Big Data is raising challenging questions about the future role of finance. Accountants could be sidelined as professionals who are seen to specialise in providing financial accounts to report past performance. Or they can seize the opportunity to become champions of Big Data as a source of evidence to support effective decision-making - and help to redefine how business is done.
Google's Eric Schmidt in 2010 claimed that the amount of data collected since the beginning of humanity until 2003 is equivalent to the volume produced in a mere two days in the modern age of information. A dynamic age propelled by social media and online technology; an age in which business is increasingly shaped by this plethora of information.
Big Data, in its simplest terms, refers to the tools and processes which allow an organisation to create, manipulate, and manage massive quantities of information in real time. It is also a phrase now commonly used by perplexed executives who are questioning their company's ability to exploit this data revolution.
In a recent international survey with the American Institute of CPAs, we found that over a third of global finance professionals believe that incorrect analysis of data is having a significant impact on revenue.
The study of 2,000 Chartered Global Management Accountant (CGMA) business experts highlighted that 86% of organisations are struggling to turn the growing volume of data into valuable insight - and are suffering as a result. Almost half (44%) of respondents said their company did not have the sufficient technology and tools in place, and only 53% are currently investing in the necessary software and capabilities. Predictably, it is cost and time constraints that are holding them back.
A major worry is that these findings are in stark contrast to the estimated impact that Big Data will have in the future, with 87% of respondents saying that more data and better analytics will change the way business is done over the next ten years. The same amount said that those who do not harness the concept will find themselves at a competitive disadvantage by the end of the decade.
It is time for people to get more involved, and not just hope that the IT team finds a solution. Finance is one function that has a significant role to play. According to the survey, 93% of respondents agreed that the finance team is essential in helping organisations to benefit from data-related projects.
Modern finance professionals are certainly well placed to do this by translating analytical insights into commercial insights to create value. Delivering on this potential will make closer business partnering more important than ever. It is an opportunity that the finance function simply can't afford to miss.
Big Data is relevant to all organisations, regardless of size or sector. Whilst analytics are generally considered the domain of the large corporations, smaller business owners must not overlook the ample opportunities that tools can provide. In this data driven era, such oversight can result in SMEs falling behind competitors who are effectively using data to improve performance.
Traditional tools from major vendors may be unaffordable for many smaller companies, but there are online and cloud-based options available to help analyse data - including Google Analytics, Kaggle and Tableau. These allow SMEs to review and refresh their business performance in new ways.
This starts at the most basic of levels. One example that springs to mind from our research is that of Morey's Piers, an amusement park operator in the US. When they wanted to assess the relative popularity of different rides, the company literally bagged the paper tickets and weighed them.
Today, electronic gate scanners provide clear data on which rides are performing, and which might need to be switched. The company also uses an external analytics firm to perform a deeper analysis of the ticket packages it sells online, and which rides are doing most to boost the business.
In the UK, Sweaty Betty, a women's sportswear retailer, uses data and geo-demographical services from Experian to provide detailed insight into customer profiles, which they then use to help devise new store locations.
Whilst smaller companies may have limited resources and budgets, they do have other advantages - such as a more flexible IT infrastructure and the ability to change practices quickly.
Taking advantage of these opportunities will be challenging. It creates a need for new skills, tools and ways of thinking. But an evolution is required and if companies - and their finance teams - can take the step up, they can ensure their commercial advantage. They can ensure their future success.
The results of the survey feature in the latest CGMA report 'From Insight to Impact - Unlocking opportunities in big data.'