More financial professionals working in business are using Big Data in their decision-making process. And the explosion of data generated each day plays a huge role in how management accountants perform their day-to-day duties. Although there are many positive aspects of integrating new technology into our companies and using analytics to interpret data, there are also drawbacks. Here’s a breakdown of Big Data and how management accountants can become the gatekeepers of this information.
What Is Big Data?
In 2013, IMA® and ACCA (Association of Chartered Certified Accountants) published a report titled “Big Data: Its Power and Perils,” which defines Big Data as “the vast amount of data continually collected through devices and technologies such as credit cards and customer loyalty cards, the Internet and social media and, increasingly, Wi-Fi sensors, and electronic tags.” Big Data can help improve company performance and productivity to increase company revenue and stakeholder trust. Management accountants use Big Data to identify risks in real time and to make valuable business decisions.
What Are the Trends?
Big Data is changing the landscape of business. Companies are going from using predictive analytics to prescriptive analytics – they’re collecting data from their customers’ cell phones and other mobile devices to analyze customer profitability. This allows companies to cross-sell and up-sell their products. Management accountants are charged with analyzing this data and distilling it into bite-sized chunks so that management, who might not be familiar with the analytics, can find it easier to digest. As gatekeepers of this information, the management accountant’s role will become increasingly important.
What Are Some of the Risks?
As the amount of data grows, so does the risk for hackers to steal information and other actors to commit fraud. Although more data might make it easier to make decisions, it also requires an increase in both physical and digital internal controls. Securing your physical data warehouse and controlling who has access to it will help deter wrongdoing. And because hackers are everywhere, cybersecurity should be top of mind for every company – large or small. As a result, improved tools and techniques are being developed daily.
In addition, not knowing how to analyze so much data can lead to erroneous conclusions and decisions. There’s also an opportunity cost of gathering, storing, and analyzing bigger data instead of making other core investments. In other words, picking the wrong tools and hiring the wrong people to use them will increase the likelihood of misallocation of resources.
What Are the Rewards?
On the flip side, there are many opportunities for company growth and market expansion because of Big Data. Like I mentioned previously, companies can harness a new market by emerging in the mobile market. Mobile devices can be accessed through Wi-Fi (or if the customer downloads the company’s app – another opportunity for expansion), which makes it easier to connect to your customers and advertise new products. In turn this improves analytics, and thus, you can learn how to better serve your customers, increase revenue, and develop targeted services to niche markets.
How Can We Protect Company Data?
When using Big Data, companies should always consider a data governance strategy, which will help mitigate risk. The strategy should cover the availability, usability, or utility of information and the integrity, quality, and security of information. Management accountants play a large role in protecting company information, systems, data centers, and more through effective controls and monitoring. After all, you are the gatekeepers of Big Data.
To become part of the conversation, visit the Technology Solutions & Practices (TS&P) Committee on LinkUp IMA: http://bit.ly/1SrwFHe.
Written by Linda Devonish-Mills, CMA, CPA, CAE
“Key Technology Trends for Management Accountants” – Strategic Finance
Global Risks 2015 – World Economic Forum