Impact of Big Data on the Organization - Coursework Example

Running Header: Impact of big data on the organization Impact of big data on the organization Author’s Name Instructor’s Name Course Number Date of Submission Impact of Big Data on the organization Introduction Big data is the dynamic, large and disperate data volumes that are being created by people, tools and machines. Big data requires new, innovative and scalable technology to collect, host and analytically process the vast amount of data gathered in a bid to drive real-time business insights which relate to consumer, risk, performance, profit, productivity management and hence enhanced shareholder value (Rouse, 2017). Big data includes information that is gathered from social media, data from internet-enabled devices, machine data, video and voice recordings as well as the continued preservation and logging of structured and unstructured data. Big data is characterized by for V’s including volume, variety, velocity and veracity. Changes that have made big data possible A number of changes have given rise to big data. The business has always been interested in deriving insights from information so as to make better, smatter, fact based and real time decisions. Thus, the demand for depth knowledge has fueled the growth of big data tools and platforms. Big data has also been fuelled by the aggressive acquisition and permanent retention of data that has become a popular business model. The cost of data storage has also significantly reduced while capacity has shot up and continues to double every two years (mongodb.com, 2017). Data has also been fuelled by business analytics which has rapidly accelerated recently while organizations continue to capture far more security data with the emergence of ubiquitous devices. Improvements in search has also boosted usefulness of document and web data thus helping increase collection and maintenance of unstructured data. Finally, technology proliferation and clouded infrastructure has greatly reduced upfront capital costs of big data thus fuelling big data. How big data relates to accounting Accounting is related to big data in that account mainly uses data in performing its various functions. Big data provides for improved managerial accounting, financial accounting and financial reporting practices. For instance, it contributes to the development and evolution of effective management control systems and budgeting process owing to availability of adequate data as far as managerial accounting is concerned. Big data also serves to improve the quality and relevance of accounting information which enhances transparency and stakeholder decision making as far as financial accounting is concerned. Big data also helps in creation and refinement of accounting standards which helps ensure that the accounting profession remains useful in providing useful information as the dynamic and real time global economy continually evolves. It can thus be argued that big data is related to accounting in that it enhances the performance of accounting. This is evident in a number of areas as explained below. Accounting has a lot to do with accurately recording of financial data that enables preparation of financial statements. Big data facilitates this by providing data recorded in various forms and formats thus ensuring that the data recorded in financial accounts is more accurate in addition to providing evidential support. Big data also aids accounting by categorizing data in various forms and this helps in extraction of useful financial information and hence preparation of accurate accounts (ey.com, 2014). Through various applications that big data makes use of, it is possible to summarize data in various forms that are relevant in accounting record preparation and reporting. Big data analytics are useful in analyzing various data sets and hence coming up with relevant summarized data for accounting purposes. In the same way, big data aids in accounting reporting through provision of quality and relevant accounting information that is necessary for financial reporting. Thus, it can be concluded that big data is related to accounting in that it aids in improving efficiency while accounting can learn a lot from big data regarding recording, categorizing, summarizing and reporting. How big data has changed the working environment I work in a food production company as an accountant. My role includes performing such financial functions related to collection, accuracy, recording, analysis and presentation of the company’s financial operations results. In other words, my role has traditionally been that of collection of data and maintaining accurate records from which the company’s accounts and financial reports are prepared. However, with the emergence of big data, the accounting/ finance environment and the role of accounting/ finance in the organization is rapidly changing thus affecting how we perform our duties. Unlike in the past when financial data was limited, the financial data is now available from various sources and this has affected the expectations placed on financial professionals like accountants as we are now required to produce more quality work than before. With the emergence of big data, we are not just required to produce financial reports but we are required to extract more insights from financial data necessary for improving business process and efficiency and drive corporate strategy (Hannan, 2016). We are increasingly abandoning the use of spreadsheet as the main query tool in analyzing financial information. Traditionally, our department was analyzing the known unknowns such as profitability and return on investment. We are nowadays not just analyzing the structured information (spreadsheets) but also semi-structures and unstructured data while also relying on data from other departments. For instance, we now use predictive analytics tools in conjunction with customer data in making forecasts. In internal audit, we no longer just rely on the financial statements but we now have access to a lot of unstructured data from such sources as emails and formal company records. Technology is now applicable in analyzing text and hence our profession has been revolutionized by data analytics. Thus, it can be concluded that Big Data has revolutionized our profession by changing both the environment we operate it as well as our role. This is because in performing our duties, we no longer rely entirely on structured data such as financial statements but we also use unstructured data thus resulting in better use of data. Communication channels have also changed since we can now communicate our reports on a timely manner through the social media or even through our website. Opportunities that better use of data provides to the organization Big Data enables better use of data and hence avails a lot of opportunities to the organization. Big data helps identify questions which can help in monitoring and improving business performance while building analytical models which support various product and organizational improvements. Big data also helps the organization in risk identification and better management. The opportunities availed to the organization by big data are discussed below; i) Better decision making by the organization-Big data enable the organization to analyze growing volumes of structured transaction data as well as other forms of data usually left untapped by conventional business intelligence or accounting by enabling the organization use a mix of semi structured and unstructured data for instance from the internet, social media among others and hence draw conclusions that help the organization make informed business decisions (Hagel, 2013). This is made possible through the use of such elements as predictive models, statistical algorithms and what if analysis. ii) Big data will help the business to act more nimbly and allow it adapt to changes better than its competitors. iii) Use of Big data provides opportunity to increase customer loyalty by increasing the amount of data shared with the organization and the speed at which it is updated hence helping the business to more accurately and rapidly respond to customer needs. iv) Big data will help the company to collect billions of real-time data points on its products, customers and resources and then package the data instantaneously thus optimizing customer experience or resource utilization. v) Management of risk – using big data results in increasingly expanding the data resources used in forecasting to see the bigger picture of business risk (McAfee and Erik, 2012). This will be done through predictive analytics that combines statistical modelling and data mining in predicting events. The predictive models can be used in assessing risks of investments in new markets, products or emerging threats. Use of predictive analytical techniques will result in changes to budgeting and return on investment calculations while also applying failure based learning into processes, budgets and capital allocations. The threats associated with big data Big data has been associated with a number of threats that organizations ought to be aware of even as they embrace it to ensure that they benefit from it while guarding themselves against the associated threats. The threats include the following; i) Unsecured internet – Big data involves transferring data through a wireless network which poses a great risk to crucial data especially given that hackers write programs capable of intercepting logs and information passing over the network (theconversation.com, 2017). Organizational data passed through such network thus become vulnerable to attacks not only by malware and virus but also by hackers and this is a real threat to organizational data. ii) There lacks proper security tools for companies to protect themselves against security threats. Even with such tools as firewall and high tech secure file transfer, organizations are still faced with the threat of data loss. iii) The use of poor methods of information handling by employees may also expose organizational crucial data to the wrong hands (Parms, 2017). For instance, employees may forget to sign out of the company’s site thus exposing important data while untrustworthy employees may even leak company data to those seeking to exploit it and this may even threaten the company’s competitive advantage. iv) Big data has also exposed the organization to increasing competition since data is easily available in the internet and hence the organization no longer has competitive advantage of data. References: Rouse, M2017, Big data analytics, Retrieved on 6th May 2017, from; http://searchbusinessanalytics.techtarget.com/definition/big-data-analytics mongodb.com, 2017, Big data explained, Retrieved on 6th May 2017, from; https://www.mongodb.com/big-data-explained ey.com, 2014, Insights on governance, risk and compliance: Big data-Changing the way business compete and operate, Retrieved on 6th May 2017, from; http://www.ey.com/Publication/vwLUAssets/EY_Big_data:_changing_the_way_businesses_operate/%24FILE/EY-Insights-on-GRC-Big-data.pdf Hannan, A2016, Big data meets accounting, Retrieved on 6th May 2017, from; http://www.beckerpinnacle.com/accounting-and-finance/continuing-professional-education/big-data-meets-accounting/2016 Hagel, J2013, Why accountants should own big data, Retrieved on 6th May 2017, from; http://www.journalofaccountancy.com/issues/2013/nov/20138590.html McAfee, A&, Erik, B2012, Big data: The management revolution, Retrieved on 6th May 2017, from; https://hbr.org/2012/10/big-data-the-management-revolution theconversation.com, 2017, Big data security problems threaten consumers’ privacy, Retrieved on 6th May 2017, from; http://theconversation.com/big-data-security-problems-threaten-consumers-privacy-54798 Parms, J2017, More info, more problems: Privacy and security issues in the age of big data, Retrieved on 6th May 2017, from; https://www.business.com/articles/privacy-and-security-issues-in-the-age-of-big-data/ Read More