The biggest asset you might not know you have

Bernadette Starzee, BridgeTower Media Newswires

Every company generates data, and that data can be used to help businesses gain a competitive advantage. But while some firms have established a system to collect and analyze data, others don't know how to begin making this asset work for them.

"There is so much data being created in our world now from sensors that track activity to social media to call centers," said Nathan Weise, a consulting supervisor at Grassi & Co., a Jericho-based accounting firm. "The concept of big data is taking all this information and finding ways to harness it to help companies make more strategic decisions."

Of CFOs surveyed for a report by the American Institute of Public Accountants and the Chartered Institute of Management Accountants, nearly all (87 percent) said that big data is going to change the way business is done over the next decade. But one in three (32 percent) said their organization does not have the skills needed to make use of new and growing volumes of data.

The biggest challenge is bringing data together from different databases and business silos, cited by 62 percent of respondents. Others mentioned problems with ensuring the business captures reliable good-quality data in the first place (51 percent), extracting insight from non-financial data (46 percent), ensuring insights gained from data are used to improve performance (43 percent) and identifying meaningful trends and insights in a mass of data (39 percent) as major issues.

Many large and now midsized accounting firms are providing consulting services to help companies harvest data and use it to their advantage.

"One of the things that I am constantly talking to my clients about is identifying the data assets that they have already," Weise said. "Companies are generating data internally every time they have transactions: customer data, inventory data, financial data." Then there's online data such as the number of people that visit the company's website and how much time they spend on different pages as well as information that can be collected from social media and email marketing campaigns. "Companies are generating data, but they're not always capturing it to analyze it for decision-making purposes. I talk to clients about setting up a data strategy, defining what their goals are and helping them reach their goals."

The goals vary widely by company and industry.

Online retailers, for instance, might look to identify potential customers' preferences based on parameters like what they click on, how long they spend on each page and prior purchases to recommend products they might like.

A law firm's managing partner might look at internal metrics like how attorneys and staff members spend their time to help drive the trajectory of where he or she wants the firm to go, Weise said.

Sensor data is growing exponentially, Weise said.

"The sensors that are put into everything from escalators to cars allow manufacturers to identify trends to know when their machinery is about to fail, in order to minimize downtime by being proactive rather than reactive with regard to repairs," he said. "For instance, if you have multiple assembly lines doing the same thing, data can be generated to help you identify when a motor is getting hotter than it should in the standard course of business, and a short is about to happen. Being proactive can save the manufacturer downtime, instead of having it break down in the middle of a manufacturing run."

Real estate firms are constantly generating data, such as rates paid by tenants in different and comparable areas, which they can analyze to develop competitive pricing. For construction firms, "the biggest expense is the labor, but very often the data that can be used to figure out ways to make operations more efficient are sitting in paper time sheets or Excel documents," Weise said. "By establishing data points and taking advantage of mobile data capture tools in the field, these firms could look at ways to increase productivity and efficiency to be more profitable."

Companies like Amazon and Google have invested a fortune in developing data tracking technologies over the last decade. "The technology is now available to middle-market companies, without the high price tag," Weise said.

According to the AICPA/ CIMA report, there are five steps to creating a data-centric business. The first is to ensure you understand what new data would be relevant to your business model and competitive position. Next is assessing which data initiatives are already in place in the business. Companies then need to identify "potential quick wins" or "small-scale proof of concept projects." Next, companies should conduct a formal data project to develop a related strategy, and finally, they should build on this initiative to start developing a data culture.

"When you move in the direction of being a data-driven organization, this needs to be driven from the top of the company there has to be executive buy-in and extended throughout the organization," Weise said.

Published: Tue, Aug 07, 2018

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