Data Science in the Real World
How is the current state of Big Data Analytics in Controlling?
Usage and Development in Controlling
The interest in using data leads to an increasing trend of adopting big data analytics to improve the decision-making process. Big data analytics is defined as “where advanced analytic techniques operate on big data sets”. Due to increasing competition in data-driven markets, firms are adopting state-of-the-art information technologies for competitive advantage.
The role of controlling or management accounting departments is directly affected by a big data analytics tool since controllers are the central unit of a company in terms of using the information to support management. One of the challenges is to gain insights from this ubiquitous amount of information. The received insights are then used to make decisions and to adjust organizational processes to generate value.
“A management accountant or controller supports and advises the management of an organization in realizing its economic, public, and/or financial goals. Support is interpreted in terms of the design and maintenance of management control and accounting information systems, and the procurement and distribution of information.”
In consequence, the decisions of a company are based on evidence from analytical results and not only by the intuition of their managers. The business-cultural aspects, technological aspects must be considered, too, like a suitable infrastructure and a user-friendly surface, to gain competitive advantages with big data analytics.
Impact of Big Data Analytics on Controlling
While the term “controller” is common in German-speaking countries, “management Accountant” is a recognized term in English speaking countries such as the USA and UK. In comparing both professions, the tasks of the controller are generally considered to an extended range, not only focusing on accounting issues but also on management issues.
In our blog, the terms “controller” and “management accountant” are used for the same meaning, as commonly found in controlling and management accounting literature.
The features of big data analytics have facilitated the advanced analytics to construct a picture of an event, a scenario, or objects of interest from pieces of trivial information that are scattered across different databases.
Companies, in particular their controlling units, can apply the insight they gained from big data analytics to enhance their decision-making processes to achieve their business objectives successfully. With the overall focus on extracting the essential insights, big data analytics is based on data mining and statistical techniques. Actions from executives that were previously based on gut feeling could now be made using data-driven mathematical models.
Now, a controller could also utilize big data analytics for scenarios and consider seasonal fluctuations. Forecast accuracy affects the efficiency of the company planning process, the degree of goal achievement, total costs, and the level of customer fulfillment needs.
Current Usage and Development of Big Data Analytics
During the “Congress of Controllers” of the International Controller Association (ICV), we collected data through a survey. This conference took place in May 2019 in Munich under the motto “Prepare for your Future — Ideas. Learning. Networks”. It is regarded as the largest controlling conference in Europe.
To measure the recent status of analytics in terms of usage, the participants rated the perceived support and development (“To what extent have big data analytics tools in the controlling area been used in your company so far?”). Constructs in this study were in general measured using a five-point Likert scale, ranging from “strongly disagree” (1) to “strongly agree” (5).
As the Figure below shows, 28% of those surveyed controller answered that big data analytics is not used or used very little. According to 39% of the respondents, big data analytics is used little in their controlling department. Regarding the development of the usage of big data analytics, it can be stated that the majority (48%) rated the development as little. The results regarding the usage of predictive analytics during the planning phase shows an untypical course. The majority (31%) is not using such methods, but still, 28% mentioned using predictive analytics widely during the planning process.
The degree of maturity of big data analytics in controlling can be classified rather at the initial stage in Germany. Incorporating big data analytics into controlling still faces numerous barriers and hurdles, which might be the reason why some respondents rated very low about controllers not using big data analytics and still not have automated processes.
The usage of big data analytics in controlling has encountered a bottleneck in recent years, and the field has stagnated. But what are the barriers that companies have to fight to use such tools? Only technological ones? Or even culture?
In our next blog article, we will answer these questions and also look at the results of the respondents. We will share our findings regarding how to potential barriers in terms of big data analytics in controlling.
If you liked our findings and want to support stargazr.ai, please share it or follow us on Linkedin or Twitter!
