
“Big data” is a phrase we’re increasingly used to hearing. In business terms, it’s often associated with online giants such as Amazon, Facebook, and eBay. At their core, these businesses each have a platform on which huge volumes of data are stored and processed.
This data is analysed to highlight trends, identify correlations, and ultimately increase competitive advantage through targeting and segmenting. This big data trend has emerged due to a number of factors: two key drivers are the dramatically reduced cost of data storage, and increasing web transaction volumes driven in part by the number of connected mobile devices. Any FD can increase the value they bring to their business by applying some big data thinking to the way that they work and think about their role. All businesses have multiple data sets – in the general ledger, in order processing and billing systems, and in operational systems for example. Powerful insights can be generated by bringing together data from different sources and analysing it in new ways. This is true in any business – whether or not it happens to have a high-volume data platform at the core of its operating model. FDs are in a unique position to do this work – they have the established functional strengths of numeracy, accuracy, discipline and independence; they have a solid understanding of the drivers of the business and how its internal functions interact with each other; and they have a key role in measuring how the business is doing. From this starting point, FDs can then use big data thinking to bring unique insights to the management team, and ultimately improve the performance of the business. A great place to start is to think about four dimensions of analysis and how they can be developed using this approach:Management information
Specific questions
There will always be ad hoc questions in a business arising from particular issues or changes in the market. Why are our gross margins lower in this particular period? How have we increased unit volumes compared with the previous year? How has our productivity changed over time? Combining data from different sources can be useful in addressing these questions. Once the analysis has been prepared, think about whether it really is a “one-off” analysis, or whether it should be incorporated into ongoing management reporting.Control reports
A big data approach can be particularly useful in spotting exceptions or outliers. Are these errors that need correcting, and if so how can we prevent them re-occurring? Are they genuine one-offs because of unique circumstances? Do they highlight opportunities or risks to the business that have so far gone unnoticed? Certain exceptions could for example point towards a potential new line of business, or a loop-hole that can result in a loss being made on certain products.Projects
Should we enter or invest in this new territory? Where should we be establishing a new location? Should we buy this piece of equipment, or find a service provider and outsource the work instead? Once again, combining data from multiple sources is key to getting a complete picture of all relevant factors. Read more about big data:- Big data and the SME
- Why big data isn’t living up to the hype…yet
- 4 ways the European Commission is driving big data
Nick Williams has been a finance leader with private-equity backed, high-growth technology businesses including telematics group Masternaut.
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