11000_The role of big data in finnish companies and the implications of big data on management accounting

THE ROLE OF BIG DATA IN FINNISH COMPANIES
AND THE IMPLICATIONS OF BIG DATA ON
MANAGEMENT ACCOUNTING
University of Jyväskylä
School of Business and Economics
Master’s thesis
2016
Jemmi Kuurila
Accounting
Supervisor: Marko Järvenpää
ABSTRACT
Author
Jemmi Kuurila
Title of thesis
The role of big data in Finnish companies and the implications of big data on manage-
ment accounting
Discipline
Accounting
Type of work
Master’s Thesis
Time (month/year)
June 2016
Pages
73
Abstract
Companies have massive amounts of data, which becomes valuable when analytics are
applied and information is extracted from it. Big data enables companies to base their
decisions facts instead of assumptions. The purpose of this study is to find out do com-
panies in Finland utilize big data and to what extent. Implementation, application areas
and experiences in decision-making context are under scrutiny. Additionally, this thesis
aims to find out the impacts of big data on management accounting. This study is quali-
tative in nature, but has a quantitative part. The chosen method is a case study and data
is gathered with a survey and five interviews.
Finnish companies are rather young in data utilization. Some companies do not use
it at all, whereas some companies are in early stages or the use is relatively wide. Com-
panies have variety of data, depending on their industry and focus areas. Companies,
who are customer centric, seem to utilize big data information more comprehensively
than others. Data is used both in operational and managerial level and companies want
to embed it to the whole organization. Most important application areas are forecasting,
improving efficiency, strategy, performance monitoring, CRM, marketing and sales.
There is unanimity over the importance of big data and companies are aware of the pos-
sible benefits. It is still seen less important than traditional accounting information. The
role of intelligence experts and data scientists is increasing its importance, but manage-
ment accountants and business controllers are still often seen to be most relevant to
management and decision-making.

Companies are often unsure how to utilize data and how to extract information and
turn it into valuable insights. It is challenging to find capable employees with both theo-
retical and practical knowledge. It has become highly important to have analytical skill
in addition to knowledge about business environment and its processes. Traditional
functions are in transition and some may disappear, analytics are needed in every func-
tion. Management accountants are seen to move closer to IT and analytics. They need to
move forward from traditional historical reporting to forecasting.
Key words: analytics, big data, decision making, digitalization, management accounting
Location University of Jyväskylä Library
TIIVISTELMÄ
Tekijä
Jemmi Kuurila
Työn nimi
Big datan rooli suomalaisissa yrityksissä ja sen vaikutukset johdon laskentatoimeen
Oppiaine
Laskentatoimi
Työn laji
Pro gradu -tutkielma
Aika
Kesäkuu 2016
Sivumäärä
73
Tiivistelmä
Yrityksillä on valtavat määrät dataa, josta saadaan analytiikan avulla arvokasta infor-
maatiota, jota yritykset käyttävät päätöksenteon tukena. Tässä tutkielmassa tutkitaan
miten laajasti suomalaiset yritykset hyödyntävät big datasta saatavaa informaatiota.
Kiinnostavaa on tietää miten kauan dataa on hyödynnetty, mitä käyttöönottoon liittyy
ja miten merkittävänä big dataa pidetään. Lisäksi tutkitaan big datan vaikutusta johdon
laskentatoimeen. Tutkimus on kvalitatiivinen, mutta siinä on myös kvantitatiivinen
osuus. Metodi on tapaustutkimus. Aineisto koostuu kyselytutkimuksesta ja viidestä
haastattelusta.
Osa suomalaisista yrityksistä on hyvin alkuvaiheessa datan hyödyntämisessä, osa
on jo pidemmällä. Osa yrityksistä on suunnitteluvaiheessa ja osa ei hyödynnä dataa
lainkaan. Tämä tutkimus osoittaa, että yritykset eivät ole hyödyntäneet dataa vielä ko-
vin kauaa, sen painoarvo on huomattu monien yritysten kohdalla vasta viime vuosina.
Dataa hyödynnetään sekä operatiivisella tasolla että johdon ja strategisten päätösten tu-
kena. Asiakaslähtöiset yritykset, jotka ovat suoraan kuluttajien kanssa tekemisissä hyö-
dyntävät big datasta saatavaa informaatiota eniten, sillä heillä on usein paljon dataa
saatavilla. Yritykset hyödyntävät sitä eri tavoin, riippuen toimialasta ja tavoitteista.
Merkittäviä osa-alueita ovat ennustaminen, strateginen kontrolli, toiminnan tehostami-
nen ja monitorointi sekä budjetointi. Myynti, markkinointi ja asiakashallinta ovat myös
merkittäviä osa-alueita.

Big datan merkitys on kasvanut vauhdilla viimeisen vuoden aikana. Nykytilan-
teessa tukeudutaan usein eniten perinteiseen laskentainformaatioon, mutta lähitulevai-
suudessa datasta saatavan ja ei-rahamääräisen tiedon merkitys korostuvat yritysten jo-
kaisella osa-alueella. Talousjohtajien työnkuvasta tulee IT-painotteisempi ja työtehtävät
tulevat sisältämään myös analytiikkaa. On tärkeää, että koko organisaatio toimii data-
lähtöisesti. Osaamisvaatimuksena on liiketoimintaprosessien ymmärtäminen käytän-
nössä sekä kyky tulkita tuloksia ja tehdä päätöksiä niihin pohjautuen.
Asiasanat: analytiikka, big data, digitalisaatio, johdon laskentatoimi, päätöksenteko
Säilytyspaikka Jyväskylän yliopiston kauppakorkeakoulu
4
TABLE OF CONTENT
1
INTRODUCTION ………………………………………………………………………………… 5
1.1
Background and topic
…………………………………………………………………. 5
1.2
Aim of the study, research questions and limitations …………………… 6
1.3
Previous research ……………………………………………………………………….. 8
1.4
Research approach ……………………………………………………………………… 9
1.5
Validity and reliability
………………………………………………………………. 10
2
THEORETICAL FRAMEWORK
………………………………………………………….. 12
2.1
Big data ……………………………………………………………………………………. 12
Definition ……………………………………………………………………….. 12
2.1.1
Big data technologies ………………………………………………………. 14
2.1.2
Before and after big data
………………………………………………….. 17
2.1.3
2.2
Big data in business processes and decision-making…………………… 18
Forecasting and planning ………………………………………………… 18
2.2.1
Marketing, sales and CRM ………………………………………………. 19
2.2.2
Business performance monitoring and improving efficiency
20
2.2.3
Management control ……………………………………………………….. 21
2.2.4
Challenges
………………………………………………………………………. 22
2.2.5
2.3
Implications of big data on management accounting and business
professions
…………………………………………………………………………………………. 23
3
RESEARCH APPROACH …………………………………………………………………… 26
3.1
Research method
………………………………………………………………………. 26
3.2
Data …………………………………………………………………………………………. 27
Survey…………………………………………………………………………….. 27
3.2.1
Interviews ………………………………………………………………………. 28
3.2.2
3.3
Analysis method ………………………………………………………………………. 29
4
EMPIRICAL FINDINGS AND ANALYSIS ………………………………………….. 30
4.1
Background information …………………………………………………………… 30
Survey…………………………………………………………………………….. 30
4.1.1
Interview ………………………………………………………………………… 31
4.1.2
4.2
Maturity and importance of big data …………………………………………. 31
4.3
Ownership, technology and methods ………………………………………… 36
4.4
Application areas ……………………………………………………………………… 40
Experiences from implementation and perceived benefits … 40
4.4.1
Challenges
………………………………………………………………………. 47
4.4.2
4.5
Implications on management accounting and professions ………….. 48
5
CONCLUSION AND DISCUSSION ……………………………………………………. 57
References ………………………………………………………………………………………………….. 62
APPENDICES
…………………………………………………………………………………………….. 65
5
1
INTRODUCTION
1.1
Background and topic
Over the past decade, the amount of data has been growing immensely, as well
as electronic form of it. In 2000, around 25 % of information was electrically
stored, whereas today the amount is 98 % (Cukier and Mayer-Schönberger,
2013). After digitalization, data is collected from everything around us continu-
ously. Companies have begun to realize the possibilities that come along gath-
ering data and analyzing it. Therefore, business analytics and the use of analyti-
cal tools have become a trend among large companies in the world (Chen,
Chiang & Storey, 2012; IBM, 2012). The technological landscape has emerged
and will continue emerging in the future transforming the landscape of busi-
ness (Hurwitz, 2013; ACCA & IMA, 2013, 8). This has led to a data-driven era of
business (CGMA, 2013).
Recently, both researchers and practitioners have shown an increased
interest towards data and its usage for management, decision-making processes
and strategy implementing (Hurwitz, 2013; Chen et al., 2012). The Association
of Chartered Certified Accountants (ACCA & IMA, 2013) raises the question of
how diverse, disparate and amorphous datasets can be managed profitably and
responsibly. Companies have vast amounts of data and the question is, can it be
used and made usable in business? It is said that along new big data solutions
information becomes most essential capital for companies (Talouselämä, 2013).
Big data has potential to dramatically change the way companies do busi-
ness and organizations use their data (CGMA, 2013; Hurwitz, 2013). Big data is
being generated by everything around us continually. Therefore, it generates
the possibility to develop data driven businesses that gather, store and analyze
data for improving business performance and profitability as well as to solve
business challenges and produce innovation. According to IBM (2012), oppor-
tunities to utilize big data technologies to improve business performance and
decision-making exist in every industry. If successful, big data enables means to
improve performance and productivity, in addition to increase revenue for
shareholders and stakeholders (ACCA & IMA, 2013).
Gartner (2015) defines big data as “high-volume, high-velocity and high-
variety information assets that demand cost-effective, innovative forms of in-
formation processing for enhanced insight and decision-making.” Data can be
found in different forms and sources for instance social media, transactions and
sensors, as well as information systems such as ERP-systems. The problem
among enterprises nowadays is to find the precise information to meet the
needs of the company. The core idea with big data is to find relevant data and
extract information out of it to support decision-making. According to IBM
(2012), big data technologies enable organizations to extract insights from data
with previously unachievable levels of sophistication, speed and accuracy.
6
Big data has been studied comprehensively during the past years. Big data
exploitation has become an increasingly important prerequisite for competi-
tiveness among companies in different industries (Ministry of Transport and
Communication in Finland, 2014). Therefore, big data solutions can create im-
mense possibilities in various businesses processes and become competitive ad-
vantage if applied correctly (ACCA & IMA, 2013). Big data no longer exists only
in the realm of technology; rather, it has spread to variety of processes and or-
ganizations in different industries and even societies (Schlegel, 2015, 12). Ac-
cording to Moorthy et al. (2015), big data has emerged to nearly every aspect of
society. According to them previous case studies show that big data is proven
to be useful for instance in healthcare, urban planning, environmental modeling,
systemic risk analysis and energy saving.
The state of big data has not yet been studied widely in Finland. In 2014
and 2013, Finland was ranked number one in Networked Readiness Index, as it
has an outstanding digital ICT infrastructure (World Economic Forum, 2014).
Similarly, Ministry of Transport and Communication (2013) state that Finland
has knowledge and capabilities as well as data reserves and communication
network infrastructure in order to gather data and build competitive big data
activities. This shows that the prerequisites for the newest technologies can be
found in Finland. United States is said to be 2-3 years ahead of Europe (Talouse-
lämä, 2013). Therefore, it is interesting to see what the state of big data utiliza-
tion in Finland is.
Big data implications on management accounting have been studied com-
prehensively around the world during recent years (E.g. Griffin & Wright, 2015;
Vasarhelyi, Kogan & Tuttle, 2015; Warren, Moffitt & Byrnes, 2015; CGMA, 2013;
Gray & Alles, 2015). Therefore, previous research provides some insights into
the subject. Data is seen to affect the whole organizational structure, most of all,
the role of finance function and management accountants is seen to change
(Bhimani & Willcocks, 2014). These types of studies have not yet been conduct-
ed in Finland. Therefore, it is important to know will big data have an effect on
management accounting, accounting profession and other business profession-
als in Finnish context.
1.2
Aim of the study, research questions and limitations
The state of big data has not been studied widely in Finland. The Ministry of
Transport and Communication (2014) studied the role of big data in Finland,
focusing more on theoretical level rather than practical. They found that two
years ago the means to collect, analyze and exploit big data were still in the
state of development and transition in Finnish context. Situations change fast as
technologies develop and therefore, this study aims to find out do companies in
Finland utilize big data in their business processes and decision-making and to
what extent. IBM (2012) conducted a study on the utilization of big data global-
7
ly. Comparing to that, this study aims to find out how and why companies in
Finland extract valuable information from big data.
Previous studies show that big data can be useful in different business
processes; it helps in improving business performance and can lead to lower
costs. Therefore, it is important to know do companies in Finland utilize data
with similar objectives. This thesis examines how companies apply big data in
different application areas. It is interesting to see what the stage of big data ma-
turity is, under whose responsibility big data as a function belongs to, what
technologies are used, who uses, gathers or analyzes data in the companies,
how important big data information is for decision-making and for manage-
ment, and what challenges companies are facing after big data implementation.
This study aims to survey the perceived experiences on big data implementa-
tion as well as any challenges that have emerged. Additionally, perceptions
about the future and role of big data compared to other sources of information
are scrutinized. Based on the information of utilization and implementation of
big data, innovations and technologies can be developed in Finland. Statistical
generalization cannot be made; the results however can shed some empirical
light on the concept (Yin, 2014)
Furthermore, the study examines the impact of big data utilization on
management accounting and the role of different business professions especial-
ly in finance function. What type of transformation of management accounting
and the profession of management accountants has emerged after the era of big
data? Along this possible change, requirements for accounting professionals can
be constructed. Management accountants may have to acquire new competenc-
es such as ability to read and understand large data sets. The results of this
study can be compared to the results of the study of ACCA & IMA (2013), who
studied how big data will change accounting.
Research questions are the following:
1. Do Finnish enterprises utilize big data? How and to what extent?
2. How is big data utilized in business processes, and to support decision-making
and management? What experiences and challenges have emerged?
3. What are the implications of big data on management accounting and to the role
of business professionals?
This study is conducted as a master’s thesis; therefore, certain limitations
were made. Being a master’s thesis, this study had some limitations with time
and content. This study focuses on large and middle-size enterprises in Finland;
as they are most likely applying data-driven tools in their businesses. Big data
and business intelligence have been under scrutiny mainly in technological or
theoretical level, rather than practical. Therefore, this study aims to survey the
use of big data in practice and the focus is on the business viewpoint rather
8
than technological. Additionally, the aim is to point out the relationship be-
tween big data and management accounting in practice. The study does not aim
to research whole field of big data or accounting. The limitation is on manage-
ment accounting, rather than financial accounting, because the aim is to add to
understanding on how companies in general use big data to attain organiza-
tional goals and how the increasing utilization of data affects the finance func-
tion. Master’s thesis is often unable to give a thorough understanding of a mat-
ter; hence, additional research is needed to ensure the reliability of the results.
1.3
Previous research
Business intelligence, big data and IT have been studied widely in the past dec-
ade particularly after digitalization. Therefore, ways to utilize big data have
been introduced and implemented. Nevertheless, company managers are often
unsure of the utilization and possible application areas of big data. Chartered
Global Management Accountant (CGMA, 2013), has studied big data utilization
widely. They state in their report, that 51 % of corporate leaders highlight big
data and analytics in top then of corporate priority matters. Similarly, ACCA &
IMA (2013) have studied the utilization of big data rather widely. They predict-
ed the future increase in adaptation of big data solutions already in 2012. In ad-
dition, they predicted 62 % growth for the impact of big data globally during
the next 5-10 years. They also found many possible beneficial application areas
of data.
The Ministry of Transport and Communication (2013) has conducted
general studies on the existence of big data in Finland (2013) and state of big da-
ta exploitation (2014). They found that all industries and areas in Finland have
possibilities to profit from big data. They studied the prerequisites for devel-
opment of possible application areas and the means for better utilization of big
data in decision-making. Davenport (2014) introduced how leading companies
utilize data in practice with examples of various companies. Akbay (2014) stud-
ied how big data can revolutionize decision-making.
SAS Institute and Intel (2015) conducted a study regarding the adoption
of big data analytics and Hadoop. They surveyed more than 300 IT-managers
from the largest companies in Finland, Norway and Sweden. They found that
data and analytics are increasingly important for companies in variety of indus-
tries. In this study, 92 % of all the respondents agreed that more and new data
used for analytics could give them competitive advantage. 90 % of Finnish
companies thought new data would be useful in order to gain competitive ad-
vantage. 76 % of Finnish companies admitted to have a need for collection of
new types of data (such as unstructured) that cannot be stored in traditional da-
tabases and systems. In this survey, Finland had the highest score and it shows
that Finnish companies have realized the possibilities and advantages that come
along big data.
9
As a market leader of big data technologies, IBM has conducted several
studies regarding big data utilization. They conducted a study in 2012 aiming to
find out how companies globally, mostly in North America and Europe, view
big data and to what extent they are currently using it. Recipients represented
variety of business functions. They examined over 1000 business and IT-
professionals from 95 countries. Their study showed that 47 % of the companies
were planning big data activities and 28 % of the companies had already im-
plemented an application or a pilot program. From these studies, it can be in-
terpreted that the importance of big data is widely recognized. Davenport and
Dyché (2013) introduced examples of large companies utilizing data, mostly in
North America.
World Economic Forum (2014, 45) released a global information technol-
ogy report, in which they introduced the risks and rewards of big data. Accord-
ing to their report, big data most frequently assists financial management as
well as marketing, and sales. It is least valuable in human resources manage-
ment. Data-rich organizations, such as retailers or telecommunications compa-
nies, are best equipped to utilize their internally generated data (World Eco-
nomic Forum, 2014, 46). Moorthy et al. (2015) studied the prospects and chal-
lenges of big data and found several business benefits of big data utilization.
Schlegel (2014) studied the utilization of big data and predictive analytics to
manage supply chain risk. The results showed that the use of real-time infor-
mation in supply chain management could increase revenue and profit. Warren
et al. (2013), and Gray and Alles (2015) found ways to make use of big data in
management control.
ACCA & IMA (2013, 5) has hypothesized the impact of big data on ac-
counting profession, and claim that more strategic decision-making role of fi-
nance professional has already developed. Similarly, Warren et al. (2015) stud-
ied the implications of big data on both managerial and financial accounting.
They also studied possible risks and limitations regarding the use of big data.
Vasarhelyi et al. (2015) as well as Griffin and Wright (2015) conducted a re-
search on big data implications on accounting. CGMA (2013) surveyed the
changing role of management accountants, and found that they need to become
more data- and IT-oriented. Additionally, Gray and Alles (2015) studied the
changing roles and requirements of management accountants and came to simi-
lar conclusions. Bhimani and Willcocks (2014) studied how big data transforms
accounting information, finance function as well as management accounting.
1.4
Research approach
This study is a combination of quantitative and qualitative research. Qualitative
approach has more emphasis, as qualities of qualitative research are interest in
details, individual factors of events, as well as causation. Additional qualities of
qualitative study are interest in constitution of meanings in individual actors.
(Metsämuuronen, 2005, 203) The chosen method is a case study, with some
10
characteristics of a grounded theory method. Case study was chosen, as it is rel-
evant in situations when a certain phenomenon is studied extensively and in-
depth with “how” and “why” -questions. Case studies do not aim to statistical
generalization; however, some analytical generalization in the context could be
made (Yin, 2014). Case study is a suitable method in case of limited prior re-
search (Humphrey & Lee, 2004). A feature of grounded theory method is data-
orientation in formulating the results, which is used in analysis phase.
(Metsämuuronen, 2005). Case studies are commonly used in accounting re-
search. The method is often used by accounting researchers in the UK and in
Nordic countries (Lukka 2005). Recently, many Finnish studies in management
accounting have been case or field studies (Järvenpää & Pellinen 2005).
The chosen method to gather the data for the quantitative part is a sur-
vey. Due to the quantitative nature of the survey method, it aims to provide
some insight into the subject. Survey is useful in answering questions such as
who, what, how much or how many (Yin, 2014). The aim of a survey is to de-
scribe and chart phenomenon rather than explain reasons and consequences
(Buckingham & Saunders, 2004). In this thesis, the quantitative part lacks the
general qualities of a quantitative study because it does not aim to generalize.
Due to a small sample size and low response rate, a second part was conducted
in order to expand the amount of data.
The data in the second phase of this study is gathered with interviews.
Interviews are chosen in order to gain more in-depth insight into the subject of
how and why companies in Finland apply big data in their business processes
and utilize it in decision-making. It aims to acquire information more extensive
information and create somewhat explicit picture. The aim is to get personal
experiences from companies. Weaknesses of an interview as a way to gather da-
ta are for instance bias due to poorly constructed questions and prompting the
interviewee to tell what the interviewer wants to hear (Yin 2014). The qualita-
tive part aims to describe, explain and compare the phenomenon (Hirsjärvi,
Remes, Sajavaara, 2006, 125). The research approach is presented more detailed
in chapter 3.
1.5
Validity and reliability
Validity is achieved by using research instruments that measure what they are
intended to measure. Reliability refers to the fact that same results can be pro-
duced from the same conditions each time a research instrument is used (Buck-
ingham & Sanders, 2004, 72). In this study, response rate remained low; there-
fore, the results cannot be generalized. Additionally, small sample size can ef-
fect on the reliability of the study. Questionnaires are somewhat limited in the
amount of information they can gather, which may also affect the reliability
(Buckingham & Saunders, 2004, 44, 70). The questionnaire used in this study is
rather long and therefore, respondents may be hesitant to answer the questions
precisely if it seems time-consuming. If the survey form is too long, it can effect
11
on the results, if the respondents are not fully concentrated or have time limita-
tion to answer the questions.
The definition of big data can be somewhat unclear to respondents even if
it is explained at the beginning. Big data can be defined and experienced differ-
ently depending on the viewpoint of the respondent as well as organizations;
therefore, inconsistency can occur within the responses. Some of the questions
were similar with other questions and if in hurry, it may be challenging to no-
tice the difference between questions and themes. Most of the questions did not
have “I do not know” –option, and in cases of uncertainty, respondents could
select any of the answers randomly, which can distort the results.
In a case study, researcher may face challenges in developing a sufficiently
operational set of measures and how to measure certain social phenomena (Yin,
2014). This may endanger the reliability. One limitation of this study is that the
interviewed companies were selected intentionally instead of random sampling,
and therefore, the sample does not represent the whole population truthfully.
When conducting an interview, interviewer may prompt or probe the respond-
ent and cause a bias in the responses (Buckingham & Saunders, 2004, 72). This
is more likely to occur when conducting Master’s thesis, as the interviewer is
not yet very experienced with being an interviewer. If the interviewer is not
very experienced, it may be challenging to perceive when to ask additional
questions and acquire more information about an important theme. Researcher
always has some type of perspective through which they observe the world,
and this perspective may affect the interactions and interview manner (Atkin-
son & Delamont, 2010). Additionally, results of a qualitative study strongly rely
on researcher’s interpretations.
12
2
THEORETICAL FRAMEWORK
2.1
Big data
Definition
2.1.1
Nowadays data can be found everywhere: social media, internet, data ware-
houses, digital archives and reporting systems. Machines and inanimate objects
produce most of the data, rather than humans, who have done it before. Com-
panies can collect data from various sources: credit cards, emails, company
websites, social media, and business transactions, even GPS-systems. Most
people have mobile devices and many companies have mobile applications,
through which data can also be collected. In addition, sensors, simulations and
scientific experiments can nowadays produce vast amounts of data. Some of the
data is in cloud storages. Data collected from these sources is not traditional da-
ta; therefore, all of this can be referred to as big data. (ACCA & IMA, 2013, 10;
IMB, 2015; Gray & Alles, 2015, 23; Moorthy et al., 2015, 89)
Laney, an analyst at Gartner (2001) introduced the widely known defini-
tion of big data, in which it is referred to as the 3 V’s: volume, velocity and vari-
ety. Later, Gartner has widened the definition into 4 V’s including veracity. The
recent definition of IBM (2015) introduces a fifth V, value. Volume denotes to
the vast amount of data and the variety of information sources. Velocity repre-
sents the speed at which new data is constantly created and processed to meet
the demand of accurate information. Variety refers to the various types of data
that can nowadays be used, because data often differs from common structured
data that fits into table. Veracity refers to the reliability of data. As the amount
and form of data widens, so does the accuracy and quality of it. Overall, value
is in the core of big data, because the main interest is to gain value from the data
that is available today. (IBM, 2015; Syed et al., 2013)
Big data can be defined as collecting, storing and analyzing massive
amounts of data. Big data is fast data; collected, transferred and processed
promptly (ACCA & IMA, 2013, 12). Nowadays, data can be recorded without
much effort or awareness. Due to lowering storage costs, it is more usable to
store data, even if it is not used, than to discard it. Thus, the possibility to ex-
tract valuable information out of company data expands. Big data can also be
defined as a broad term for datasets so large and complex that the traditional
software programs, such as Excel, are unable to store or process them (Syed et
al. 2013, 2446). Therefore, new technologies have to be invented and thereby
programs that can be used to analyze big data, such as Hadoop and Tableau,
have emerged.
The definition of big data is wide and differs depending on the domain
and user of it. Additionally, continuous technological development effects the
conceptualization of big data (Huang & Huang, 2015). The definition is prone to
13
changes and can become more exact in the future. During recent years, big data
programming models and software have been developed and are often used
synonymously with big data, creating a wider definition (ACCA & IMA, 2013).
In some cases, big data is seen synonymous to business intelligence (BI). In this
thesis, however, they are differentiated from each other.
Data is nowadays collected from various sources. It can be in different in-
frastructures, such as cloud, or in different databases, such as rows, columns, or
files (Moorthy et al., 2015, 89). Data can be divided to internal and external data
as well as structured, semi-structured and unstructured. Essentially big data is
unstructured data not conformed into a specific or predefined data model. Un-
structured data consists of various types of human information; emails, videos,
social media postings, phone calls and clicks on websites. Structured data is a
database of information stored in columns and rows, readable by humans.
Structured data can also be searched by data type within content. (Syed et al.,
2013, 2446)
Companies can gather internal data, such as customer transactions or op-
erational log data, from ERP-systems, master data management or business in-
telligence tools; hence internal data is often more easily accessible (IBM, 2012,
10). External data is collected from sources outside of the company for instance
websites or social media. In addition, different types of sensors can create ex-
ternal data. Warren et al. (2015) emphasize the categorization of data into video,
audio, textual and image data. External data is often not in a format ready for
analysis, rather, it requires a process in which the required data is extracted
from the sources and expressed in a structured form suitable for analysis
(Moorthy et al., 2015, 89; Labrinidis & Jagadish, 2012).
When analyzed, data goes through different programs and metrics and fi-
nally, information comes out of the process. Big data technologies offer a possi-
bility to get readable and statistical information. The information, however, still
needs need to be interpreted. Interpretation is an essential part of the process
and incorrect interpretations can be harmful rather than valuable. Data is avail-
able as similar for everybody, the key is to interpret the information that comes
out of analyses and comprehend the value-added insights from that infor-
mation. When utilizing these insights extracted from big data, decisions can be
based on hard evidence rather than senses and speculations. According to
McAfee et al. (2012), corporate leaders still rely too much on experience and in-
tuition, and not enough on data. Many companies are pretending to be more
data-driven than they actually are.
Companies are in different stages of applying big data. According to
CGMA (2013), companies should begin the implementation by identifying their
key business problems. They need to understand their business model, as well
as data structures and sources. World Economic Forum (2014, 48) presents a
framework for measuring the maturity of big data utilization. The framework
incorporates three elements: environment readiness; internal capabilities; and
the various, steadily more sophisticated ways to use big data that range from
increased efficiency in existing operations to a complete change in an organiza-
tion’s business model. They divided the measurement system into four stages: 1.
14
Performance management; 2. Functional area excellence; 3. Value proposition
enhancement, and 4. Business model transformation. These four stages are pre-
sented in figure 1.
Figure 1. Big data maturity framework (World Economic Forum, 2014, 48)
If the company is in the first stage of maturity, it enables executives to
view their own business more clearly, often utilizing mostly internal data. In
second phase, organizations start to use external data more comprehensively
and use for example customers’ purchasing behavior, in order to predict the
sales or monitor production plants. These may lead to revenue increase or ad-
vanced operational efficiency. Third phase may include innovations such as
customized, real-time recommendations or the personalization of services to
augment the customer experience. Organizations begin to position big data as a
value driver of the business. In the final, fourth phase big data permeates the
whole organization. It becomes deeply embedded within the operation, deter-
mining the nature of the business and the mode of executive decision-making.
(World Economic Forum, 2014, 48)
Big data technologies
2.1.2
Data itself is unworthy but by analyzing and organizing it, data becomes valu-
able (Ministry of Transport and Communication, 2014). Therefore, it is essential
to have capabilities and knowledge in order to benefit from data. In order to ex-
15
tract value from big data, optimal processing power, analytical capabilities,
skilled analytics and technologies are needed. The utilization of big data re-
quires an extensible and secure infrastructure and data foundation. For instance,
a scalable storage and high-capacity warehouse as well as integration within
organizational information are requisites. Mining for instance requires integrat-
ed, cleaned, trustworthy, and efficiently accessible data, declarative query and
mining interfaces, scalable mining algorithms, as well as big data computing
environments. Many companies have to merge big data technologies with their
traditional infrastructure, which may be challenging. (IBM, 2012, 8; Davenport
& Dyché, 2013; Labrinidis & Jagadish, 2012)
Big data applications attempt to unlock the potential of data using busi-
ness analytics and visualization trends. Visualization is critical, as it provides a
way to maintain context by showing data as a subset of a larger part of data,
showing correlated variables. Visualization is also relevant to data streams that
are common in a current situation, because they can help identify patterns over
time. Big data technologies have evolved because big data is so large, that tradi-
tional technologies cannot process it. These big data programs, such as Hadoop
and Hbase, are most often used for data processing in support of the data-
mining techniques and other data science activities. The decreased costs of col-
lecting, storing and processing datasets after the development of IT and cloud
computing have also widened the available data and created demand for suita-
ble and relevant programs. (Fisher et al., 2012, 57; IBM, 2012; Huang & Huang,
2015; Moorthy et al., 2015, 95; Provost and Fawcett, 2013, 52; Ministry of
Transport and Communication, 2014).
Traditional symmetric multiprocessing (SMP) architecture became too
expensive to support vastly growing data volumes. This led to the creation of
the foundation for big data handling, cheaper parallelized virtual servers,
which can be in cloud or on-premises. IT-companies such as IBM, Google and
Microsoft can be seen as leaders in the market of providing big data applica-
tions. Some big data tools found in the market are high capacity and scalable
data storage, columnar databases and Analytic Accelerators. Some programs
and tools are Hadoop, Java, Developer, NoSQL databases, Map Reduce, Big Da-
ta, Linux, Hive, and Scala. Different codes can be used in the analysis as well as
programming languages, such as R, Python and database-like language Pig.
(Schlegel, 2014, 12, 16; Akbay, 2015, 26; Fisher et al., 2012)
The term analytics often means any data-driven decision-making. In the
corporate world, an analytics team often uses their expertise in statistics, data
mining, machine learning, and visualization to answer questions and solve
problems that management points out. In order to support decision-making of
corporate leaders, the analysts find datasets, choose informative metrics and
architecture that can be computed from available data, perform the necessary
computations, and report the results to CFO in a way that they can comprehend
and act upon them. The emphasis of analytics also in corporate management is
increasing, as analytics is seen to become a part of their duties. (Fisher et al.,
2012)
16
Datasets are often too large for data-analysts to view and process on-hand.
The need for more advanced visualization techniques, capabilities to find pat-
terns in complexity of data and modeling capabilities have increased along the
introduction of big data (Schlegel, 2014, 16; IBM, 2012, 12). According to IBM
(2012), most effective strategy to utilize big data is to identify business require-
ments or objectives first, and then leverage the existing infrastructure, data
sources and analytics to support the business opportunity. Figure 2 shows some
techniques companies leverage in order to analyze data. Most commonly used
analysis method is query and reporting, secondly data mining and thirdly data
visualization.
Figure 2. Big data analytics tools. (Schlegel, 2014, 15; IBM, 2012)
Big data tools go through massive amounts of digital information looking
for useful correlations. With the help of increased processing power, analyza-
tion tools can create rapid and accurate information to support decision-making
(ACCA & IMA, 2013, 6; Davenport, 2014). With distributed systems, datasets
from different locations can be connected by networks and analyzed accurately
(IBM, 2015; Sukumar & Ferrell, 2013, 258). Vasarhelyi et al. (2015) claim that
within businesses, greater value can be created when automatically gathered
inside information and outside information are “bridged” together, for instance
personal information, credit information and criminal records. The availability
of these types of data has increased, therefore, companies could benefit greatly
from utilizing it.
Business interactions record data, which often remains unused. According
to Gartner, data, which companies record in their daily business processes, but
do not utilize it, can be referred to as dark data. This dark data is the type of da-
ta, which company managers could exploit and acquire competitive advantage
(Gray & Alles, 2015). According to Akbay (2015, 27) with applicable infrastruc-
ture and large IT department, companies could collect logs, in which business
17
processes can be monitored. This enables companies to quickly identify large-
scale patterns and help in diagnosing and preventing problems. Big data appli-
cations capture the operations of a business, and all the information and behav-
ior of customers is logged as interactions. These real-time interactions are com-
bined with meaningful transactions and historical data in order to deliver busi-
ness value.
Before and after big data
2.1.3
Previously, before the era of computers, company data has been mainly hand-
written paper records, not easily accessible. Later, advanced technology al-
lowed larger data amounts to be collected, stored and reused. Davenport (2014)
states that company managers have been familiar with using traditional data
analysis to support decisions since 1970. The internet revolutionized the state of
information about 15 years ago. Due to mobile phones few years later, every-
thing became connected. Mobile devices enabled all human knowledge to be
available for everyone to use. In addition, the formation of cloud computing as
well as social media affected the incurrence of big data.
Vasarhelyi et al. (2015) state that traditional accounting data in companies
have been ERP data, which was acquired manually in transactions. Afterwards,
scanner data enabled more possibilities to collect data e.g. in the cash register.
This increased data analysis applications, including inventory control, detecting
related products and individual product preferences. Semi-automatic data col-
lection also lowered the cost of data collection. Web data expanded the analysis
of customer behavior. Data collected from the internet allows following cus-
tomer information, acquisition and decision process. Furthermore, after the ex-
pansion of mobile data, automatically collected data has increased vastly. Mo-
bile data allows for instance finding the location of a customer and predicting
customer behavior. (Vasarhelyi et al., 2015)
The definition of big data closely links to business intelligence (BI). How-
ever, big data was introduced later than business intelligence; hence, more stud-
ies on BI can be found. BI can be seen as some type of hypernym for big data.
Davenport (2014) defines it as providing tools to support data-driven decisions,
with emphasis on reporting. Yeoh & Koronios (2010, 23) defined BI as “an inte-
grated set of tools, technologies and programmed products that are used to col-
lect, integrate, analyze and make data available. According to Negash (2004), BI
is a combination of systems that supported decision-making. The increase of
internet technologies and prevalent user interface enabled the development of a
more comprehensive BI, which gathers information from many systems. Ac-
cording to the definition of Davenport (2014), business intelligence has been in-
troduced in 1989. Studies on BI can be found from somewhat 40-50 years ago.
A new IT-term is born already. Internet of Things (IoT), in which every-
thing is connected. According to World Economic Forum (2014), IoT is predict-
ed to boost the global economy massively by 2030. In IoT devices, machines,
and physical objects with sensors are intelligently connected to a network,
18
which will create waves of data across the entire business value chain. It is es-
timates that less than 1 % of physical objects are connected to IP networks, but
the IoT is expanding as more devices and users are connecting to IP networks
every day. This increases transactions and processes online, therefore, expand-
ing the amount of data and consequently, increasing the amount and im-
portance of big data. One idea is to share data with different actors across in-
dustries and form data ecosystems. (Ministry of Transport and Communication,
2013; Gray & Alles, 2015, 25; World Economic Forum, 2014, 36)
2.2
Big data in business processes and decision-making
Forecasting and planning
2.2.1
During recent years, the use of big data in decision-making has been studied
widely (e.g. Warren et al., 2015; Vasarhelyi et al., 2015; Gray & Alles, 2015).
Therefore, ways to utilize big data have been introduced and implemented.
Nevertheless, company management and executives are often unsure of the uti-
lization and possible application areas of big data. Vast amounts of data are
available; therefore, it is essential to be able to specify the necessary data and
decision-relevant information. Subsequently, these will aid in solving specified
problems and achieving objectives (Gray & Alles, 2015).
According to Moorthy et al. (2015), decisions that were previously based
on guesswork can now be made using data-driven mathematical models. This
offers a precise foundation for decision-making. Big data can be used in fore-
casting in different functions. Better forecasting can be made about the competi-
tive environment, with more data and accurate analysis. Forecasts can be made
about future sales and cash flow, demand for raw materials, financial situation
as well as long-term trends. Similarly, sales forecasts can be made and reported
to management. Thus, necessary actions can be taken based on what have been
monitored. (Davenport, 2014; Gray & Alles, 2015, 23)
ACCA & IMA (2013, 7) studied future implications of big data and found
that, when applying big data and utilizing specialized more valuable real time
information analyzed from it, companies can create immense picture of their
performance by using both financial and non-financial information. This could
aid them to proceed to new directions, create new products or move to new
markets. Additionally, they found that big data could generate opportunities to
identify and evaluate risks and rewards of previous decisions as well as im-
prove operating efficiency. Warren et al. (2015) suggest that big data and infor-
mation could be useful in budgeting, as new budgeting practices have emerged.
ERP-data can be combined with external and non-financial data and budgeting
can emerge to new extent.
According to Moorthy et al. (2015, 81) by collecting for instance consum-
er and market data and analyzing it, companies can find out new patterns that
reveal possibilities of new product features and segments. New products can be
19
introduced based on these patterns. By gathering large amounts of data, com-
panies can capture behavioral trends and use the information in creating prod-
ucts that are more appealing or revise pricing models in order to increase sales
(CGMA, 2013, 13).
According to Gray & Alles (2015, 23, 29-31) one of the most valuable
types of data is data, which could aid in predicting future problems or identify-
ing unexpected opportunities in the markets. According to them, one means to
apply big data for business decision support is through sentiment analysis by
monitoring comments said about the company on the internet or in social me-
dia. In case the comments turn negative or the number of complaints increases,
some actions could be taken in order to avoid negative publicity and possible
decrease in future sales. By monitoring customers and their social media behav-
ior, indicators of potential issues can be noticed beforehand and management
can act on them before the damage has already happened.
Marketing, sales and CRM
2.2.2
Several studies are focused on utilizing big data in marketing, sales and espe-
cially in customer relationship management (CRM). As World Economic Forum
(2014, 45) report found, marketing and sales are some of the segments mostly
utilizing big data. This can also be noticed from various examples. IBM (2012)
conducted a study and examined the objectives for adopting a big data solution.
They found that almost 50 % of the organizations studied were targeting cus-
tomer-centric big data applications. Additionally, Davenport (2014) emphasizes
the utilization of big data information in companies who have customer orient-
ed approaches in their products and services. These types of companies often
have vast amounts of data; they may have loyalty programs through which
they gather data about their customers. Companies can also conduct customer
research through which they acquire data. Data can be used to improve cus-
tomer experience, to personalize products, and consequently, engage customers.
(Ministry of Transport and Communication, 2013)
It seems that companies see understanding of consumers and customer
behavior as a significant priority. Companies can benefit from new, real-time
and more organized information about customers and provide them with re-
quired solutions, products and services as well as enhance sales. This is im-
portant in order to engage with existing and potential customers, as the compe-
tition of customer loyalty is ongoing. Big data is a powerful weapon for exam-
ple in capturing consumer data directly or indirectly even with or without per-
mission and participation. It provides enormous potential to precisely and effi-
ciently identify behaviors, behavioral changes and target them at the individual
level. Data captured from customers and their purchases can aid in making new
product and service offerings. If any deviations from normal patterns about
company brand or products emerge, companies can provide rapid responses to
consumer reactions, shape new products, and expand to new markets. (Moor-
thy et al., 2015, 92; Davenport & Dyché, 2013, 6; George, Haas & Pentland, 2014)
20
Marketing and CRM could also benefit from the use of big data by listen-
ing to data streams and cross-reference them with customer profiles in order to
provide clear perspective about their best customers (Akbay 2015, 28). Compa-
nies could find out what motivates customers to buy and offer them allocated
marketing and advertising, and even special pricing models. Global Economic
Forum (2014, 46) report introduces an example of a global mass merchant, who
was able to increase its profit per customer by 37 % by applying advanced cus-
tomer analytics, such as behavioral segmentation, to identify its best customers
and provide them with personalized offers.
Big data is seen to have many possibilities in CRM. It is highly important
for companies to understand consumers and to know what they want to buy
and where they want to buy it. According to Bhimani and Willcocks (2014), big
data enables more comprehensive analysis of business environment. Compa-
nies can gather data from their e-stores about purchasing frequencies and pre-
vious purchases of customers and predict the likelihood of certain subsequent
purchases. Similarly, Moorthy et al. (2015, 82) perceived some benefits in cus-
tomer relationship management. They found that in one case company, by cen-
tralizing customer information into one program, agents were able to handle
more customers per day. Implementation of big data application also appeared
as higher customer satisfaction and awareness. When data was centralized in
one program, more of beneficial information was available. Due to that, market
group could sell products to customers easier, as they had the required solu-
tions within reach. Customer experience management was also improved and
predictive analytics initiatives helped to manage risks and control with better
forecasting of revenue expectations.
Davenport (2014, 47) introduces an example of a company in which re-
cordings from call centers are processed through software in order to analyze
language of customers phone calls. Similarly, Vasarhelyi et al. (2015) state, that
audio data can be transcribed into text and associated with other data, such as
texts and videos. If audio data is transcribed into text, certain focus areas can be
found from the customer phone calls. This could aid in finding the main rea-
sons why customers are calling to call centers. Perhaps they are facing some
specified continuous problems. Based on this information, companies can for
instance create info packages to instruct their customers in these types of situa-
tions.
Business performance monitoring and improving efficiency
2.2.3
According to IBM (2012), other rationales for implementing big data technolo-
gies in addition to sales and marketing were operating optimization, risk and
financial management, enabling new business models and employee collabora-
tion. It is studied and claimed that utilization of big data leads to higher
productivity (Provost & Fawcett, 2013, 54). According to Schlegel (2014, 14) the
prediction of customer behaviors and outcomes of proposed scenarios integrat-
ed with risk assessments allows businesses to create and test supply chain
21
models in real time, thereby increasing their revenue and profit. He introduces
a case study in the industry of consumer packaged goods and grocery, where
implementing a big data technique aided a company to adjust supply and de-
mand issues and minimized the financial risk of write-downs and write-offs.
Akbay (2015, 28) suggests that big data could be utilized in optimizing
sales in retail. Sales would be recorded and monitored and in case of low or
high sales, an alert would be sent to the retailer. After this alert, they would
know the need for a new delivery or for another necessary action, and therefore,
be more efficient. Moorthy et al. (2015, 81) found that big data tool led to in-
creased operational efficiency for frontline customer service agents and market-
ing group, better customer information availability and lower IT-costs due to
centralization of data.
Big data tools can influence and improve company strategy and fur-
thermore, supply chain management. Schlegel (2014, 15) studied big data impli-
cations on supply chain and introduced an example of Dell, who implemented
a big data tool, an optimized configuration. It clustered high-selling products
from historical order data, which could tell what products the company should
build to order and what it should produce to stock. Tool supported their core
competencies and market differentiator, and led to improved business perfor-
mance. Davenport and Dyché (2013, 4) introduced an example of a company
who planted sensors in their trucks and followed the routes of their drivers.
Consequently, they were able to optimize their route structure and acquire sig-
nificant cost reductions.
According to Davenport (2014), big data introduces a new dimension en-
abling companies to discover new opportunities in product development pro-
cesses. He introduced an example of a company who applied big data to im-
prove services, optimize service contracts and maintenance intervals for indus-
trial products. This could aid in boosting sales, as maintenance can be offered to
customers after they have purchased a machine. According to Davenport and
Dyché (2013), companies are increasingly adding sensors into things in order to
capture more data and optimize their businesses. Even a small improvement
can result in great savings when adopted on a large scale.
Management control
2.2.4
Both Warren et al. (2015) and Gray & Alles (2015, 30) claim that big data could
be used as a tool in management control for creating a Balanced Score Card
(BSC). Managers can collect and analyze data from different areas; finance, cus-
tomers, internal business processes, and learning and growth. For instance ana-
lyzing customer service calls may reveal issues in customer service. Additional-
ly, internal emails, internet or mobile phone use during work may correlate
with learning and growth. According to Bhimani & Willcocks (2014, 480) the
availability of big data enables redesign of ways of organizing executive re-
sponsibilities and rewards. Big data can also be used in analyzing individual or
team behavior, using sensors or badges to track individuals as they work to-
22
gether. Management could monitor how employees move around their work-
space, spend time interacting with others or allocate to specific tasks. (George et
al., 2014)
Additionally, according to Warren et al. (2015), big data information can
reveal new important measures to be incorporated in management control sys-
tems. Big data could aid in discovering new motivational measurements. Con-
sequently, new monitoring and performance evaluation could lead to increased
productivity. Companies can gather and analyze data about how employees
use for instance company cars or cell phones. With these types of measurements,
management accountants can enforce comprehensive monitoring. They state,
however, that extensive monitoring can lead to decreased creativity and lack of
motivation. Increased personal monitoring may also cause legal and ethical is-
sues. (Warren et al., 2015)
Challenges
2.2.5
If unsuccessful, big data can lead to poor decisions, and endangered data secu-
rity and privacy codes. Moreover, it can damage organizational reputation and
brand as well as destroy value. According to CGMA (2013), companies should
begin implementation by identifying their key business problems. They need to
understand their business model, as well as data structures and sources in order
to succeed. Big data does not erase the need for vision or human insight. Busi-
ness leaders have to be able to spot opportunities, understand market develop-
ment, and propose new ideas. Adopting big data often causes transformation in
organizational culture; thereby leaders have to be able to manage change effec-
tively. (ACCA & IMA, 2013; McAfee et al. 2012)
Ministry of Transport and Communication (2013) mentioned privacy is-
sues and data security as challenges after the emergence of big data. Much of
the data gathered may contain highly sensitive or personal information. Warren
et al. (2015) state that many organizations are unable to apply big data tech-
niques due to limiting factors, such as lack of data, irrelevant or untrustworthy
data, or insufficient expertise. In addition, they may be unable to access the data.
It is essential to have data scientists and other professionals who are able to
work with large quantities of information. Capabilities in cleaning and organiz-
ing large data sets are crucial. “People who understand the problems need to be
brought together with the right data, but also with the people who have prob-
lem solving techniques that can effectively exploit them.” (McAfee et al. 2012,
67-68)
According to CGMA (2013, 2), for most companies the adaptation pro-
cess to a data driven business remains unfinished. They found that most com-
monly businesses are struggling to bring data together from different databases,
ensuring the quality of data, and getting valuable insight from data. One can
simply mistake correlation for causation and find misleading patterns in the da-
ta (McAfee et al. 2012). Other challenges that emerged were ensuring that in-
sight is used to improve performance, finding the relevant data and information,
23
and reporting and visualizing insights in a proper manner. Davenport (2014)
claims that a clear way to apply big data in decision-making is still under con-
struction, because the fast-flowing stream of datasets is ongoing. Data filtering
needs to be done, if the amount of data available exceeds the amount that is re-
quired to perform the selected analytics.
World economic Forum (2014) also listed some obstacles in their report.
One common challenge was shortage of available talent specializing in data an-
alytics. According to CGMA (2013), companies also face challenges trying to
find the relevant tools and technologies, because before selecting a tool, they
should determine how they want to use data and what the objectives for utiliza-
tion are. If the objectives are not clearly defined, it may cause a failure. There-
fore, the chosen data and analysis methods should be consistent with the de-
sired outcomes or problems at hand. (Gray & Alles, 2015, 26)
2.3
Implications of big data on management accounting and
business professions
Management accounting uses data and information generated from accounting
records to support their duties as a decision-maker. Duties of management ac-
countants include for instance cost accounting, strategic and operational deci-
sion-making as well as supporting top management in overall decisions. An
important task of management accounting is to combine corporate goals and
behavior of management and employees with management control systems.
Behavior-regulating devices, management control systems can be distinguished
from decision-making role of managerial accounting. Management control can
be defined as systems, rules, practices and values through which management
directs employer behavior. (Warren et al., 2015, 400; Malmi & Brown, 2008)
According to Institute of Management Accountants (IMA), broad re-
sponsibilities of management accountants include for instance managing func-
tions that are critical to business performance, supporting organizational man-
agement and strategic development in addition to providing accurate and in-
sightful information in order to make better decisions. Management account-
ants are often viewed as reporters of historical cost information, when they
should be seen as advisors of how to reduce those costs. Finance function can be
seen to consist of various activities such as accounting, compliance, manage-
ment and control, strategy and risk, as well as funding and resourcing. They are
facing challenges and tensions today across organizational settings. Along in-
creasingly complex technologies, some traditional accounting practices may
disappear. Therefore, managerial accounting and finance function are facing a
transition phase. (Gray & Alles, 2015; Smith and Payne, 2011)
According to Gray & Alles (2015, 25-30), management accountants
should expand their value adding activities and improve their relevance to their
organizations. In order to do so, they should move to extended data sources
24
and explore additional data analytics tools. Additionally, they predicted that
management accountants have to expand the amount of data they are using in
today’s competitive, complex and global market. They suggest that in order to
be proactive and the catalyst for the change, management accountants should
improve their data analytics competency. Nowadays, because of the decreasing
time that is available for waiting how the markets evolve, management ac-
countants need to be able to make consistent decisions promptly. Therefore, it is
essential for them to identify the important and necessary internal and external
data the company should collect and analyze. (CGMA, 2013, 20-23; ACCA &
IMA, 2013, 6; Gray & Alles, 2015)
According to CGMA (2013) BI and big data -tools enable accountants to
get more involved in the application of business, take more proactive role and
strategic position in companies and become more visible. They also state in
their report that, in order to acquire a more strategic role, they should increase
their data analysis skills. Thus, they are more active in converting the potential
of data into real commercial value. According to them, management account-
ants will need to co-operate more closely with their colleagues in IT who cap-
ture much of the data; the data scientists who most commonly perform analysis
on data; and with business leaders who ensure new ideas are turned into con-
crete action. This requires financial professionals to have a broader range of
management skills: clear communication, the ability to lead and influence, and
a strategic understanding of the business.
According to ACCA and IMA (2013) whilst big data creates possibilities
for businesses, it simultaneously reshapes accountancy and finance professions.
It can potentially embrace the traditional accounting profession or create new
opportunities and functions. It will most likely bring accounting department
closer to technology. Clayton (2013) also states that CFOs should collaborate
with CIOs and benefit from big data analytics more efficiently. ACCA and IMA
(2013) suggest the formation of new professionals such as chief finance and
technology officer (CFTO) or chief finance and information officer (CFIO),
where the individuals have both technological and financial capabilities.
New qualities and capabilities are already required from management ac-
countants. Big data will require development of new metrics and accounting
standards as well as development of various new skills (ACCA & IMA, 2013).
According to ACCA & IMA (2013), management accountants need forward-
looking data analytics for a complete evaluation of the potential benefits and
consequences of alternative actions and decisions. According to CGMA (2013, 2),
the role of finance professionals around big data is to aggregate outcomes so
they can be converted into insightful reports. Therefore, new qualities and ca-
pabilities, such as ability comprehend data and information extracted from it,
are required. CGMA (2013, 4) also state in their report that qualities of a CFO
with data-capabilities are for instance, ability to understand relevant data,
knowledge about customers’ demand, ability to use complex data, endurance of
uncertainty as well as ability to interpret data in multiple ways. ACCA and
IMA (2013) estimates that employers need to have deep analytical experience
25
whereas managers need to become data-literate. There seem to be an evident
change in the requirements and competencies of various business professionals.
Pickard and Cokins (2015) claim that accountants have lacked the skills to
uncover strategic insight from financial data they create. They also state that ac-
countants should have more understanding of and abilities to apply advanced
data mining and analytics techniques in order to increase their scope of influ-
ence and perform their responsibilities with more impact. It is also suggested by
Gray & Alles (2015, 25, 30) that management accountants should move away
from analyzing primarily traditional data in Excel and contribute more to data
analytics technologies. They should move onto non-financial data and more in-
ferential statistics as well as predictive and prescriptive analytics. Learning new
technological skill and developing better semantic understanding of business
processes are essential in reaching these objectives. According to Bhimani and
Willcocks (2014), changes in IT causes a change in information collection and
analysis for management and control activities.
Management accountants or business controllers are often unaware of the
data and analytics that are merely on their responsibility in the company.
Therefore, Gray & Alles (2015) introduce the term data fracking, which could
belong solely to management accountants, as data analytics tools are seen to be-
long to statisticians and predictive analytics to management. The idea in data
fracking is to gain value from data that was previously considered unusable.
The goal is to find decision-specific data rapidly and apply analytics to it, rather
than waiting for the relevant data to be available as accounting data. This data
fracking could provide management accountants with required tools and moti-
vation. Subsequently, management accountants could fulfil the broadening
roles, which IMA had also acknowledged.
According to McKinsey Global Institute, there will be shortage of talented
employees with the necessary knowledge of data analytics and IT (Clayton,
2013, 24). This could stand out as a problem, unless companies can find talent-
ed people, outsource their big data activities or unless they can educate their
staff themselves. According to Clayton (2013) the first step to tackle the chal-
lenges that come along big data, would be to hire the right personnel with re-
quired competences. He emphasizes the role of big data as CFOs new best
friend. Clayton (2013, 25) also claims that: “The more insight and understand-
ing CFOs can gain about their business through big data, the more they can
help their organizations meet vital business objectives. With a clear and action-
able view into big data, CFOs can help increase efficiency, improve collabora-
tion and alignment between finance and the business, improve organizational
agility and foster innovation.”