As businesses are being transformed by the impact of big data and data analytics, the role of accountancy and finance professionals is set to change too. Iwona Tokc-Wilde reports
It is often said (although impossible to prove) that 90% of the data in the world today has been created in the last two years alone. We now have access to unprecedented volumes of it and, because of our increasing ability to analyse and gain new insights from it, big data represents a unique opportunity for businesses to use it for strategic advantage.
‘Every sector, from manufacturing to retail and services, wants to capitalise on the chance to increase operating efficiencies, assess risks and identify advantages and weaknesses through analysis of big data,’ says Helen Crofts, content consultant at Kaplan.
In fact, in a survey by ACCA and IMA, 62% of companies globally cited big data as hugely important to the future of business, potentially giving savvy businesses an edge on their competitors.
By extension, big data is also transforming the role of the finance professional.
‘Finance’s evolution from scorekeeper to strategic business partner started with the need for a stronger sense of commerciality, but this is now extended into the requirement for finance teams to extract more insights from financial data to improve business processes and efficiency, as well as drive corporate strategy,’ says Luke Davis, vice president at Robert Half Management Resources.
‘The challenge for the profession to be more commercially integrated hasn’t changed – it’s the potential scope of analysis that has evolved.’
As for the analysis of financial and other information, long gone are the days of the humble spreadsheet as the main query tool.
‘Before the big data phenomenon, finance departments were analysing the known unknowns such as profitability and return on investment; now they are not just analysing the structured information (spreadsheets) but also semi- and unstructured data, enriching traditional finance data such as SAP or management information systems with data from other departments,’ says Dan Somers, chief executive at Warwick Analytics, predictive analytics software provider to the finance industry.
‘For example, they are using predictive analytics tools together with customer data to make forecasts.’
Audit is a good example of how the technology and data analytics have revolutionised the profession.
‘There is now much more to an audit than just an analysis of the income statement and the balance sheet and we have to assess huge quantities of unstructured data, such as emails, in addition to formal company records,’ says Herman Heyns, head of big data at EY.
‘In the past, an auditor might have had to manually trawl through large correspondence files to monitor for risks, but this can now be accomplished by using technology to analyse text.’
Outside of audit and big accountancy firms, the biggest change has occurred in the realm of small business, with the advent of cloud accounting and real-time reporting.
‘The likes of Xero and Intuit are leading the way here – it’s the first time real-time data is available to business-owners through specific add-ons available with cloud accounting software,’ says Shaz Nawaz, managing director of AA Accountants.
Ed Molyneux is chief executive and co-founder of FreeAgent, a provider of cloud accounting software to small businesses and their accountants in the UK.
‘The shift towards the cloud is accelerating the commoditisation of compliance services and many accountants are happy to see the end of low-margin compliance work as it opens the door to higher-margin advice and planning services,’ he says.
Molyneux explains that, with cloud accounting software, it is possible to aggregate data across all clients within a relevant sector and area, to come up with meaningful performance benchmarks.
‘While your plumbing business client may not worry much about gross margins, they are much more likely to listen to you if they know that similar businesses in their area are performing much better,’ says Molyneux.
‘Big data can offer accountants and finance professionals the possibility of reinvention, the chance to take a more strategic, “future-facing” role in organisations,’ says Faye Chua, ACCA’s head of future research.
‘Trained to structure, gather and analyse financial information, they can apply their core skills to non-financial and other datasets, so the increase in the value they bring to organisations could be dramatic. There could, in the next five to 10 years, be a qualitative change that sees the finance department develop from a service function to a business-critical service, central to strategic decision making,’ says Chua.
The ability to use big data analysis tools to gain insights about business issues such as customer payment behaviour, seasonal variation in demand for products and services and customer complaints will be critical to this.
‘It means that accountancy and finance professionals will need to bridge the gap between the IT department (that traditionally manages data and tools) and the business (that needs insight to improve processes and develop new products),’ says Davis.
The Big Data: Its Power and Perils report from ACCA and IMA (see ‘Related links’) calls these finance professionals of the future ‘new professional hybrids’. And while the report acknowledges that accountants are neither software engineers or data scientists, they could be in the future.
Data analysis skills are already sought-after by finance employers. At the time of writing, there were over 100 business or financial analyst vacancies advertised on ACCACareers.com.
‘For candidates with technical programming and statistical skills to manage big data, there is an opportunity to leverage these skills for a salary premium,’ confirms Davis.