Killer Analytics: Top 20 Metrics Missing from your Balance Sheet

Introduction: What Are Predictive Analytics?

You’ve probably heard or read something about analytics, which are a hot topic these days with finance and IT types. You are probably also a little confused about what analytics are and how they might be useful to your organization. The world of finance is characterized by tracking and studying individual statistics like sales revenue and costs as well as ratios like assets and liabilities, or overhead costs and total costs. While these are important statistics, analytics are more sophisticated numbers used to track and predict future performance in a business.

Organizations spend a lot of time and money measuring the past. Pretty much all traditional financial metrics (sales, profits, costs, adherence to budget, stock price, etc.) are measures of the past. Most nonfinancial metrics are also measures of good and bad things that have already happened: lost customers, accidents, new accounts landed, acquisitions completed or sold, employee turnover, overtime hours or costs, customer complaints, patients discharged, and so on. The good thing about measures of the past is that the data tends to have high integrity. In other words, there is no uncertainty when an employee quits, a customer closes her account, or we buy another company. Past-focused metrics tend to be based on reality and hard to deny.

LEARNING FROM PAST MISTAKES

The problem with this type of performance measurement is that it is too late to do anything about it. When I canceled ...