How we will learn to love big data in 2018
Leading futurist and keynote speaker Ross Dawson, who regularly consults to accounting, finance and banking bodies, spoke with Chris Sheedy about the single greatest opportunity that the future holds for accountants.
There are a lot of reasons to be happy about putting 2017 behind us. It’s the end of fidget spinners, for one. We can also wave goodbye to dabbing. And of course, there are no more clowns lurking menacingly in the sewers.
But from an accounting point of view there is still a spectre on the horizon in the form of technologies such as blockchain. However, there is a more positive way to look at 2018’s potential technological developments and it highlights the enormous opportunities they offer.
“We have seen major shifts in the accounting profession, both in the nature of what accounting is and also in the way services are provided,” said Ross. “This has created changes in the structure of accounting firms and the way that accounting is carried out internally. But more importantly the drivers of these changes, such as artificial intelligence and machine learning, have improved the way that accountants can bring value to their clients.”
How do we focus on what to measure?
In the past, Ross said, accountants have measured financial transactions. Technology and data, however, have combined to offer businesses so much more. Impact can be reliably measured, as can engagement, influence, customer satisfaction and churn.
Loyalty, innovation metrics, sales trends, customer behaviour and product performance can also be measured in real time. Various types of market research can be carried out without subjects being aware that they’re taking part.
There are literally billions of data points that can drive the ability to innovate, to experiment and to grow revenue.
“Think of the way a lean start-up works. They start with an experiment, measure precisely what happens, and use the results to learn and improve what they’re doing, iterating towards better results. Large business are now also able to adopt this kind of data-intensive approach to business,” he explained.
“Imagine that you’re a retailer and you begin to measure the time of day that specific types of items were sold. You also have equipment that monitors the eye movement of customers as soon as they walk into the store.
“Gathering these and many other pieces of data while you experiment with different layouts allows you identify precise actions to increase sales and the next day you make the change, moving the item to a higher shelf at a specific time of day to catch the customer’s eye more quickly. There are literally billions of data points that can drive the ability to innovate, to experiment and to grow revenue.”
What does this have to do with accounting?
The data, metrics, numbers and statistics are all part of the natural environment in which chartered accountants exist. Data analysts claim this field as their own, but they do not have anything like the general business knowledge that is drilled into CAs from day one. They also don’t have any of the reporting expertise that accountants have boasted for decades – systems and processes that offer real meaning to management teams.
That sense of being overwhelmed, however, simply indicates that the data is being approached from the wrong angle.
“Accounting becomes a true business intelligence function,” emphasised Ross. “You can show the P&L on the balance sheet, but you can also show a report on specific analyses of millions of data points that clearly show exactly where you need to invest in order to increase sales, or the precise changes that must be made to increase customer loyalty, or the hottest trends over the next few years according to current behaviour.”
He hates the term ‘big data’ because it scares people off. There is so much data out there that it’s easy to be swamped. That sense of being overwhelmed, however, simply indicates that the data is being approached from the wrong angle.
The secret to using data for business advantage
Accountants have always had more data than they need, but they also have the ability to focus only on the numbers that answer a particular question. That is the secret to success in the current environment of data overload.
Data is the single most important ingredient of good decision making in business today.
“I believe the starting point to gathering the right data is to ask what decisions the business needs to make,” he said. “What decisions can the business be better at making? What decisions will bring true value? Then you seek out only the data that helps to answer those questions, figure out how to analyse it and where to cross-reference it, then communicate it in a way that is meaningful to decision-makers, often in powerful visual formats.
“Data is the single most important ingredient of good decision making in business today. Now that we have more of it, and so much more that can be measured, CAs are in pole position to be the masters of this exploding data world, helping directors and executives to situate their businesses for success in a rapidly changing world.”
About the author
Chris Sheedy is one of Australia’s busiest and most successful freelance writers. He has been published regularly in the Sydney Morning Herald, Virgin Australia Voyeur, The Australian Magazine, GQ, In The Black, Cadillac, Management Today, Men’s Fitness and countless other big-brand publications. He is frequently commissioned to carry out copywriting and corporate writing projects for organisations, including banks, universities, television networks, restaurant chains and major charities, through his business The Hard Word.