This article was first published in the February 2013 International edition in Accounting and Business magazine.
Size matters. The amount of data the world produces is growing so fast that we will soon run out of words to quantify it. Each day our photographs, personal location records, phone signals, online searches, social data, video clips and other digital output expand the total by an estimated 2.5 quintillion bytes. And as the technology needed to collate, manage and analyse all of this becomes increasingly accessible and affordable, big data is starting to transform the business landscape.
A new ACCA and IMA (Institute of Management Accountants) report, Big data: its power and perils, which draws on input from ACCA’s Accountancy Futures Academy, demonstrates how it’s also starting to transform the finance profession. While the new technology can commoditise some traditional aspects of the profession, it also provides an opportunity for finance professionals to move upstream to a more strategic, decision-making role within businesses.
The earliest exploiters of big data were some of the world’s largest and most innovative technology companies. Big data is behind Amazon’s targeted product recommendations and Google Mail’s ability to progressively reduce the amount of spam that finds its way into your inbox. Now venture capital is flying in the direction of tech start-ups that are creating tools to help big and small organisations in all sectors to explore and exploit the possibilities.
Searching for patterns
Innovative organisations and individuals are already using big data to unlock value from vast data sets, to innovate in business models, products and services, to support, automate and improve decision-making, to boost operating margins, to identify and reduce risks, and to gain competitive advantage. Analytics for big data is also being built into the software that accountants are used to having at their fingertips, such as accounting and finance systems and business intelligence tools.
So the next phase of exploitation seems likely to take big data into the mainstream, as businesses seek ways to use this new resource both tactically and strategically. But getting this right will be as much about people as it is about bits and bytes, because exploiting big data will demand individuals with data mining and interpretation skills, who know which questions to ask to gain insight and appreciate that high-quality data is as important as access to vast amounts of it.
Big data shrinkers
Accountants could play a valuable role here. The structural and analytical skills commonplace in accounting can be used to great effect on big data. Finance professionals are well placed to distil vast amounts of information into actionable insights, and make big data smaller.
Members of the profession wanting to reposition themselves to take advantage of the big data bonanza will need to embrace change. The report from the Accountancy Futures Academy predicts that the most successful will be those who differentiate themselves by adding new skills, developing new ways of thinking and forming new collaborations and partnerships.
To differentiate themselves and turn big data to their advantage, accountants and finance professionals will need to:
- develop new methods and services for valuing data – and extend their role in compliance and internal control to encompass the ethical and effective stewardship of data assets
- use big data to offer more specialised decision-making support – often in real time – and decide when data can most usefully be shared with internal and external stakeholders or monetised as new products
- use big data tools to identify risks in real time, improve forensic accounting and evaluate the risks and rewards of long-term investment in new products and markets.
The accountant’s role will be increasingly important, as more companies look for ways of developing new products and services from data they generate and own, particularly given growing concerns about privacy and ethical data usage. Accountants are already responsible for integrity in reports and accounts and ACCA members are bound by a code of ethics, so their role in stewardship and quality control may grow.
As the scale of collection, storage and trading of sensitive data ramps up, individuals, organisations and entire countries are recognising the dangers and risks of data misuse. Accountants may need to step up and act as custodians of large non-financial datasets and ensure that the information in them is robust and reliable, as well as valuable and marketable.
Preparing for the downside
Despite big data’s potential for creating a bright sunny future for finance professionals, there are thunderclouds on the horizon. Some once valued skills will become commoditised, as has already happened in other professions, while skills that were previously misunderstood or overlooked could become more valued.
One software developer is already using aggregated data from business and finance transactions and processes to find trends and benchmarks that it can use to create new services for accountants and businesses. The profession will need to follow suit.
WHAT IS BIG DATA?
The vast amounts of structured and unstructured data that we now refer to as ‘big data’ are being heaped up by the shift to digital, converging trends such as cloud computing and social technologies, widespread mobile device adoption, and the increase in internet-connected systems and devices.
Big data already comprises a massive amount of contextual relationship, information and raw data. As more physical objects connect to the internet (to create what is often called the internet of things or the internet of everything), so their ‘exhaust data’ will increase the amount by unimaginable proportions.
Big data is not just about data. It has three main characteristics: the data itself, the analysis of that data, and the presentation of the results of the analytics – plus the associated products and services. Market intelligence firm IDC defines big data as: ‘A new generation of technologies and architectures, designed to economically extract value from very large volumes of a wide variety of data by enabling high-velocity capture, discovery and/or analysis.’
Because big data is part of a more fundamental technology-driven shift in business trends and practices, the term probably has a limited shelf life and will fall out of use, as our understanding of it evolves and it is supplanted by new words for more specific technology-driven processes and applications.
FINANCE’S new role?
Ian Betts, data manager upstream and projects and technology at Shell, says: ‘Shell is moving towards managing information and data in an ever more integrated way. This requires control and assurance skills that sit naturally with the finance function.
‘A key part of our role is to explain the value of good-quality data for all of our business processes. We work on the basis that correcting a data error costs about 10 times as much as getting it right first time. Our vision is for the finance function to provide efficient and effective data quality assurance that unlocks business value at appropriate cost.’
Ng Boon Yew FCCA is chair of ACCA’s Accountancy Futures Academy and chairman of Raffles Campus, Singapore