Firms and organizations should always be looking to improve. After all, stagnation usually means the end of the road has been reached. Employing data as a discovery and decision-making tool has grown in line with the advent of technology. Today’s capabilities make it a powerful ally that no analyst can afford to ignore.
Here we’ll answer: what are the uses of data analytics? We’ll also take a look at its growing place within the accounting world.
Data analytics uses data as its primary source of evidence for discovering answers to problems and informing future decisions. Making decisions traditionally might take a sample of data and combine this with a person's professional expertise and experience. Modern data analytics removes any ambiguity from the process, by enabling 100% data sets to be collated and analyzed. For an in-depth description, find our post on what is data analytics?
The uses of data analytics spread far and wide. A scientist might use it during a process of experimentation to better understand the results. An individual might use it to monitor their personal fitness, weight gain or weight loss. Any procedure in which data can be collected to better understand something can benefit from an analytical approach.
From a business perspective, data analytics can be employed to better understand customers and their behavior. For example, a business leader might want to know how their top-spending consumer's shop.
Is it online, or do they visit a physical store? Or perhaps they’ll use it to evaluate the success of an advertising campaign, social media post or web page. Any information gathered can help a business improve its service and do better the next time around.
There’s a growing use of data analytics within the external auditing profession. Accountants are increasingly using such processes, and given the possibilities they offer, we’ll take a further look at these below.
Data analytics enables organizations to base their decisions on 100% cold, hard evidence. This is as opposed to there being some aspect of personal opinion involved. Working with pure, data-based evidence allows for more accurate findings, and solid reasoning to base strategies on.
A specific point for auditors, using data analytics can increase trust in the process. Traditional auditing has long been based on data samples, leaving the potential for human error. Data analytics enables huge businesses to be audited, using complete data sets.
With data analytics in your arsenal, sheer size can no longer be used as a reason for higher-income accounts to avoid an audit. The use of 100% data is a vital step in shoring up confidence in the auditing industry.
Discover more: The difference between data analytics and audit analytics?
Building a business strategy takes time and money. It can also make or break a business, should that strategy be misinformed. Working with 100% data enables business leaders to base their decisions on evidence and evidence alone.
Using such an approach makes the potential for success much more likely. Figures are always more reliable than personal initiative, regardless of experience.
Data analytics acts as a digital work buddy for the external auditor or business analyst. It’s been estimated that automated analytics can take over around 65% of HR tasks, for example. These are generally the areas requiring the least amount of creativity from the analyst. This then frees them up to work on the most enjoyable part of a project.
Without looking into a crystal ball, one thing is certain – data analytics is here to stay. So will the future bring great changes?
In reality, data analytics will evolve, as developers find better methods of achieving their goals. There will likely be an increase in dedicated software tools. Some of these will be aimed at specific industries, with others intended for multi-use scenarios.
We also expect to see increased automation. The use of artificial intelligence combined with machine learning is growing at an alarming rate and will continue to do so. Thanks to cloud processing, the storage of big data will become easier than ever before. And, following a period of adjustment, external auditors will be able to collate and analyze data in real-time.
This would mean there’s no need to perform an entire audit within a tight and set schedule. The evidence can be screened whenever the data is ready. Such a shift could prove revolutionary in terms of being a time and money saver. It would also allow decisions to be made at a quicker pace, enabling organizations to gain advantages over their competitors.
For a deeper understanding of companies and their processes, adopting the best and latest technology is a must. Used by more than 1000 accounting firms worldwide, Inflo software can act as your 24/7 assistant.
Inflo software can analyze and map out audit data analytics for any company, big or small.
Contact us today for an entirely new approach to data analytics.