Using the 5 V’s of big data to embrace finance digital transformation

March 30, 2022 10:46 AM

From finance to education to law, no profession will go unaffected by digital transformation. This includes accounting professionals — despite the fact that our field has long relied on digital technologies to simplify the many repetitive tasks demanded by our jobs.

One of the most interesting, yet overlooked aspects of digital transformation is the way in which it changes the shape of data available to auditing professionals. New technologies such as robotic process automation will increase not only the amount of data available to analyze, but also how that data needs to be analyzed as well as the variety of data models that auditors must become familiar with.

A popular means by which to understand the role of data in digital transformation involves invoking the “five V’s” of big data. The five V’s is a common framework used by technology analysts and executives for understanding corporate data, which tends to be highly abstract and otherwise difficult to conceptualize. By using the five V’s below, we are able to think more productively about technology strategy in our profession:

Value: The real or assumed business value of data;
Volume: The amount of data (depending on your industry, typically measured in terabytes or exabytes);
Variety: The different types and categories of data available;
Veracity: The verifiability or authenticity of the data; and
Velocity: The speed by which data is coming into the business.

When paired with emerging technologies that are increasingly playing a role in digital transformation in the enterprise, this framework can be useful for assessing the specific impact of finance digital transformation on internal auditing. Here are some considerations accounting professionals should keep in mind, using the five V’s as a model:

The value of blockchain data for CPAs

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When it comes to auditing, new technologies will improve not only access to and visibility of financial data, but also operational data. For CFOs, this is important — it’s not just the financial data that matters. In many cases, operational data is even more critical. For example, with the maturation of technologies such as blockchain, the value of data associated with cryptocurrency transactions could stand to increase dramatically, especially given the technology’s relatively under-regulated nature.

Turning up the volume for auditors

The advent of big data is most commonly associated with an increase in the sheer volume of data available. To make sense of such large data sets, auditors will increasingly require access to robotic process automation features and native machine learning analysis tools; these help simplify the process of sifting through large data sets. This will be complemented by a heightened emphasis on the technical implementation and necessary acumen of such time-saving technologies, enabling the finance function to take on a more strategic role.

Understanding the role of data variety

The relative variety of data can also be important because it often involves encompassing touchpoints from a wide variety of sources. Such data lends itself to solutions such as graph analyses and graph data modeling, which is a top Gartner emerging tech trend (Laurence Goasduff, “Gartner Identifies Top 10 Data and Analytics Technology Trends for 2021,” 2021). Such wide-ranging analyses can help improve overall decision-making and the functional ability of a finance executive and the company as a whole — particularly when it comes to changing a strategy or modifying operations if the company is not seeing financial results.

When truth matters: considering data veracity

It’s not uncommon for data points to be incorrectly measured or miscalculated due to misconfigured devices, settings or simple human error. Although technologies such as blockchain can help improve the veracity of data, it’s important to think critically about how existing processes are shaped and refined using existing features. In addition, with the rise of consumer privacy and the advent of consumer data platforms, internal auditors need to be especially mindful while ensuring proper segmentation analysis and budgeting for machine learning-powered marketing spend allocation.

Data velocity and the Internet of Things

Whether you work for a warehousing business or a software-as-a-service platform, the rise of IoT devices has led to an increase in data that moves at a rapid pace. Even though such data points can sometimes lay outside the realm of what’s needed to perform an audit, the operational data therein can be important for decision-making in the C-suite. Practitioners must be informed about the speed at which data is flowing into and out of the enterprise in order to understand how business operations are being affected by potentially unforeseen supply chain dynamics.

The importance of savvy digital transformation in finance departments can’t be understated. Disruptions will certainly affect our industry, yet we are not alone — and there will be no shortage of software and other modern technology solutions available to help us deliver optimal value to our businesses in an evolutionary age of sweeping digital change.