I was speaking to an IMA member when he asked me “Been following you on LinkedIn and twitter, you speak a lot about Big data and analytics linking it to Strategy and Finance. This is a not a normal Management Accounting topic”
Well, that actually got me interested to start writing about that myself in our UK Chapter newsletter. So, for the people who want to know more about this I will literally start from the very beginning hoping that I get more interest in the topic from Finance Professionals. In march 2016, I was invited as keynote speaker for the IMA Chapter Cairo Conference so let me start with this presentation and build on it.
What is digital disruption?
According to Cambridge dictionary "disrupt is to prevent something, especially a system, process, or event, from continuing as usual or as expected". Disruption in business normally happens due to some economic, technological or other effects, something changes and affects the way we do business.
Businesses went through different industrial revolutions, the First Industrial Revolution was the use of water and steam power for production. The Second revolution used electric power for mass production while the third used electronics and information technology for automating production. Now a Fourth Industrial Revolution is taking place, this revolution is based on big data, robotics and artificial intelligence.
Are all businesses affected in the same way?
Technology created a revolution; it is re-writing business models, changing economies and affecting different boundaries and functions within businesses. All industries will face digital disruption but on a different scale and timing. For example IT sectors faced it early with Cloud technology back in late 2000s and affected other businesses, hospitality experienced it when Airbnb entered the business and all of a sudden customers were competitors while manufacturing are looking into how to make use of sensors making this sector more efficient.
How are businesses reacting?
Businesses should understand how they are being impacted and how to respond based on what happens not only in their sector but also in other sectors. They should make use of information and data available for more effective and efficient decision making.
What are the analytics enablers?
- Cloud: Cloud became a buzz word back in the late 2000s, it was a massive thing when I was working in the IT sector during this period. It provides agility and cost savings for companies but a lot of concerns were voiced in terms of security at that time. The term Cloud comes from not having data stored in each company's server but rather on a shared server of a big company providing this service. Companies like Google, Amazon and others provide massive servers which save companies both the investment and maintenance costs.
- Social: Social platforms now are important for a lot of people with the likes of Facebook, twitter and LinkedIn topping this field. A lot of data is available on these platforms like customer satisfaction, suggestions as well as customer needs. P&G has used this information effectively through its “Consumer Pulse”, it did a lot of work listening to its customers through social media and ensuring that it understands them.
- Mobile Apps: A lot of applications are available now enabling us to make better use of our time. For example, we can easily do most of our banking transactions if not all on our mobiles now. This is leading to the development of a new area of business called Fintech. According to Oxford dictionary Fintech is "Computer programs and other technology used to support or enable banking and financial services". This field was not present five years ago.
- Internet of Things: Wearables now are a big thing, smart watches in order not to miss notifications, heart-rate monitors for fitness fanatics and can you really think how we survived without GPS devices (Google maps, Garmin and others)? Amazon can now suggest things before we realise that we actually need them. It is scary but a lot of data is out there especially with the linkage of mobile apps, computers and other data sitting on the cloud.
- Big Data: A lot of people refer to big data now as the new oil, the one that will never get dry. We can say that Big Data is a result of all the above four enablers. It is called Big Data because it is massive amount of data and I will be explaining it in more details in my future articles. An example of big data use is when Coca-Cola entered the US market of non-concentrate juice and perfected the acidity taste of orange for its customers using its "Black Book" algorithm.
Technology disruption is here and we do need to understand it to be able to play an active role as strategic finance professionals, we are the people linking strategy and finance for different stakeholders to make the correct decisions and the use of analytics is not an option anymore.
Please let me know your thoughts of the topic whether through the UK Chapter email my twitter account @FatemaElWakeel or LinkedIn https://www.linkedin.com/in/fatemaelwakeelmbacma/.
Fatema El-Wakeel, MBA, CMA
IMA UK Chapter Founding President