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
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
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
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