By Jennigay Coetzer – Business Day, 5 May, 2011

The explosion of data is the single most pressing issue facing chief financial officers in most companies. “It is predicted that the volume of data produced globally will have increased from 800,000 petabytes in 2009 to 35 zettabytes by 2020,” says Greg Bogiages, director of Cortell Corporate Performance Management.

He says eighty percent of business related data is unstructured, and some of this is external. Unstructured data includes information stored on radio frequency identity (RFID) tags that allow products and vehicles to be tracked as they move through the supply chain.
“Research shows that 30 billion RFID tags were in use in 2010 compared to 1.3 billion in 2005.”

He says another form of unstructured data is the information companies are trying to gather that is being posted on the internet, such as what customers are saying about them and their products and services on social networks. “Twitter processes 7 terabytes of data every day and Facebook processes 10 terabytes a day.”

He says people tend to trust information they obtain through social networks more than they trust the marketing information put out by the companies that are selling the products and services. Data accuracy and integrity is another major problem for companies, says Bogiages.

“More than a third of the companies we come across still produce financial information manually and lack sufficient operational and financial data.” He says this includes large global organisations with multiple subsidiaries that have been acquired over the years that all use different product definitions, descriptions and coding structures.

In organisations like this, the finance departments spend hours trying to benchmark performance across subsidiaries, which is impossible to do accurately. “We have a mining customer in this situation, and we have had to develop specific business intelligence systems for each of its mines,” he says.

These systems draw information out of systems across the organisation and aggregate it at a high level, but it is still difficult for top management to drill down into the detail. If the problem of managing and analysing data is not addressed today, the implications will become increasingly serious, says Bogiages.

He says the King 3 report recommends that all companies should produce an integrated report covering people, profit and the environment. “In January this year the Johannesburg Stock Exchange (JSE) made this a requirement for listed entities.”

This means companies must produce a sustainability report about aspects of the business such as skills levels, BEE status, health and safety and the impact of their business activities on the environment, in terms of their carbon footprint. In addition, these reports must be independently audited.

“In our experience, in most companies much of this information is not captured electronically,” says Bogiages. To address data management issues, companies need to implement standards for the terminology, definition and the format of all data.

They also need to standardise the way in which things are measured and defined, for example in relation to how their carbon footprint is measured, how absenteeism is defined and what gross profit includes. “Everywhere we go we see conflicting definitions of how gross margins are defined and calculated,” says Bogiages.

He says companies need to appoint someone who is accountable for the accuracy of company information. Accountants also need to develop more analytical and interpersonal skills so that they can deal with the people they are relying on to provide them with the information they need to analyse.

“South African accountants are highly financially skilled, but they are not trained in analytics and communication,” he says.

Jennigay Coetzer is a freelance business and technology journalist and she writes regularly for Business Day. She also runs media training and writing skills workshops, and is the author of A Perfect Press Release – or Not?, a guide to writing and distributing effective press releases, an electronic version of which can be downloaded free from her website: www.jennigay.co.za.

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