Big Data is now more than just hype. The companies who have fully implemented it and are making decisions based on their data are now the ones who are making the biggest moves in the markets.
There are opportunities for the use of Big Data and Analytics across the entire enterprise, but none more so than in the finance function.
Yet many companies have not fully implemented this, meaning that it is yet to reach its full potential in finance.
One of the main reasons that finance would benefit so much from Big Data is that the finance function works across the entirety of the organization, so the data that can be pulled to assist with the finance team can come from multiple areas.
The question is, what kind of benefits can Big Data give to finance?
Rolling forecasts are not a new idea, they are something that most will have heard of and the majority of progressive companies have already implemented. This allows them to change their forecasts within certain timeframes.
With the use of Big Data, it becomes becomes possible to create continuous forecasting. This means that rather than adapting a forecast for the next six months based on data from the last 3 months, the forecasts can be made with data as it is coming in.
The power that many Big Data forecasting technologies have, allows this real time analysis to take place. Where rolling forecasts could take weeks to create, these can be done in seconds using effective algorithms and powerful systems.
The benefits of this are obvious, rather than being hit by a sudden warning of what could be coming, it allows companies to see in real time what is happening, then adjust accordingly to either avoid problems or maximize opportunities.
At the moment many financial reports work purely with numbers. This could be ‘the sales team are selling well this quarter’ or ‘our outlay is similar to previous years’. It does not take into account the why behind these trends.
With the deeper insight that having terabytes of data brings, it is possible to not only see that something is happening, but why.
This means reports with far more insight that give considerably more information to those who need it. It is far more useful for companies to see why something is performing the way it is, then either change it to improve or adopt a similar approach across other departments.
Better Investment Decisions
If we have learnt one thing from the financial crash of the last 10 years, it is that investments need to be made on solid grounding. They need to be looked at in detail in order to make sure they are what they seem. We have seen from companies like Enron and schemes like Bernie Madoff’s that in depth data is key to being able to make correct decisions on investments.
Big Data has allowed companies to dig deeper and take a more holistic view of all aspects of an investment. From the way they are discussed on social media, to the accuracy of their forecasts, it can all be incorporated through the use of data mining, allowing for better investments with less risk.
Well Rounded Skill Set
In addition to creating opportunities for finance departments, it also means that those working within it are required to have a more rounded set of skills, rather than the tradition finance centric requirements.
This means that they not only are they required to have the basic accountancy skills like normal, but they also need to be able to analyze data and associate it with other areas of the company. This translates to knowing more about the company as a whole and having more flexible skills that can translate across various parts of the business.
It is this element that will cause the biggest changes within finance departments, as those working within the department will need to adapt their skills accordingly and when looking for new recruits it will be important to look for these kinds of skills as much as the traditional ones.
Overall, we are likely to see big changes when the adoption of Big Data within finance departments hits its peak. These will allow finance departments to have a considerably larger impact on the rest of the company as well as being able to perform better internally.