I hear many owners say "My business too small for big data”. Ironically, the size of the data is the least important aspect for business improving decision-making.
Business owners, irrespective of the size of their organisation, are making decisions on big data. Businesses of all sizes generate a significant amount of non-financial unstructured information For example, GPS position data from mobile phones, temperatures from sensors, free-form text in questionnaires, website customer interactions, social media conversations and video from security cameras.
The hallmark of big data
The hallmark signature of this big data in this context is that it represents the non-financial information (NFI) occurring in between transactions. Since the Renaissance, humans have been diligently capturing and recording financial transactions using double entry bookkeeping and accounting systems, The NFI has not been collected or utilised.
The representation of the current business is transactions (sales and operational indicators), but the future situation depends on human empathy and relationships, represented by the likes of user-generated content regarding the use of brand products (eg via Twitter), ratings (eg via TrustPilot), reviews (eg TripAdvisor), one to one conversions, distress signals from customers (via Customer Service Video, Voice or Text analysis) and geolocation of customer activities (eg via Mobile Phone GPS).
..and that's before you consider the Internet of Things and all the physical sensor information available
But how does this impact the financial state of affairs? Consider a hotelier. She pays attention to rankings changes on TripAdvisor, as this impacts her future revenue. She could leverage that big data to anticipate a change in demand for rooms and take action. Rather than waiting for financial statements from her accountant before taking action on the revenue discrepancy.
The democratisation of data
Increasingly, this phenomenon of using data held outside of businesses to provide predictive capability in advance of actual events or publication of financials represent the democratisation of data.
The democratisation allows Cloud Accounting to gain access to data to help you make data-driven business improvement decisions. By free we mean very little or literally no investment for the data.
Big data for competitive advantage
Chartered accountants can leverage big data to gain competitive advantage over other professionals. At Cloud Accounting NI, we integrate big data into the financial performance measures we regularly provide to businesses.
For example, a website of any business is a natural starting point. A decrease in online customer visits compared to a previous period is a potential indicator of a future drop in sales. Google Analytics reporting helps provide visibility into sales well before a sales transaction entry is recorded. Or indeed lost to a competitor.
We have seen NFI (non financial information) and financial accounting data work together to better benefit businesses.As accountants we provide a more holistic service for businesses to provide predictive capability.
Please get in touch with us if you feel you can benefit from predicting the future.