, how to organize it and what it means. Technology is only an enabler and aims at making the financial decision-making process flow more smoothly with speed and convenience. Technology, therefore, cannot replace good leadership and decision-making skills but complements these attributes.
Conclusion
Technological applications can be become a fundamental resource to streamline an organization’s decision-making process towards achieving expected outcomes if fully exploited. Time is of the essence with regard to decision-making and smarter decisions with the support of a gleaned data can be the cornerstone for an organizational success. Data is an extremely powerful tool that allows you to gain valuable insights by the application of using relevant digital tools. Invest in technology and decision support systems can help businesses to become agile and gain better control over accounting data.
BERNARD BEMPONG
Bernard is a Chartered Accountant with over 14 years of professional and industry experience in Financial Services Sector and Management Consultancy. He is the Managing Partner of J.S Morlu (Ghana) an international consulting firm providing Accounting, Tax, Auditing, IT Solutions and Business Advisory Services to both private businesses and government.
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