The power of business intelligence in accounting
Now more than ever before, practices are looking to technology not just to increase profitability, but also to foster resilience in the wake of what has been a disruptive year. What we’re seeing is that this ‘eye on the future’ mentality is driving an increased interest in innovation-based technology such as business intelligence tools, and what it can do not just for practices, but for their clients.
Innovation fuelled by disruption has also been identified as a trend by industry experts. In its latest IT spending forecast released in early April 2021, Gartner said that global information technology spending will grow 8.4% to $4.1 trillion in 2021, driven in part by enterprises accelerating their digital transformation plans. Gartner also stated that businesses are moving beyond the knee-jerk reaction of deploying technology to get a remote workforce functioning, and focusing on investments that enable innovation, not just task completion.
It encapsulates perfectly the natural evolution many practices have experienced over the past year, as well as the roadmap many are now pursuing. This often includes solutions such as business intelligence, as well as cloud-based visual reporting, and more flexible KPI building functionality.
Practices are becoming aware of how powerful it is to be able to use analytics, data mining, and visualisation to help make more data-driven decisions. Using business intelligence tools, they can analyse areas of potential profitability, assess cash reserves, manage chargeable and non-chargeable timesheets, forecast cashflow, and overall, improve practice management.
The business intelligence tipping point
As the pandemic hit, practices realised how valuable timely information is, and how integral it is to be able to drill down into their data and to see near real-time, business-critical metrics.
It’s no longer enough just to see net and gross profit. Practices now want to be able to see visual insight from their data such as WIP progress by employee, monthly billing processes, and other metrics such as client referrals and website referrals. It’s all valuable information that can be used to make business decisions and to inform future planning and forecasting, and it is why many practices are considering business intelligence tools.
Spreadsheets are often a mainstay in terms of organising and analysing data at many practices and there is nothing wrong with this, but as a mechanism, they simply can’t aggregate data from multiple sources into one place, and refresh it every hour without the need for manual intervention. If a practice has up to 30 spreadsheets that circulate throughout the business, it is likely to be time-intensive to update them, and as such, numbers are often only run once a week, or in some cases, once a month.
Gaining competitive edge
Many practices begin using business intelligence tools to increase transparency surrounding their own business activity, and this has been a big trend during the pandemic; particularly when businesses have prioritised putting in place more future-focused, resilience-based plans. However, while most technologies serve to improve operation or client-facing processes, business intelligence tools do both.
These tools can also be used as a competitive edge across practices. Advisors gain greater control of their data and reduce the time between something going wrong in your database and their ability to act on it (hourly refresh versus monthly board packs). The tools also significantly increase the chances of a practice hitting its goals and being able to evolve and grow.
What if you could pull data from unrelated sources for your clients to analyse, organising it with visually compelling and interactive insight? Business intelligence tools can be used for clients to generate this data-driven insight and to construct a strategic plan that identifies actions that can help clients not just to survive, but to be proactive in all business decisions.
Here’s an example: with a distributed workforce, you could pull a range of Practice Management-led insight around work in progress, debt and lockup across all clients, and be able to slice that information down to any dimension – office, partner, department. Having this type of information to hand can be crucial in terms of making timely decisions about actions to take with specific clients, or in the case of future planning, when forecasting may help to underpin major decisions.
Consider how data-rich timesheets are and think about how much insight can currently be extracted from them. With business intelligence tools, it’s possible to surface all timesheet information to see a visual breakdown of where all chargeable and non-chargeable time is being spent, down to assignment type. This gives the ability to see patterns of how work is being done in almost real-time, highlighting where improvements may be made.
What does the future hold?
The possibilities are endless, and there is a great deal more to come as, to date, most practices have just experienced the tip of the iceberg. We are seeing a rise in practices repurposing their traditional report builder roles into more modern business intelligence-focused roles.
As business intelligence tools become a mainstay for the accountancy profession, both small and large practices will be able to make more meaningful, data-driven decisions to help clients drive growth, while also increasing efficiency and productivity.
By Ian Elder, head of business analytics, Wolters Kluwer Tax & Accounting UK