Use Your Data to Propel Your Organization; Go For It on Fourth Down
In the early days of artificial intelligence (“AI”), stories of the limitations of robots learning to drive cars were prevalent. Despite driving being something humans are able to do almost subconsciously, robots have difficulty reading context into situations – even after years of some of the smartest humans alive researching and developing self-driving vehicles.
The human brain has thus far been proven impossible to replicate even with all the technological advances in society, which is why machine-driven data analytics is not the be-all and end-all solution to your problems. Despite the early success of sports organizations using analytics to gain an edge on their opponents, as portrayed in the film “Moneyball,” many of the most successful teams still do not rely on data analytics to make important decisions. New England Patriots Coach Bill Belichick recently said, “Analytics is not really my thing. I just try to evaluate what I see.” Then he explained that the role of analytics in his fourth down decision making was “less than zero.”
Using your prior experience to run your business or organization is just as important to making the right decisions as it is to Belichick in deciding whether to go for it on fourth down. However, in a time with abundant data available on every topic, giving yourself every data point possible to make informed decisions is paramount to success.
Consider this: Business owners and managers worldwide – and potentially your competition – rolled out of bed this morning and opened an app to see every data point pertinent to their business carefully curated to help inform their decisions for the day. They may have access to a “visualytics” platform such as Tableau or Microsoft Power BI that allows them to easily dive into data from the prior day, week or month to answer questions related to the performance of their organization. They may be cutting down on wasted time in their company’s finance department by using extract, transform and load tools (ETL) to automate daily processes through coded and scheduled actions. In real time, they probably can tell you their company’s cost of capital, their next project’s expected return on investment or the number of man-hours used to produce their previous month’s revenues.
Fortunately, you likely already have the tools to join them. Our team can help you navigate those tools and understand your numbers!
Common Analytics Tools
Nearly every business uses Microsoft Excel for myriad applications, but most users barely will scratch the surface of its capabilities. Many people have at least a passing familiarity with pivot tables and can use them to summarize data quickly. Most, however, are unaware of how to use the free Excel add-in PowerPivot, which can supercharge your ability to quickly pivot (or summarize) data from multiple sources. After a one-time setup, data can be pulled directly from the databases your software uses and automatically be manipulated and connected to other data sources through relationships in the Excel “data model.” Then, the aggregated data can be analyzed much like it would be in a pivot table.
Likewise, VLOOKUP is a commonly used Excel function to analyze two lists or tables, but it is far less common for people to use Microsoft’s free Fuzzy Lookup add-in, which allows you to multiply columns in multiple tables for similar matches. You also can customize just how similar, or “fuzzy”, you’d like your matches to be.
While Excel and pivot tables can create charts and graphs that are visually appealing and assist with analysis, there are other software applications that can make the process easier and handle larger data sets and diverse sources. Microsoft PowerBI takes the Excel data model one step further by providing a user-friendly way to investigate your data visually through charts and dashboards. Dashboards can be created once and updated from multiple systems in real time, allowing executives to see what matters to them most, manipulate it and immediately drill down deeper into the data. Microsoft offers its PowerBI platform for free, but users can pay $10 per month per user for advanced sharing capabilities.
While it is a more expensive option, Tableau is popularly regarded as the standard for visual analytics.
Benefits of Automation
Aside from allowing you to look deeper into data, another branch of data analytics can solve a nagging problem for companies by using programs to automate resource-hogging tasks. A mantra often referenced in technology circles sums it up — “Automate the Boring Stuff.”
Many accounting departments have found ways, for instance, to have computers reliably perform bank reconciliations in mere minutes that previously had taken employee hours or even multiple days to complete. Some accounting departments have even automated their month-end closing procedures, consolidating what may have taken days into to a few hours of work. One anecdotal report in the news tells the story of a work-from-home employee who wrote a program to automate his job responsibilities and fraudulently claimed 40 hours a week when it only took him one to two hours per week to review the program’s work. Ethical conundrums aside, this serves to illustrate just how much time can be freed up for employees to be able to focus on higher-level issues.
Automation can also be used to enhance employee work and ensure data quality. Accounting mistakes too often are only caught in month-end or even year-end closing processes. Tools are available, however, to verify data and eliminate errors on a daily basis. Instead of an executive scanning bank statements for indications of fraud, a program can run a whole suite of tests to find suspicious transactions or duplicate payments.
Data tools can range from being created for specific uses to being generalized for all data types, industries and users. While programming languages and open-sourced software, such as Python, VBA in Excel or KNIME, can be used to automate tasks, they may not be as user-friendly as purchased solutions, such as Alteryx or EasyMorph, which allows users to visually script workflows for data to follow and import directly from or export directly to databases.
Accounting departments and internal auditors have long been known to use products such as Caseware’s IDEA and ACL Robotics to help automate tasks, while Microsoft Windows comes installed with an app called “Task Scheduler” that can be used in conjunction with other programs to run workflows without a need for anyone to be present.
You already use data analytics (whether you realize it or not), as your brain is constantly processing the data points available to it. You, like Belichick, can continue to rely on your brain to make decisions autonomously. To keep up with an ever-changing world, however, your “gut” can and should be supplemented with additional data points that can be made nearly instantly available to you. The timeliness, quantity, quality and consistency of those data points will depend on the tools you use and the successful implementation and monitoring of them.
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About Ericksen Krentel
Ericksen Krentel CPAs and Consultants, founded in New Orleans, Louisiana in 1960 with offices in New Orleans and Mandeville, believes that serving as the clients’ most trusted adviser is grounded in going beyond the numbers.
That includes helping clients achieve their business and personal financial goals by providing innovative and exceptional services in the following areas: audit and assurance services, tax compliance and planning, outsourced CFO services and business valuations for a variety of industries; employee benefit plan audits; fraud and forensic accounting; business planning; IT consulting; loss calculations; and estate planning.
Learn more at www.ericksenkrentel.com.