When I recently asked leading data scientist Foster Provost (co-author of Data Science for Business*) what he thought the most important development in data science would be in the next five years, he replied, ‘the instrumentation of everything’.
The embedding of sensors in all kinds of objects is increasing rapidly, as is our ability to connect these sensors to the internet. Consequently, we can now measure, record and analyse information about the performance of machines, vehicles, land, buildings, consumer goods, people and more. This has significant implications for how we make decisions and think about business models.
The internet of things and accounting
The instrumentation of everything makes the publication of our new report, The internet of things: lessons from China, particularly timely. In this report, we explore how the internet of things (IoT) can be used by accountants to better support their organisations, from improving basic management information through to developing new strategies.
For example, at China Tower – a company that builds and maintains telecoms towers on behalf of Chinese mobile phone operators – the finance department is working with the business to better understand revenues and costs at a very granular level, using sensor data from each tower. This highly detailed data enables the business to make better decisions, for example, on where to build new towers and on which towers to decommission or relocate.
China Tower can now also analyse the usage of its back-up batteries in a way that enables it to share these batteries with other organisations and so generate additional revenues, with minimal risk to its own services. Banks have been taking advantage of this service to ensure their cash machines are always up and running.
New skills will be needed
To make the most of the IoT, accountants will need to develop the skills which ICAEW’s Data Analytics Community seeks to support. For example, the sheer volume of real-time, streaming data will mean spreadsheet skills will no longer be enough. To get insights out of the IoT's raw data, more advanced software packages or coding languages, such as Python or R, will need to be used.
Even if data scientists do most of the number crunching, accountants will still need to understand the models, algorithms and outputs of these tools. Indeed, accountants could play a lead role in taking complex IoT data analysis and making it accessible and useful to business leaders.
Please let us know how you are taking advantage of the IoT by emailing us at bam@icaew.com
* ICAEW members and students can access the e-book from the website.
Richard Payne
The views expressed are the author’s and not ICAEW’s.