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SUMMARY DATA ANALYTICS
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Contains all lectures and videos + additional notes. Grade: 9.5
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Data Analytics Summary Lectures & VideosTopic 1 – Introduction to Data Analytics, Decision Support Systems, Business
Intelligence and Data Science
Introduction and Motivation
New Technologies Affect Accounting
- Cloud services: online environment where you can stall papers etc, software
providers who provide also accounting services in the cloud
- Artificial intelligence: at the core of data analytics, how external reporting works and
will work
- Blockchain: more secure, hard to break it, crypto currency, bitcoins, affects
significantly how accounting data is stored, processed, and shared
- Enterprise resource planning system → ERP
- XBRL: to exchange financial information
- IoT: internet of things → all connected to each other and communicate with each
other
- Robotic Process Automation
- Several technologies
- Big data: huge volume compared to what we have seen in the past, characterized
that it consist of a variety of different types of data
o Ex: unstructured, structured, likes on youtube etc
- Internet has changed our society → electronic communication
- Major impact: data is not stored physically anymore but in data bases
- Stall and recording data → financial support system
Developments in the Profession
- Business Intelligence (BI), Big Data analytics, artificial intelligence are used
extensively by firms especially for internal reporting and decision making.
- BI and data warehouses form the foundation of nowadays corporate reporting.
o Allows to analyze very quickly and report
- Audit firms have started using data analytics to support and automate auditing ( e.g.
PwC Halo, E&Y Helix, KPMG Clara).
,The Impact of Technological Innovations
- Cloud based services provide access to digital capabilities to all kind of firms which
have previously only been accessible to large companies.
o In the past, those technologies might have also been available. But what’s
now the game changer: with these cloud-based services, the technology
becomes available to everyone
- Virtually all data is digital and accessible.
o Doesn’t matter where in the world you are
- Software takes over the task of processing and recording business transactions as
well as traditional bookkeeping activities.
The Changing Role of the Accountant
Illustration of traditional accounting tasks and now the changing role of the accountant.
These traditional tasks are taken over by the software itself → new role of advising, not the
traditional bookkeeping activities anymore.
Why do we need this course?
- Big Data (large, fast accumulating, heterogonous data) is causing information
overload among decision makers.
- Someone must be able to understand the data by using suitable techniques capable
of dealing with Big Data via advanced data analytics.
- There is a severe shortage of professionals with sufficient data analysis skills
especially in the accounting profession.
- Data scientist might be the sexiest job of the next decade(s).
Managerial Decision Making
Information for Managerial Decision Making
- Management is (almost) the same as Decision Making?
- Management is a process by which organizational goals are achieved by using
resources
- Decision making: selecting the best solution from two or more alternatives
→ To select the best solution management requires sufficient information. How to make the
best decision?
,Decision-Making Process
Managers usually make decisions by following a four-step process
- Intelligence: Define the problem (or opportunity).
- Design: Construct a model that describes the real-world problem, define evaluation
criteria and search for alternative solutions.
- Choice: Compare, choose, and recommend a potential solution to the problem.
- Implementation: Implement the chosen solution.
Example: working for electricity company that has been established for a couple of years →
traditional electricity provider. Decision whether to acquire a new start-up company which
has developed a new smart electricity meter technology (they measure how much energy is
being consumed by your customers). During this decision process of acquisition, it engages
in different steps:
- Define the organizational objectives relative to this decision → acquire new skills,
larger market share
- Which search methods should be used?
- Data has to be collected → problem classification: in this case an investment
decision, which is usually highly unstructured
- Problem statement
- Formulate a model (ex: mathematical model or simple matrix)
- Searching for alternatives (ex: invest in start-up, acquire start-up or do nothing)
- Solutions are calculated and sensitivity analysis is carried out → how robust is model
- Implementation
o Feedback loops in this model
Models
- Decision making processes involve the inclusion of at least one model
- A model is a simplified representation or abstraction of reality
o Reality is usually too complex to consider in its entirety
- Modeling is a combination of art and science
, The Benefits of Models
- Manipulating a model is much easier than manipulating a real system
o Changing a model is easier
- Simulation is easier and does not interfere with the organization’s daily operations
- Compression of time, years of operations can be simulated in minutes or seconds
- The cost is much lower than experiments conducted on a real system
- The consequences of making mistakes are less severe
- Mathematical models enable the analysis of a very large number of possible
solutions.
- Models enhance and reinforce learning and training
- Models and solution methods are readily available
This framework helps us to understand what types of decisions there are and what type of
controls we can execute.
MIS: Management Information System, systems which are used in order to support
management and employees to make rather structured decisions
DSS: Decision Support Systems, systems which are primarily used in order to support
management in making semi structured or unstructured decisions.
Question: For most organizations, evaluating the credit rating of a potential business partner
is? Answer: Part of managerial control
An Early Decision Support Framework
Degree of Structuredness (Simon, 1997)
- Highly structured (programmable)
- Semi-structured
- Highly unstructured (non programmable
Types of Control (Anthony, 1965)
- Strategic planning (top-level, long-range)
- Management control (tactical planning)
- Operational control
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