Whilst some accounting functions can be automated, data analytics helps you go a step further.
Mark Blayney Stuart spoke to Sam Ellis, Head of Operations and Finance at Interworks Europe.
What are the key benefits of data analytics?
They give you an understanding of how the business is performing right now; how it has performed in the past; and if you take things a step further, can give you an idea of how it might perform in future.
How can finance students and professionals develop their data analysis skills?
Try different things. Take different approaches to analysing data from what you’re familiar with. Typically, accountants will have been shown how to do data analysis in a particular way, or have learnt methods from academia. However, it’s about trying things that aren’t always the way you’ve done them in the past.
A tip for how to do this in practice?
Don’t just communicate with other staff member and colleagues from different departments, but also collaborate with them.
Understand what they want from data analytics. As accountants we can be guilty of prescribing what people want and we’re not so good at genuinely taking the time to understand what people actually want. Then look at the questions that you’re asking of the data, and identify what’s stopping you getting to the analysis you wanted.
Which tools should you use?
There are technological advances every few months and new tools appear all the time. The important thing to remember is that they are worth a try – they’re not to be feared.
Many market-leading software providers offer software on a trial basis for free, so there’s no harm in trying some of them on a free basis. It’s low impact in terms of cost, and requires little expertise to get started – so you’re not really committing much more than a few hours of your time and there’s no financial outlay.
How do you turn data into insights?
There’s a difference between analytics and insight. Insight is a term people like to use freely, without really understanding what it means. Analytics describes the here-and-now and your past. Insights is a deeper understanding of the data and the subject matter.
The more insight you have, the more you understand a particular department, the manufacturing line or the group of people – and it gives you something you didn’t know before, because you looked at the data from different angles.
Can you give us an example of this in action?
Data might show you that Team A made £10k of profit this month and Team B only made £8k. That’s analytics. But the insight is that Team A were able to create better opportunities because they were in a better geographical location.
In other words, dig into the data and ask why things are happening – that’s how you start to make decisions based on data and insight.
Are there traps to avoid falling into?
You can get carried away with data visualisation. You can produce numerous attractive-looking data visualisations that may seem useful but actually, unless you really understand the questions you’re asking of the data, and what the end user wants, you’re just creating a distraction and more noise. That detracts from what data visualisation is for – and it starts to give it a bad image. So it’s key that people understand what they’re using it for before they embark on the journey.
The tools make it incredibly easy to get started and produce something, but users may conclude the existing kind of reporting is better than the new technology; if so, you miss how useful it is.
Dig into the data and ask why things are happening – that’s how you start to make decisions based on data and insight tweet
Instead, how do you use data visualisation effectively?
It’s to measure things you currently aren’t looking at. For instance, how many hours is a team working during the week; do they mainly work Monday to Thursday but lose several hours on Friday?
With data visualisation you can easily show that and then correlate it back to profit and loss and balance sheets. It frees you up to look at things from lots of different angles, and ultimately you end up with a better story around the numbers that you present.
Big data is in the news a lot and the Cambridge Analytica headlines mean people are aware of the need to handle data responsibly. What’s your advice for accountants?
We should be using people’s data for the right reasons – a lot of the data that we examine is real people, and we need to be respectful of that. It’s easy to see numbers and treat them scientifically, but we have to be cognisant of what we’re doing with them and ensure we’re doing the right thing.
You’re speaking at this year’s AAT conference on 7-8 June. What can attendees expect from you?
My session Using data analytics to inform decision making will give an overview of big data; and why business intelligence and data analytics are relevant to finance teams and accountants. Someone walking away from the session will understand what those things are and they’ll feel more comfortable about being in a conversation about these things – whether they’re in industry or practice. I’m also presenting The integrated and analytical accountant, which examines in depth one of these business intelligence tools – I’ll cover why we use it, what it can do, and how you might use it in a real-life situation.
When people go back to the office they’ll be able to get started; at the very least, you’ll be able to say, I know how to do this now.
And any final thoughts?
Do try out the new business intelligence or data manipulation tools as they appear. They’re really powerful and you don’t need to be wary of them. But it’s also fine to test them and then decide not to use them.
If you don’t find it works for you, don’t buy it. But ultimately, the new business intelligence tools are shaping the future of analytics; and if you’re not using or testing them now, essentially you’re behind. Ultimately, this is all about ensuring we stay relevant as accountants for the future.
Sam Ellis will be speaking at the AAT Annual Conference 2018; get your tickets here.
Mark Blayney Stuart is Business Journalist of the Year, Wales Media Awards 2017 and Former Head of Research at the Chartered Institute of Marketing.