Harnessing Data Insights for Enhanced Business Management in Finance

Introduction

The practices of business management are faced with technological innovations that disrupt and change the current management procedures (Brinch 2018). In this era, business processes have become increasingly dependent on data and data-derived insights have emerged an integral instrument in improving business performance (Li et al. 2019). It is also in this era that the concepts of big data and business analytics have offered better decision-making practices resulting in increased process-level and firm-level performance (Lien 2017). Big data is perceived as a new business management paradigm which is based on the principle that discursive reasoning and intuition are enhanced using facts, logic, and evidence for enhanced decision-making. In this background, the aim of this paper is to carry out a research on the role of data insights in business management in finance and accounting firms. For students who are seeking business dissertation help, understanding the evolving landscape of data-driven decision-making in the finance and accounting sectors is very paramount.

Digital Disruption

What is digital disruption?

Skog et al. (2018) define digital disruption as environmental turbulence that is caused by digital technologies thus leading to erosion of approaches and boundaries that previously served as a basis for creating value. Analogously, Bolton et al. (2019) argue that digital disruption is the change that occurs when new digital technologies change business processes, customer experiences, and business models, resulting in change in value co-creation in an ecosystem. Digital disruption leads to change in the established industry structures and thereby exerting pressure on the established firms to respond, which prompts fundamental change to operations, technologies that support business models, and the identities of firms and the professionals within these firms (Crittenden and Peterson 2019). Responding to disruptive technologies remains a source of competitive advantage for business organisations.

How will digital disruption impact the finance and accounting sector?

In the finance and accounting sector, digital disruption provides a great potential to enhance the efficiency with innovation, more competitive financial systems, and improved supply diversity (Teoh 2018). Digital disruption will exert pressure on the margins of the incumbent firms and perhaps encourage increased risk taking (Teoh 2018). For increased efficiency in the sector, the incumbents might undergo restructuring which will happen simultaneously with the entry of new competitors (OECD 2019). Big data and data analytics as disruptive technologies will affect finance and accounting in many ways and significantly influence how business is conducted as well as how financial statements are prepared and audited. According to Richins et al. (2017), big data has provided accounting firms with different sources of data which are integrated into accounting information systems. For example, audio, video, and text data is being gradually linked with traditional data. In addition, data is being mined automatically through tracking URL clicks, analysing customer purchases, and analysing content engagement data. On the other hand, Appelbaum et al. (2017) assert that big data has the potential to improve performance management systems; for example, finance and accounting teams can acquire benchmark metrics from big data analytics. To auditors, big data analytics has lowered the cost of auditing while enhancing profitability; for example, database-to-database verification with different organisations can be implemented increasing efficiency for these firms (Salijeni et al. 2019). Big data also has the potential to change the standards of accounting to focus on data rather than presentation (Salijeni et al. 2019). Businesses are using big data to enhance their understanding of their customers, risks, operations, and markets.

How will digital disruption affect types of jobs and skills required in the finance and accounting sector?

A study conducted by Richins et al. (2017) shows that managerial accountants are struggling to get valuable insights from data, which underscores the need for accountants to enhance their analytical skills to deal with large volumes of data. With the emergence of big data, firms in the accounting and finance industry are interested in employees that can analyse both structured and unstructured data which is non-traditional in nature (Salijeni et al. 2019). Exploiting big data will require a range of skills: statistical skills to develop algorithms and understand the robustness of models, technology and data skills to extract and manipulate the data, and domain knowledge to gain valuable insight from the analysis (OECD 2019). On the other hand, Appelbaum et al. (2017) emphasise the importance of business and commercial skills and the opportunity for accountants to play a bridging role between data science and the other business functions since data science is only a part of business operations.

Summary

There is no doubt that digital disruption continues to change operations and business models in the accounting and finance sector. Defined as digital technologies that lead to turbulence in the business environment, digital disruption has emerged a major source of competitive advantage for business organisations. In the finance and accounting sector, firms that have responded to big data and big data analytics in order to gain insight have enhanced their performance in that they have been able to understand their operations, their customers, risks in the business environment, and the markets they serve. However, research shows that many employees are not able to make valuable insights from big data, which shows there is a gap in knowledge influenced by big data which future researchers should explore.

References

Appelbaum, D., Kogan, A. and Vasarhelyi, M.A., 2017. Big Data and analytics in the modern audit engagement: Research needs. Auditing: A Journal of Practice & Theory, 36(4), pp.1-27.

Bolton, R.N., Chapman, R.G. and Mills, A.J., 2019. Harnessing digital disruption with marketing simulations. Journal of Marketing Education, 41(1), pp.15-31.

Brinch, M., 2018. Understanding the value of big data in supply chain management and its business processes. International Journal of Operations & Production Management.

Crittenden, V. and Peterson, R.A., 2019. Digital disruption: The transdisciplinary future of marketing education.

Li, T., Xiong, L., Dong, A., Liu, Z.S. and Tan, W., 2019. Optimization method based on big data in business process management. Cluster Computing, 22(3), pp.5357-5365.

Lien, D., 2017. Business finance and enterprise management in the era of big data: an introduction. The North American Journal of Economics and Finance, 100(39), pp.143-144.

Richins, G., Stapleton, A., Stratopoulos, T.C. and Wong, C., 2017. Big Data analytics: Opportunity or threat for the accounting profession?. Journal of Information Systems, 31(3), pp.63-79.

Salijeni, G., Samsonova-Taddei, A. and Turley, S., 2019. Big Data and changes in audit technology: contemplating a research agenda. Accounting and Business Research, 49(1), pp.95-119.

Skog, D.A., Wimelius, H. and Sandberg, J., 2018. Digital disruption. Business & Information Systems Engineering, 60(5), pp.431-437.

Teoh, S.H., 2018. The promise and challenges of new datasets for accounting research. Accounting, Organizations and Society, 68, pp.109-117.

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