Look at the New Relationship Between Accounting and Business Intelligence

With the struggling economy, all companies are focusing on any possible ways to increase revenues and decrease expenses. Executives are under pressure to make decisions which will greatly affect the well-being of their corporations. Historically, executive decision making has been strongly led by finance. Many board rooms have always had seats at the table for Chief Executive Officers, Chief Financial Officers, and Chief Operating Officers. Recently, however, a new chair has been pulled up to the table for Chief Information Officers.
One major area of growth for CIOs is Information Management, specifically, Business Intelligence (BI), also known as Decision Support. BI is a field which focuses on turning data into information by applying knowledge, technology, and analysis. BI technologies can be utilized for historical analysis, present analysis, and predictive analysis. Business intelligence encompasses data warehousing, which allows for massive quantities of data, often obtained from many separate source systems, to be housed in one location, which is available for querying.
One of the source systems providing a plethora of rich data is the financial system. Financial systems are often used for each financial transaction and the sum of the data then feeds into a system that is used to manage the General Ledger. The financial transaction data feeds the GL, and then the GL data often feeds the costing system. These systems generate financial statements such as the balance sheet and the income statement.
The financial data is incredibly useful for numerous types of analysis which can benefit not just finance, but multiple departments in an organization. The top summary of financial data would be the Balance Sheet, the Income Statement, and the Statement of Cash Flow. By analyzing these statements, a good understanding of the current climate in an organization can be obtained. These high level reports are not as good, however, at pointing out more specific problems and potential solutions.
In the past, once executives would analyze the high level reports, they would have more detailed analysis manually compiled by employees and then have summaries presented to them. With new technology, executives no longer have to hear all of the news second hand. Innovative reporting allows executives to get the overall climate of the organization with summary statistics and graphical representations, and it also allows them to dig in on their own through cube technology which provides drill-through capability right into the detailed data. This technological advance in reporting capabilities allows for quicker analysis, quicker answers, increased internal transparency, and overall quicker and more informed decision making.
Another large piece of business intelligence is an emphasis on process improvement with a focus on automation. Manual manipulation of data always creates increased risk for integrity, whether the mistakes made are intentional or unintentional; when manual adjustments are made, errors are inevitable. Eliminating as much, if not all manual manipulation from the point of data entry to the point of reporting allows for the most pure form of the information to be relayed to decision makers.
While many of the priorities for finance and business intelligence seem aligned, process improvement may be the largest point of contention. The premise of automating a task is that if there are consistent rules which can be applied to a process, those rules can most likely be programmed into a system to take the initial data and create the final product. While the programming code can be unbelievably complex and detailed, it requires very strict adherence to rules. Accounting principles, as established by governing boards such as the Financial Accounting Standards Board (FASB), are not strict rules, instead they are flexible guidelines. This slight disagreement in principles for BI and Accounting can create a bit of friction; however, if BI and Accounting teams can have clear and consistent communication it is possible to find and continuously represent a middle ground between the BI rigidity and the Accounting flexibility both internally and externally.
Since BI is young, many organizations are just learning how to embrace the new concepts and technology. Historically, finance has been the one of the main sources for analysis and reporting within an organization, so the introduction of BI is a huge change and it is one that is viewed by some as threatening. It is important to consider, however, that BI contains and analyzes data for an entire company, not just with a focus on finance, but also with a focus on operations, quality, etc.. BI architects and analysts, therefore, must have many skills outside of just the financial realm and typically do not contain highly focused certifications such as that of CPA or CMA. BI architects and analysts rely on the subject matter experts for much of their initial and ongoing development. The goal of BI is to make it easier for other employees and managers to do their daily tasks by removing manual tasks and allowing them to put more of their undivided attention on the concepts that require their more focused skill sets. The new relationship that must be formed between accounting professionals and business intelligence professionals within organizations is one that may take time to perfect; however, it is worth working on because the outcome can be highly beneficial for all parties involved.
Since BI is young, many organizations are just learning how to embrace the new concepts and technology. Historically, finance has been the one of the main sources for analysis and reporting within an organization, so the introduction of BI is a huge change and it is one that is viewed by some as threatening. It is important to consider, however, that BI contains and analyzes data for an entire company, not just with a focus on finance, but also with a focus on operations, quality, etc.. BI architects and analysts, therefore, must have many skills outside of just the financial realm and typically do not contain highly focused certifications such as that of CPA or CMA. BI architects and analysts rely on the subject matter experts for much of their initial and ongoing development. The goal of BI is to make it easier for other employees and managers to do their daily tasks by removing manual tasks and allowing them to put more of their undivided attention on the concepts that require their more focused skill sets. The new relationship that must be formed between accounting professionals and business intelligence professionals within organizations is one that may take time to perfect; however, it is worth working on because the outcome can be highly beneficial for all parties involved.

Posted in: Accounting,Business