Data analysis needs to improve

How business challenges are creating opportunities

The challenges businesses face

There is a lack of people with the advanced analytical skills needed to be data scientists.

Good data governance and data management are vital — otherwise, diverse practices and systems across different business units can make a large organisation’s data architecture very complex and data sets incompatible. Analysis based on such data can be misleading and discredit the analysts.

Data tends to belong to whoever owns the processes and activities that generate it. Human nature means that if these owners report on it, the analysis is likely to be flattering. There is a clear need for the finance discipline’s professional objectivity and validation.

Budgets are still important in setting expectations — but they’re subject to gaming and the level of detail in their preparation can be spurious. Driver-based rolling forecasts provide a more reliable and timelier basis for performance management.

The drivers of value in most businesses are intangibles. There is a need for metrics, or quasi measures, that can help to monitor, manage and develop the intangibles that
drive value.

Too often, management is based on financial measures about outcomes. This is like painting by numbers. A management accountant’s commercial mindset has
more flair.

How management accountants can seize the opportunity

The planning and control cycle is often too cumbersome. The strategy > operating plans > budgets > reporting > analysis > forecasting phases need to be better aligned. This would enable better data planning including prior identification of the data that must be captured and curated properly to ensure it is fit to inform decision-making and performance management.

The FP&A functions are often so busy gathering data and producing standard reports to support 'business as usual' that management accountants can fail to raise their game and achieve their potential. New technologies can streamline this reporting on dashboards, enabling business unit managers to interrogate and conduct analysis.

Because data scientists are such a scarce resource, it can make sense to centralise them in multidisciplinary teams within finance, enabling their expertise to be better leveraged.

Management accountants are well-positioned to work alongside data scientists. They can help to frame the business issues to be addressed and work with IT professionals to ensure data is made available for analysis.

Management accountants can also work in partnership with business managers, cascading the CFO’s influence throughout the business. They are well positioned to help ensure that insights gained from Big Data are applied in how the business is managed.

“Management accountants are well-positioned to work alongside data scientists.”

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How management accountants can enable better business decision-making with Big Data

What’s next: improving performance through business partnering
When it comes to Big Data and its analysis, business partnering is the area of greatest opportunity for management accountants. The Association’s ongoing research to update the professional syllabus shows the roles in data that employers are most keen for management accountants to take are not those of information technologists or of data scientists.

Rather, they require them as champions of evidence-based decision-making. That way, they’ll help to translate analytical insights into commercial insights which they’ll ensure are applied at business-unit level to improve the organisation’s prospects and performance.
Opportunity to learn more
Management accountants should be alert to the potential in all the data sources available to the business. That way, they can liaise with IT professionals, data scientists and business-unit managers as information brokers who ensure decision-making and performance management are properly supported.

Their roles give management accountants a broad overview of the business and the professional objectivity to be able to challenge assumptions or assess evidence.

Some, having an understanding of the business and its systems and being quantitative by nature, may take the opportunity to change careers to become data scientists. Others may prefer to develop their careers as project managers, change managers or IT professionals.

However, our discussions with employers clearly show that the biggest opportunity for management accountants lies in their combination of accounting and analysis skills with business understanding to support value creation as business partners.

Through the Association, the combined strength of the AICPA and CIMA, we are in a stronger position to help members prepare for the digital age. This gives you the opportunity to learn more about digital technologies.