Numbers have always been the lifeblood of the accountancy profession. Now, the trends of big data and analytics promise to increase the volume and velocity of this information flowing to finance professionals. Just as commerce thrives on information, businesses now have the computing power to corral ever-increasing volumes of information and apply analytics to help them make better decisions.
To understand these “transformative” trends, Chartered Accountants Worldwide member ICAEW has published a report from its IT faculty. ‘Big data and analytics – what’s new?’ to look at this hot topic from an accountant’s perspective.
The report opens with a short background on developments in big data and analytics to date, explaining how the technologies have evolved. It also outlines the proposed business benefits from this technology in helping businesses to gain insight or forecast outcomes.
“When analytical techniques are applied effectively to big data, businesses can potentially achieve many incremental improvements – personalised services, optimised operations and better risk management, for example. Furthermore, the high pace of technology development and the sheer volume and breadth of opportunities to use data will increasingly influence the business environment and provide opportunities for disruptive new business models,” the report says.
Using a three-step framework, the report looks at what’s creating big data, what are the opportunities and risks, and how to exploit this information, as accountants, businesses and policymakers.
Although the authors say big data can help businesses to gain insights, predict the future and automate non-routine decision making, they also acknowledge the risks in using data in these ways. “Care needs to be taken to avoid unjustified conclusions, ensure appropriate reliance on predictive models and manage the impact of growing automation,” they write.
Smaller businesses may feel the big data concept is not relevant to them, while other organisations may have lots of information but struggle to identify what’s useful. The report includes advice on how businesses can get started with big data. It suggests focusing on questions that will help the business to be successful and identifying possible data sources from that process.
The report also refers to opportunities for accountants to make use of big data and analytics techniques to enhance their contributions to businesses. These include:
- Using predictive models and other sources of data to improve budgeting and forecasting
- Using more sophisticated outlier and exception analysis to improve internal control and risk management
- Improving the efficiency and quality of audit activities through analysis of whole data sets