Big data: its power and perils - ACCA

40 Pages·2013·2.04 MB·English

Accountancy Futures Academy
Big data: its power and perils
About ACCA
This report sets out to give a
ACCA (the Association of Chartered Certified balanced picture of the impact of
Accountants) is the global body for professional
big data on the accountancy and
accountants. We aim to offer business-relevant, first-choice
qualifications to people of application, ability and finance professions in the coming
ambition around the world who seek a rewarding career
5 to 10 years.
in accountancy, finance and management.

We support our 162,000 members and 428,000 students
throughout their careers, providing services through a It is framed by the question, ‘How
network of 89 offices and centres. Our reputation is
will big data affect businesses over
grounded in over 100 years of providing world-class
accounting and finance qualifications. We champion the next 5 to 10 years, and what
opportunity, diversity and integrity, and our long
opportunities and challenges will it
traditions are complemented by modern thinking,
backed by a diverse, global membership. By promoting create for the accountancy
our global standards, and supporting our members
profession?’
wherever they work, we aim to meet the current and
future needs of international business.
As a piece of ‘futures thinking’, it
About IMA®
does not claim to predict the
IMA® (Institute of Management Accountants), the future. Instead, it identifies and
association for accountants and financial professionals in
explores the big data trends likely to
business, is one of the largest and most respected
associations focused exclusively on advancing the affect the accountancy profession
management accounting profession. Globally, IMA
supports the profession through research, the CMA® globally in the coming years.
(Certified Management Accountant) program, continuing
education, networking, and advocacy of the highest
ethical business practices. IMA has a global network of
more than 65,000 members in 120 countries and 200 local
chapter communities. IMA provides localised services
through its offices in Montvale, N.J., USA; Zurich,
Switzerland; Dubai, UAE; and Beijing, China.
THE ACCOUNTANCY FUTURES ACADEMY
The Accountancy Futures Academy contributes to Faye Chua
ACCA’s research and insights work with powerful visions Head of Future Research, ACCA
of the future. It provides a platform to look forward, to
tune into the emerging trends and discussions in the Faye Chua is ACCA’s head of future research
global business and policy spheres and the latest reforms and leads ACCA’s global research and
facing the world of finance. insights work that focuses on the future
directions of business and the accountancy
profession across a range of subjects. She
By looking to the future it helps the profession stay at the
has over 10 years of experience in research
cutting edge. The Academy’s work fosters fresh thinking
across different sectors of the economy and
and innovative discussions, identifies the barriers to and
has worked in North America, Asia Pacific
facilitators of tomorrow’s successes, and identifies the and Europe.
potential strategies that will enable business and finance
to navigate the choppy waters that lie ahead.
www.accaglobal.com/futures
© The Association of Chartered Certified Accountants,
N2ovember 2013
Contents
Acknowledgements 4
Foreword 5
Executive summary 6
1. Introduction 8
2. Big data and the future of business 10
3. Big data and the future of accountancy: opportunities and challenges 14
4. Big data and the future of accountancy: imperatives 25
5. Conclusion 30
References 32
Appendix: Contributors to this report 33
BIG DATA: ITS POWER AND PERILS 3
Acknowledgements
ACCA and IMA would like to thank all the individuals who have contributed to this research, either by taking part in an expert
interview and/or attending the roundtables.

See Appendix for the full details of contributors.
This report was written for ACCA and IMA by The Futures Company.
4
Foreword
‘Big data’ has become a business buzzword, and its promise and pitfalls are gaining
increasing attention from business and the media globally. The vast quantity of
data collected, stored and transferred by new technologies is reshaping priorities
for many businesses, and the development of new analytical tools is aligning with
other deep shifts in the way that companies work to transform the business
landscape
ACCA’s Accountancy Futures Academy has long had the rise of big data on the
horizon. In 2012, ACCA and IMA published 100 Drivers of Change for the Global
Accountancy Profession, a report that highlights big data as one of the key factors
shaping the future for accountants and finance professionals over the next decade.
Subsequently, the Accountancy Futures Academy has undertaken this new research
that explores in depth the opportunities and challenges big data will present the
accountancy and finance profession.
As business is transformed by the impact of big data and big data analytics, so the
role of finance professionals will change as well. The paradox of this new
technology is that it has the potential to commoditise some traditional aspects of
Ng Boon Yew FCCA
the profession, but it also provides the opportunity for finance professionals to
Executive chairman
move ‘upstream’, shifting to a more strategic decision making role within
businesses. As big data accelerates the process by which business reimagines itself,
the accountancy profession will have to reinvent itself.
Accountants and finance professionals are well placed to take an active role in big
data by providing a new and critical service: ‘distilling’ vast amounts of information
into actionable insights. In addition, professional accountants are the ethical heart
of the company and they can help act as custodians of non-financial datasets and
set quality and ethical standards for the information used in making strategic
decisions. The role of accountants will become increasingly important as more
companies look for ways of developing new products and services from data they
generate and own, particularly within the context of growing concerns around
privacy and ethical data usage.
The speed at which big data will be adopted by the accountancy profession is
uncertain. This report, however, identifies those within the profession at the
forefront of exploring big data, and through them we can see a glimpse of the
future.
BIG DATA: ITS POWER AND PERILS FOREWORD 5
Executive summary
Big data can offer seek ways to use the resource of big OPPORTUNITIES AND CHALLENGES
data strategically and unlock the
accountants and
insights that transform companies – The paradox of new technology is that
finance professionals without threatening their relationships it offers the chance to replace the value
with customers or exposing themselves lost as it commoditises traditional skills.
the possibility of
to unacceptable risks. The market for Advances in automation, such as
reinvention, the chance big data analytics is, unsurprisingly, self-service data retrieval, are freeing
growing rapidly, forecast to reach accountants and the finance function
to take a more US$23bn by 2016 (IDC 2013). from the more routine aspects of
internal reporting and compliance work
strategic, ‘future-facing’
The open-source software movement – and creating opportunities for them
role in organisations. and the software industry have to alter their profile in business radically.
developed solutions such as new
programming models and new suites of Trained to gather, analyse and
data tools.1 Combined with increases in benchmark information and to use data
The transition, however, will not be easy. processing power, these solutions make in modelling and forecasting,
it possible to synthesise vast amounts accountants and finance professionals
The accountants and finance of information with previously can provide a new and critical service:
professionals who differentiate unimaginable speed and accuracy, but making big data smaller, ‘distilling’ vast
themselves will be those who develop they are only part of the answer. amounts of information into actionable
new skills and new ways of thinking, and insights. Responsible for the ‘integrity’
who form new collaborations and Managing big data effectively requires of reports and accounts, they can help
partnerships. the right people. act as custodians of non-financial
datasets and set quality and ethical
The vast amount of data continually This has far-reaching implications for the standards for the information used in
collected, stored and transferred by accountancy and finance professions. making strategic decisions and for that
technologies is changing the priorities sold to third parties. This role will
of businesses and posing important In this report, ACCA and the Institute of become increasingly important as more
questions for their leaders. How can Management Accountants (IMA) carried companies look for ways of developing
diverse, disparate and often amorphous out a desk-based review of literature new products and services from data
datasets be managed profitably and published on big data, and convened they generate and own, particularly
responsibly? three roundtables with leading within the context of growing concerns
accountancy and finance professionals around privacy and ethical data usage.
Get big data right and it will facilitate to consider the future implications of
ways of improving performance and big data for the profession. This was Big data offers the finance professional
productivity, and creating new wealth supplemented by a series of expert the possibility of moving into a more
for shareholders and stakeholders. Get interviews with big data practitioners strategic, proactive role in business. It is
it wrong and the result will be poor and early-adopter accountancy and important, however, to understand the
decisions, breaches to data security and finance professionals. realities of what it means: the
privacy codes, damage to opportunities are matched by the
organisational reputation and brand, This report examines in unprecedented challenges.
and destroyed value. depth the opportunities and challenges
big data presents the accountancy and To differentiate themselves in the
Data management is becoming a finance profession over the next 5 to 10 marketplace in the next 5 to 10 years
business-critical function as leaders years. and turn big data to their advantage,
1. The open-source movement is based on the idea that programming source codes should be shared. The Apache Hadoop framework, one of the best-known
big data solutions, was developed by an open-source community.
6
accountants and finance professionals A NEW PROFESSIONAL AGENDA Meanwhile, there will also be
will need to do three things. requirements to extract value from big
The opportunities and challenges data through advanced analytics – and
• Develop methods and services for suggest three imperatives in the next 10 to interpret the meaning of big data in
the valuation of data – and extend years, ie those of: ‘visual language’ that can be used in
their role in compliance and internal company dashboards, decision-making
control to the ethical and effective • developing new metrics ‘cockpits’ and information ‘hubs’.
stewardship of data assets.
• learning new analytical skills The accountants and finance
• Use big data to offer more professionals who succeed in the future
specialised decision-making • creating a visual language of data ‘art’. will form a bridge between data science
support – often in real time – and and data art, combining analytical skills
decide when data can most usefully Combined, these imperatives make up and sophisticated models developed by
be shared with internal and external a new professional agenda. mathematicians and statisticians with the
stakeholders or ‘monetised’ as new skills of data art and data ‘storytelling’.
products. Accountants and finance professionals
must find ways not only to measure big They will collaborate closely with the IT
• Use big data and its associated tools data as an organisational asset but also and information management
not only to identify risks in real time to use it as a measure of organisational departments in cross-functional and
and improve forensic accounting but performance. The trend towards multidisciplinary teams: the future could
also to evaluate the risks and integrated reporting (IR) and the inclusion see the emergence of a new
rewards of long-term investment in of non-financial ‘capitals’ in company professional ‘hybrid’, the chief financial
new products and new markets. reports and accounts makes adopting technology officer (CFTO) or chief
this approach all the more urgent. It will financial information officer (CFIO).
increasingly be necessary to combine
‘hard’ financial data with ‘softer’ and Most importantly, they will form
non-financial datasets to provide the partnerships with senior leaders in the
bigger picture of performance. development of strategy and the
management of risk – and provide a
service critical to the future of business.
Figure ES1: New accounting and finance professional hybrids
FINANCE
New
professional
hybrids
TECHNOLOGY INFORMATION
BIG DATA: ITS POWER AND PERILS EXECUTIVE SUMMARY 7
1. Introduction
Big data has become a The amount of data that is generated As business is transformed by the
and stored is increasing rapidly, even impact of big data and big data
business buzzword. Its
exponentially. It may be doubling every analytics, so the role of finance
promise and its pitfalls two years, according to one estimate professionals will change as well. Some
(IDC 2011). At the same time, new skills that were once valued will become
are gaining increasing
advanced analytical techniques allow commoditised, as has already
attention in businesses practitioners to connect and interrogate happened in other professions. Other
datasets that were once separate, if skills that were previously
across the world, as they existed as data at all. misunderstood or overlooked could
become more valued. In other words, as
business leaders come
The combination of new data and new big data accelerates the process by
to terms with the risks analytics is aligning with other deep which business reimagines itself, so the
shifts in the way that companies work, accountancy and finance professions
and opportunities it will
transforming the business landscape. will have to start to reinvent themselves.
mean for them. Organisations are becoming more flexible,
more fluid, more open: they are becoming The people who can see the patterns in
creatures of increasing complexity. the data, and who are able to translate
Figure 1.1: The impact of big data on business over the next 5 to 10 years
WESTERN EUROPE
51%
CENTRAL AND
EASTERN EUROPE
UK
52% 63%
US SOUTH ASIA
IRELAND (REP)
62%
47% 77%
GULF STATES
GLOBAL 76% MALAYSIA ASIA PACIFIC
63%
AMERICAS 62% MIDDLE EAST 76%
62% 74%
AFRICA AUSTRALIA
91%
69%
8
them into compelling strategic stories, Achieving widespread adoption in the METHODOLOGY
will find themselves at the heart of profession will demand new
21st-century business. capabilities, new metrics and new ways The research was carried out in three
of thinking. stages. The first, after an initial period
Accountants and finance professionals of desk research and a review of
have already spotted the potential of New types of data will throw up new existing evidence, involved the
big data. In the 2012–13 ACCA–IMA challenges as well: over the next development of a series of hypotheses
technology trends survey, 78% of decade, new standards for measuring about what big data means for the
respondents said that they expect and valuing data will be developed, future, supplemented by interviews with
widespread adoption of big data within with the inclusion of new and more experts.
the next two years (ACCA and IMA diverse datasets in reporting, modelling
2013). The same survey identified big and forecasting. There are less In the second stage, these hypotheses
data as the second most impactful measurable issues too, such as those were tested in workshops attended by
technology trend in terms of its concerning ethics and privacy. The big data experts, accountants and
potential to significantly reshape the debate about the impact and finance professionals, and held in
business and accountancy landscape implications of these has barely begun London and Singapore and (online) in
(see Figure 1.1 for scores by region). – but getting them wrong could prove the US.
to be explosive.
In the final stage, evidence and insights
This report, then, sets out to give a were brought together – to identify the
balanced picture of the impact of big key drivers of change and the key
data on the accountancy and finance themes for this report.
professions in the coming 5 to 10 years.
Figure 1.2: Expectation of It is framed by the question, ‘How will The report has four chapters. The first
widespread adoption of big data big data affect businesses over the next chapter provides an introduction to big
5 to 10 years, and what opportunities data, chapter 2 defines big data and the
and challenges will it create for the future of business, chapter 3 sets out
In 5–10 years
accountancy profession?’ As a piece of specific opportunities and challenges
(2%) Within
‘futures thinking’, it does not claim to for the accountancy and finance
the next
In 2–5 2 years predict the future. Instead, it identifies professions. The last chapter identifies
years (78%) and explores the big data trends likely some of the actions these professions
(20%) to affect the accountancy professions will need to take to ensure their
globally in the coming years. continuing value and relevance.
The research was jointly commissioned
by ACCA’s Accountancy Futures
Academy and the IMA, and carried out
by The Futures Company. It draws on
extensive international consultation
with experts both inside and outside
the accountancy profession.
BIG DATA: ITS POWER AND PERILS 1. INTRODUCTION 9
2. Big data and the future of business
Big data has the Nonetheless, the benefits will not be WHAT IS BIG DATA?
easily won. Datasets can destroy as well
potential to transform
as create value. They need to be Any analysis of the impact of big data
almost every aspect of effectively and expertly managed, and needs to start by defining what big data
they require significant investment from means. The term is commonly used, but
business – from research
companies. not commonly understood. It refers
and development to primarily to the vast amount of data
This section examines the risks and continually collected through devices
sales and marketing and rewards of big data in business. and technologies such as credit cards
and customer loyalty cards, the internet
supply-chain
and social media and, increasingly, WiFi
management – and to sensors and electronic tags. Much of
this data is unstructured – data that
provide new
does not conform to a specific, pre-
opportunities for growth. defined data model.
BOX 2.1: BIG DATA AND TECHNOLOGY REVOLUTIONS
The impact of big data on business is part of a deeper and more fundamental shift. Drawing on the work of Carlota
Perez, the technology and economic historian, one can identify a series of long-term (50–60 year) technology waves since
the industrial revolution, from canals and cotton in the late 18th century, through rail, steam, electricity, steel, oil, and
cars at the start of the 20th century, and information and communications technologies towards the end of it: a wave that
is continuing.
Perez observes that existing businesses need to integrate the technologies of the latest wave if they are to remain
competitive. Typically, this involves a process of business transformation. So, to take the example of the retail sector, the
department store was the creation of the third wave (electricity, steel and chemicals). During the fourth wave (oil and
cars) retailing shifted to edge-of-town sites and road-based distribution. Now, in response to the fifth wave (information
and communications technology), retailing is being transformed by the application of digital technologies, both in how it
engages with customers and in the way that stock is managed, monitored, and distributed.
The emergence of big data as a business issue can be seen as an expression,
Big data
more generally, of this transition. It also suggests, as a number of
interviewees noted, that as the impact of ICT on business is
5 Age of information and 1971
better understood, the term big data will fall out of use telecommunications
and will be replaced by words for more
specific technology-driven 4 Age of oil, automobiles and 1908
mass production
processes and applications.
3 Age of steel, electricity and 1875
heavy engineering
2 Age of steam railways 1829
1 Industrial revolution 1760
10