Business Wire IndiaIMA®
(Institute of Management Accountants), one of the largest and most respected associations focused exclusively on the advancement of the management accounting profession, released a new report today on the topic of Big Data. “The Impact of Big Data on Finance – Now and in the Future,”
examines how organizations are increasingly harnessing Big Data and how this change presents an opportunity for finance and accounting professionals to build on their proficiencies around data governance and analysis.
“Big data is being implemented by companies at a much higher rate than other technological initiatives, and the number of companies that use it will double in the near future,” said Raef Lawson, Ph.D., CMA, CSCA, CPA, CFA, CAE, professor-in-residence and vice president of research and policy at IMA. “For accounting and finance professionals, this provides an opportunity to increasingly assume the role of business partner with others in their organizations, as they draw on their competencies in governing, analyzing and communicating data.”
Some of the highlights from the study include:
A top down mandate to prioritize Big Data
The perceived importance of Big Data and analytics is underscored by the fact that the drive to implement these technologies and tools is coming from the top of organizations – in nearly two-thirds of companies from across the world, senior management is championing the Big Data initiative.
To what extent are companies exploiting the ability to analyze vastly larger, more complex data sets – Big Data? The answer is to a fairly large extent, with much more soon to come. The study found that companies that have implemented Big Data have already begun to reap the benefits. These organizations report a significant improvement in performance, especially in the areas of performance measurement and strategy formulation.
Exploiting Big Data will soon become standard business practice
Highly indicative of the perceived importance of Big Data is the fact that the percentage of companies exploiting Big Data is expected to double in the relatively near future. As with other technologies, the mining of Big Data is a work in progress for most organizations. Very few have completed implementation, but most have started and are on the road to gleaning additional important business insights from their data.
In terms of the stages of implementation of various technologies, the implementation rate of Big Data is exceeded by self-service reporting and mobile delivery. In fact, the interesting finding of the study is that globally, Big Data implementation exceeds implementation of technologies such as voice recognition, automation and predictive modelling among others.
Big Data is key for performance measurement
While Big Data can be used to positively impact processes throughout an organization, its potential impact is greater for some processes than others. Key among those with the greatest benefit is performance measurement. Organizations face significant challenges in objectively evaluating the performance of their employees, processes, machinery, and so forth. Deploying Big Data capabilities to collect and evaluate the mountain of data needed to make these evaluations “makes sense” for many organizations. The study highlights that the main functions of deployment of Big Data are (i) performance management, (ii) strategy formulation, (iii) research and development, (iv) order fulfillment and finally (v) product/service rationalization.
The journey of Big Data starts small
Consistent with the idea of starting simple and small when implementing Big Data projects, we find companies are more likely to use existing (in-house) data sources when starting their Big Data journey, although both existing and new data sources are being used. The majority of organizations today understand the importance of using data from new and varied sources and consider both internal and external data when developing and executing their strategy for which data from both internal and external sources are used.
With Big Data comes big responsibility
An essential factor for establishing a data-driven organizational culture employing Big Data is having strategies for the effective use of leading-edge analytic techniques and technologies. It’s not enough to just buy leading-edge technology for Big Data and analytics. To be a truly data-driven organization, strategies must be in place to ensure everyone is trained on the technology, uses it appropriately, understands and reports results based on it, and, most importantly, executives and employees are committed to act on insights uncovered based on the data. Without having these strategies in place, purchasing the technology is a waste of money. Even worse, if employees using the technology uncover insights for improvements, but these insights are ignored by management (which is not prepared for change), it can have a negative and deflating effect on the morale and motivation of employees. Slightly more organizations have developed strategies around the use of Big Data (53%) vs. those that have not (43%). For those that have already implemented strategies around Big Data, its impact is clear: The vast majority (80%) report improvement in their organizational performance, with the remaining organizations indicating it was too early to tell if benefits had been achieved.
Regardless of the data source, ensuring its integrity and quality is key. Before a Big Data strategy can be developed, it is essential to build strong data governance and quality infrastructure. Yet for many companies, ensuring data integrity and quality is still a work in progress.
Even the smaller players are adopting Big Data strategies
The implementation of Big Data is taking place in firms of all sizes. Surprisingly however, small companies (less than 500 employees) are slightly more likely than larger firms to report having completely implemented Big Data initiatives. This most likely reflects a more limited project scope and smaller data sets used by small companies. Small firms were also more likely to only be at the beginning stage of implementation or still scoping it out, reflecting the more limited resources of these companies. Still, most small companies are pursuing Big Data initiatives, reflecting the ability of Big Data and advanced analytics to help small companies more effectively compete against larger ones.
Main take-outs for management accountants
As CFOs lead their businesses into the new year, many are looking ahead and seeing turbulence. Instability looms in the specter of a shifting technological landscape, while presenting new opportunities for management accounting professionals. The following trends are top of mind for finance executives as they plan for 2020:
- Artificial Intelligence, machine learning, blockchain, and robotic process automation will play greater roles in the finance function.
- Management accountants are embracing data science to improve performance. IMA research analyzes the impact of Big Data on finance and how management accountants can improve their data governance and analysis capabilities.
- Professionals must continue to develop the skills needed to keep pace with technology and perform as a strategic business partner.
- Relevant continuing education, to enable professionals to do more and stay relevant.
The full report is available here