Four ways to make use of big data as an accountant
Posted by Sjoerd-Jaap Westra
Big data is more than just a marketing tool. For a growing number of businesses, it is an asset on their balance sheet. This is not surprising. Analysis of big data allows businesses to increase operating efficiency, assess risk, and spot emerging trends. Refined into actionable business strategies, big data becomes the foundation stone for building profit.
Accountants who embrace big data analytics have a unique opportunity to support their own and their client's business development. Here are four ways that you can make use of this emerging trend.
1. Real-time decision-making support
Finance is undergoing an evolution from bookkeeper to strategic business partner. As firms become more commercially integrated through cloud accounting, such as Unit4's Accountancy software, and real-time reporting technology, there is increasing scope for aggregating data across all clients within a market and to come up with meaningful performance benchmarks.
While your small business clients may glaze over when you mention their gross margins, they are much more likely to listen to you if you can show that their peers are performing much better than they are. This level of real-time analysis can help you sell your higher-value services such as budget forecasting and cash-flow management. Over time, big data will allow you to take a much more strategic, future-facing role in your client's businesses for your client's and your own practice growth.
2. Risk management
Accounting professionals are increasingly concerned with the impact of external forces on business performance. These forces may range from regulatory changes and supply-chain risks to mergers and acquisitions and fraud.
Big data analysis can help finance professionals to see the bigger picture of business risk. Social media may give an early warning of a shift in consumer behavior. Data sets may be able to link, quite precisely, the products that customers buy with the likelihood of them defaulting on a credit card bill. A negative correlation between different sets of data could be a red flag indicating fraud. Over the next few years, accountants should increasingly be looking at the ways in which they can leverage big data to help their clients pre-empt and mitigate risks, and thus protect performance.
3. Data governance
The value of data cannot be unleashed unless all the data is collated, organized, and made fit for sharing. Accountants are well placed to ensure that data complies with regulatory standards as well as the company's own key performance indicators for data quality, privacy and security. Medical data, for example, may not have clear lines of ownership and using data without the consent of the patient or a legal foundation may cause trouble for the organization. In every industry, intellectual property issues may exist. Accountants are in a unique position to offer data governance services to help ensure that big data delivers the most profitable solutions for clients.
4. Better alignment of resources with strategies
Failing to align a business strategy with available resources is a common, yet costly, problem. Accountants can be the glue that binds the puzzle pieces together. Their discipline in working with quantitative data, combined with their ability to translate information-driven insights into a competitive advantage, will enable the accounting firm to deliver business decision support in a way that emphasizes planning, precision and control. This takes the intuition out of long-term strategy planning for more effective business decisions.
As for the future of big data, it is clear that, by 2018, the demand for professionals with statistical analysis skills could outstrip supply by 50 to 60 percent. Grasping these opportunities now can help your accounting firm capitalize on the business opportunities that big data will bring.
The Future for Accounting
Interested in learning more about the future for accounting?
- ACCA/IMA: Big Data: Its Power and Perils
- McKinsey and Company: Are you Ready for the Era of Big Data?