I’m sure that by now, most of you are tired of hearing about the importance of big data. We get it, data is important to help grow businesses. The more relevant and timely the data is, the more useful it can be. However, I do believe there is a disconnect that lies where the information can really give you a comparative advantage.
As a CPA, I believe that 99% of data is essentially useless in terms of driving the business forward. Past events are not always the best indicator of what will happen in the future. Honestly, the majority of the information could not even relate to what is currently happening. However, that remaining 1% is extremely important. The problem is with the constraints of going through the other 99% of the data and communicating on how the 1% is relative to the business.
What if I told you that communicating the importance of that 1% could have been used to prevent something as large as a natural disaster, or even a nuclear disaster? There is nothing more tragic than a disaster that could have been avoided, especially one where the data was right at their fingertips.
The Fukushima Nuclear Disaster was the result of a major earthquake and a large tsunami that disabled the power supply, eventually disabling three cooling reactors. The nuclear plant was constructed to withstand a major earthquake, as well as large waves caused by the tsunami. The tragic problem was that these natural disasters were much larger than the plant could have anticipated, even in their worst case scenario.
In this case, the data was available to them but was not correctly analyzed and executed. Information from recent studies reveal data that showed a natural disaster of this magnitude could have indeed happened, was available. The fault comes from not fully understanding the data. The result from this unfortunate incident could have been avoided if the plant had just used, and truly analyzed, their data when they were constructing their building.
My first accounting job was collections in the financial service industry. Lehman Brothers was one of my major accounts and I remember September 15th, 2008 extremely well because of it. My major takeaway from that experience is how quickly profits and revenue can disappear if you are unable to collect the money that you are owed. I think that one of the best internal controls a company can have is creating high visibility on outstanding debt. At Solving IT, the finance team reviews the Account Receivable Summary with the CEO every other week. This should hopefully prevent a business meltdown of our own.