Organisations have the potential to amass data from multiple sources about so many topics these days: their transactions, processes, employee efficiency, customer habits, even the impression they make on social media.
But the ability to collect mounds of information shouldn’t be confused with the ability to analyse and act on it. The point at which data and decision-making intersect is where accountants can play a critical role.
How finance turns information into action starts with getting comfortable with a data-driven culture, Scott Adair, CPA, CGMA, the CFO at Rochester-Genesee Regional Transportation Authority (RGRTA) in New York, said in an interview. That shift involves learning data tools but also continuing to learn about the business through conversations with other departments.
Finance can be valuable in interpreting data because it tends to have a complete picture of an organisation, Rose Cammarata, CPA, CGMA, said in an interview.
“It’s important to have finance to put context around the data,” said Cammarata, vice president and controller at Mattersight, a Chicago company that uses data and behavioural analytics to help companies have better conversations with customers. “We know what our most profitable lines of business are. We know where there might be a concentration of customers. We know these things that might not be entirely apparent to a person just digging into the data.”
Here are four ways finance can help improve an organisation’s approach to harnessing its data:
1. Determine the best metrics to track. Organisations shouldn’t embark on a data-analysis initiative because others are doing the same. They should develop goals for how the data will be used, and those goals should be small at first. The RGRTA has streamlined maintenance costs by installing sensors in its fleet of about 350 buses. An alert is sent when a bus is due for preventive maintenance. The system “triggers us to say, ‘OK, bus 919 needs to come in for service tonight,’ ” Adair said.
Cammarata is focusing first on improving the company’s month-end close. That involves not only looking at structured data from the company’s enterprise resource planning system but also talking with other departments. “System data doesn’t really tell a story; it doesn’t tell you why,” she said. “We had to go looking for context.”
2. Make sure the data are “clean.” Even data that come from sophisticated software might have flaws. Adair recommended making sure the information received is accurate and relevant. “You’ve got to make sure that data going in is scrubbed and clean,” he said. “You can very easily make bad decisions if you’ve got bad data.”
“You can’t follow data blindly,” said Eric Hansen, CPA, CGMA, partner and COO at BKD LLP in Springfield, Missouri. “You need to take the data, validate it, and use good intuition from a savvy and experienced business perspective to come up with good answers.”
3. Use the full functionality of available tools. Insight is sometimes a few keystrokes away but right under the nose of an organisation. Why? Because not every employee takes the time to learn about software, the same way many consumers use only a fraction of the features on smartphones. “That’s one place where accountants could get more data to analyse, by looking at what systems are in place, then using them to their full potential to collect data,” Cammarata said. “Most of us don’t even scratch the surface.”
4. Don’t be scared by the term Big Data. For small or midsize entities, Big Data can sound daunting, Cammarata said. “You don’t need a lot of data, or a data centre, to do data analytics,” she said. “We all have access to data, and data analysis can improve decision-making.” Data analysis has been in practice for many years, she said, well before companies were able to store and collect massive amounts of information.
Editor’s note: Adair and Hansen were among the panellists in the discussion “Technology, Data Analytics, and the Professional Accountant” on Sunday at the American Institute of CPAs’ spring Council meeting in New Orleans, Louisiana.
—Neil Amato (email@example.com) is a CGMA Magazine senior editor.