The Importance Of Big Data In Accounting

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Chapter 1 Introduction The definition of big data is not clear of the exact limits of big data. According to Manyika et al.(2011), big data refers to data whose magnitude exceeds the normal database application tools to store, analyze and manage. From the above definition, it is hard to determine the limits that qualify a dataset to be considered big data. Therefore, an assumption is made that as technology advances, the size and limits of big data will also increase. In addition, it is important to note that the definition of big data varies depending on sector and industry; depends on the software tools used and the sizes of data standards in the industry. With this regard, big data in many industries ranges from a dozen of terabytes to thousands…show more content…
With this regard, Mcfee and Brynjolfsson (2012) conducted a study in conjunction with McKinsey’s business technology to establish the impact of data analytics on the accounting profession. The study revealed that not all accounting managers embraced data-driven decision-making processes. However, Mcfee and Brynjolfsson (2012)’s study showed that accountantswho used data analytics had an overall better performance on operational results and financial measures. On the other hand, Manyika et al. (2011) noted that big data analytics leads to better and reliable predictions and consequently better decisions. Similarly, Mcfee and Brynjolfsson (2012) noted that management accountants in major airports in America integrated PASSUR’s RightETA, which is the key success factor in the aviation industry. Mcfee and Brynjolfsson (2012) argued that RighETA uses big data analysis to develop predictions in arrival times of airplanes, which has significantly saved many millions by avoiding delays. On the other hand, Dias (2011) argued that management accountants apply big data analytics to develop personalized promotions for companies. According to Dias (2011), data analysis from brands and all outlets in a business prevents complexities brought about by slow processes. CGMA (2014) concluded that the power of big data…show more content…
Many scholars predict that big data is the new trend just like industrialization and IT have been in the past. Despite the benefits that come along with data analytics, many predict that the industry does not have sufficient data analytics professional that can efficiently carry out data analysis processes. Therefore, it is likely that the world will not benefit from data analytics. However, scholars recommend that a lot of studies be carried out in this sector to establish the requirements and how the industry can benefit from data analytics. From the above literature, it is evident that many modern data analysis techniques are never taught in typical statistics courses. Instead, the employees acquire these techniques through experience. Therefore, it is paramount that business organizations establish sound talent management systems to ensure that they have sufficient data analytics employees. Regarding the impact of big data, it is evident that big data has more positive effects on the accounting profession than the negative impacts. The above literature shows that the accounting profession will significantly benefit, if not have already benefited, from data analytics. However, the management accountants have to keep themselves updated with the market trends to ensure that they remain relevant to the industry. Although big data has negative impacts such as misuse

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