Data Rules

Last month, the US Secretary of Commerce announced the appointment of a Chief Data Officer to the Department of Commerce.

This move exemplifies the importance of data in our world. One of the major effects of the proliferation of digital technology and its interconnectedness has been the creation and availability of vast amounts of data. There is widespread recognition, in business and in government, that this data is a valuable resource.

This recognition shows itself in business with the growing use of analytics for everything from business intelligence to customer relationships to analyzing travel expense reports.

In government, policy formulation is increasingly dependent on meaningful data from a variety of sources.

A problem emerges, however. Not all of the data is usable in its present form. It exists in a variety of information systems and formats. Thus the rise of the concept of open data, i.e. data that is set in a format that is open and understandable to a variety of platforms, such as XML and XBRL. Governments have placed much emphasis on the creation of open data portals to make data available to the public for analysis.

Accountants need to take note. In an increasingly data centric world, their role is rapidly changing from one where they create pre-formatted reports to one in which they must analyze a vast array of data and make sense of it to a waiting world. This is an epic change, to use a currently popular metaphor.

Thus in the world of accounting, the primary focus of effort has shifted from debits and credits to data analytics. From pre-formatted reports for general purposes to analytical reports that support informed decision making on urgent issues of the day.

How we make the data more useful by adopting more open standards in presentation and how we then analyze the data is what will shape the accounting profession as we move more deeply into the world of data.

For an analysis of the Department of Commerce Appointment, check this link.