TCS Study Finds More Than 50% of Global Senior Financial Leaders Get Short-Term Forecasts Wrong

DigitalCFO Newsroom | 18 November 2021

Tata Consultancy Services’ 2021 Global Financial Leadership Study Brings to Light
Current Financial Planning & Analysis (FP&A) Strengths and Weaknesses,
Priorities for Investment and Improvement, and Attributes of Top-Performing Teams

Tata Consultancy Services (TCS) (BSE: 532540, NSE: TCS), a leading global IT services, consulting, and business solutions organisation, published the TCS 2021 Global Financial Leadership Study: The Next Era in FP&A, based on a survey of 750 global senior finance leaders. According to the new study, many of these executives admit they rely on their instincts rather than data, and their financial forecasting falls short—and it’s especially true during the ongoing pandemic.

The study reveals 50 per cent of respondents say they consistently fail to deliver short-term forecasts or make significant errors. What’s more, only 54 per cent say their teams possess sufficient risk assessment capabilities. These executives estimate that, on average, 43 per cent of their financial planning and forecasting relies on intuition instead of analytics.

However, a small group of finance executives are leading the way. TCS’ study dubs them financial ‘Trendsetters’. Making up only 6 per cent of the total respondents, they have more mature digital capabilities, operate in a more agile manner, and demonstrate greater use of AI and machine learning. Trendsetters also invest more in transformational financial planning and analysis capabilities to future-proof their respective organisations before the next big disruption.

The clincher: Trendsetters are clear leaders in agility, effectiveness, and investments while others (Followers) are simply trying to keep up: 

  • 9 out of 10 Trendsetters (91 per cent) say they can reallocate resources quickly when business demands shift. Fewer than half (48 per cent) of Followers can say the same.
  • 78 per cent of Trendsetters believe they can develop budgets effectively, compared to only 43 per cent of Followers.
  • 83 per cent of Trendsetters say they are planning to increase investments in artificial intelligence and machine learning capabilities throughout the next year, compared to 55 per cent of Followers.

Despite the divide, current finance planning and forecasting shortcomings are driving organisations across the board to boost technology investments:

  • 69 per cent of all respondents said they plan to increase investments in cloud-based systems over the next 12 months; 63 per cent say they already increased investments in cloud-based systems throughout the past year.
  • 67 per cent plan to increase investments in data and analytics over the next year; 61 per cent said they already did so within the last 12 months.

Krishnan Ramanujam, Business Group Head, Business & Technology Services, TCS, said, “Today more than ever, financial leaders wear many hats—from crisis manager to growth officer. If they can supercharge and make the most out of their digital investments and insights, they will help their organizations become more agile, scalable, and proactive—and ultimately take on whatever challenges and opportunities that come their way.”

TCS’ 2021 Global Financial Leadership Study surveyed 750 senior finance leaders belonging to companies with annual revenues of US$5 billion or more, from a variety of industries including energy and resources, healthcare, travel and tourism, technology, insurance, financial services, and manufacturing. Respondents hailed from nine nations: the United States, United Kingdom, Germany, Canada, Netherlands, Switzerland, Australia, India, and Japan.

Published by the TCS Thought Leadership Institute—which conducts primary research to help organisations transform for long-term, sustainable growth—thestudy offers data-based recommendations to help shape the strategy of forward-thinking finance leaders and drive higher performance at their organizations.  

To view the full report and receive more information, please visit: https://www.tcs.com/perspectives/ceo