How Accounting Is Adopting a Data-Centric Approach in a Changing Economy
It’s as if the pandemic gripping the world has shaken a snow globe and the effects have mixed up and rearranged nearly every aspect of our work and personal lives as we once knew them.
As the global economy adjusts to a “new normal” that’s suddenly virtual, more and more organizations around the country—and around the world—are adopting a data-centric approach to managing their business and finding it necessary to use Big Data in their day-to-day operations. In fact, the number of companies employing Big Data is set to double in the near future. Accounting businesses are increasingly among them, as technology like data analytics, AI and machine learning, and blockchain and robotic process automation become more prevalent, according to a report from the Institute of Management Accountants.
After futurist Daniel Burrus put out his “Top 20 Technology-Driven Hard Trends Shaping 2018 and Beyond” list, Maryland Association of CPAs executive director Tom Hood asked more than 3,000 CPAs and finance and accounting professionals which trends will have the greatest impact on the profession over the next three years. Big Data analytics was the number 1 answer, followed by artificial intelligence and cognitive computing in audit and tax at number 2, and advanced cloud computing at number 3.
Since the arrival of the COVID-19 pandemic, organizations’ reliance on Big Data has only intensified. MarketsandMarkets forecasts that Big Data market’s global size will increase from $139 billion in 2020 to $229.4 billion by 2025. Major factors contributing to this increase include growing awareness of the Internet of Things (IoT) devices among organizations; greater availability of data across organizations to help them remain competitive through deeper insights and analysis; and increasing government investment to enhance digital technologies in some regions.
As companies work to adapt, stay competitive, and innovate in a constantly changing and increasingly virtual workplace, implementing new technology that employs Big Data and leading-edge analytical tools can be a game changer.
Why Big Data?
Accounting professionals are already adept at pulling data from multiple information systems and drawing insights from that data. It’s not completely surprising then, that accounting divisions and the professionals who work within them are under increasing pressure to understand Big Data—and there are big benefits for them in doing so.
Learning to use and incorporate Big Data and data analytics into their jobs will enable accounting professionals to truly be seen as strategic advisors within the company. Big Data has the potential to uncover valuable insights that will make tax preparation more efficient, help create new methods of detecting fraud, and help prevent identity theft. Data analytics, as AccountingWeb points out, can also help accounting professionals put into place better sampling processes for audits, predict which individuals are at a higher risk of identity theft, and help improve forensic accounting procedures.
“Companies using leading-edge analytics can have a significant advantage compared to their competitors,” says Raef Lawson, professor-in-residence and vice president of research and policy at the IMA. “Big Data is going to enable the finance function to improve its insights and become a true strategic advisor within the organization.”
The Increasing Role of Big Data in Today’s Climate
These benefits, and also the need to employ Big Data in day-to-day operations, are magnified in our economy’s new virtual workplace, where staff and client priorities have shifted, and mobile, Cloud, and virtual technologies are now more the rule than the exception. A consistent flow of intelligent data insights can help businesses quickly pivot in response to economic shifts.
In this new reality, data can help accounting firms and other organizations understand the current climate and make predictions about their future customer base; arm their teams with the necessary insights to quickly respond to shifting client needs; and successfully manage teams across the organization. To plan for economic recovery, today’s CFOs must be agile and adaptable: able to quickly respond to changing market trends, resource availability, and operational issues that arise, an Accounting Today article notes, and Big Data can assist in that. “Organizations that invest in data acquisition, performance planning and AI will have the optimal opportunity for a swift recovery.”
Accountants are transitioning from in-person to remote capacities to complete key responsibilities such as audits, tax meetings, and consultations. They’re also using Big Data to enhance the virtual workplace and help clients complete tasks that have been pushed to the forefront, such as projecting cash flow; revising budgets; determining how to better use technology; and increasing remote capabilities to shift their workforce, accounting, and billing process to fit a work-from-home environment. They’re also helping essential businesses that are scaling at an unsustainable pace to manage their growth.
Implementing Big Data Into Your Organization
The process of implementing Big Data is a challenge for many organizations, though those who have successfully implemented strategies around it are seeing organizational performance improvements.
Using Big Data effectively as an organization is about much more than simply buying technology, Strategic Finance writes. Organizations must put the right strategies into place to use the data and act on the insights they find as a result. “To be truly data-driven, an organization must have strategies in place to ensure everyone is trained on the technology, uses it appropriately, and understands and reports results based on it.” In today’s climate, businesses must strike a balance between conducting robust Big Data training and streamlining efforts to maintain agility amid an economy in crisis.
Four key elements must be present for organizations to successfully implement Big Data, according to a Bain & Company survey:
- Data-savvy talent
- State-of-the-art tools
- Quality data
- A supportive organizational culture
More than half (56 percent) of executives surveyed said their organization didn’t have the capabilities to develop deep, data-driven insights. Many companies are organizing their departments and teams in new ways to facilitate Big Data and analytics, by becoming more blended and much less compartmentalized. Successful data teams are building necessary capabilities by combining teams with different but overlapping data, business, and technical skills, who can effectively collaborate and communicate. The prevalence of the Cloud and virtual software is helping teams learn to align and share data in new and interesting ways.
Using Big Data to Find the Right Talent
As technology advances, many positions, including accounting roles, will demand a wider and more sophisticated mix of skills. Accounting professionals need to focus on developing their skills to keep up with the demands and capabilities of Big Data. Many colleges and universities are taking steps toward better preparing students for the influx of Big Data in the workplace. Austin Peay State University’s College of Business, for example, redesigned its advanced technology for accounting class to better align with the industry’s growing need to interpret and analyze big data. Under the new curriculum, students learn about Advanced Excel, Big Data Analytics and Microsoft Power BI.
For accounting firms and other organizations that hire accounting professionals, getting the right people in place to fill emerging gaps and respond to evolving business and client priorities is an important component of effectively using Big Data to compete in today’s market. As the nature of many roles in the labor market continue to shift due to emerging economic and business needs, companies will need to evaluate the structure of their current team dynamic to determine whether they have the right mix of skill sets and identify any new gaps. Big Data plays a vital role in collecting and evaluating the large quantities of data involved in making these kinds of determinations in the performance management process.
Ensuring that you have the right mix of talent is an integral part of a successful Big Data strategy, and this may include hiring new graduates who are more likely to have a data analytics background, as well as training current accounting employees to grow their skill set in this area. It will also likely mean reaching out to trusted partners to help you seamlessly identify and hire candidates with the right skills to fill your current or anticipated talent gaps. The realities of today’s economy are opening up availability for more talented accounting professionals with a robust data analytics background, and companies that work to identify future needs now will be on a path of growth in 2020 and beyond.