By: Aubrey Joachim
Big data and analytics have been the buzzwords of the past few years, and there’s a whole new industry emerging around them.
Since the emergence of big data, more or less everyone has started to use it – more or less everyone else has to. Companies use analytics to segment their marketing, scientists to identify correlations between lifestyle and disease, governments to foil terrorist attacks, not-for-profits to identify potential donors, and banks to arbitrage tiny differences in market prices.
Understanding and interpreting data is part of the role of accountants. The new technology of data capture, storage and analysis should be a gift to the accounting profession. Analytics are not only exciting in their own right: they promise to reinvigorate the finance function’s role. They present accountants with a formidable opportunity to shape business strategy.
Finance professionals have traditionally been the producers of management information in respect of organisational performance. However, this information has mostly been of a financial nature and providing a historical view of performance. This context of information provision falls typically into the definition of analysis, which is a historical view of what has happened in comparison to what was planned to happen.
Accountants term this as variance analysis. This information is only single-plane and delves into the detail of what happened in financial outcome terms, sometimes not even answering the ‘why’.
Being able to answer the ‘why’ requires framing the single-dimension financial data against other multiple data sets such as customer, market, economic data and many more. This type of multidimensional comparison of data can only be done using business analytics skills, management accounting and statistical tools. In today’s dynamic business environment, business managers need much more insight if they are to deliver the strategic outcomes for their organisations and keep ahead of the competition.
The information expectations of business managers offer a significant opportunity for finance professionals to demonstrate their capabilities. However, they need to look beyond the single-plane financial perspective they’ve been focused on for so long.
It must be recognised that the financial outcome of any organisation is only a consequence of whatever happens in the organisation in the context of both internal and external circumstances.
Today these internal and external circumstances are reflected as vast volumes of data. It’s only the application of business analytic skills, competencies, tools and techniques that can unlock significantly more business intelligence but also translate today’s big data into predictive insights.
What are the opportunities finance professionals can explore in the context of big data and business analytics?
For a start, they must realise that merely looking back at what happened is insufficient. They must be able to contribute
to providing at least a dynamic view of what’s happening.
But even this is falling below expectations. Tomorrow’s organisations expect their finance professionals to provide
predictive insights that will enable decision-makers to develop strategy and deliver strategic outcomes.
World-class finance functions see their finance professionals as business partners, getting significantly more involved in organisational strategy, from a proactive and predictive standpoint.
Getting to grips with big data and business analytics will provide finance professionals with the ideal platform to achieve a higher standing and recognition as truly value-adding business partners. In this context, finance has not recognised its latent potential.
The finance function has the prerogative of cutting across all data sources across the organisation.
Yet very few finance professionals have exploited this position to gain and share predictive insights in respect of the organisation’s performance.
Now is the time to get involved before the opportunity is taken away from them. Finance professionals and accountants
in particular must recognise that they too have a very powerful toolkit which can complement the features offered by business analytics.
What they should recognise is they must be open to the idea of transforming themselves by looking and thinking outside the box. Big data and business analytics is an opportunity that shouldn’t be missed.
And it is not only accountants in practise who can, should, or are harnessing the potential of big data. Several of the large accounting firms have made significant investments toward acquiring analytics skills as part of their advisory offering.
Additionally, as the role of the auditor and the need for a more forward looking view increases, big data might play a significant role in future developments.