How CPAs can thrive in the data-driven economy

How CPAs can thrive in the data-driven economy

With a combination of current and new skills, the profession can seize the opportunities presented by “data value chains.” In addition to the information and resources presented in the article, remember that CPA Alberta has a number of initiatives to help in this area. This includes a normal of professional development sessions, the Innovation and Technology Executive Program, and a Peer-to-Peer Forum focused on innovation and technology.

Over the past 18 months, Canadian CPAs have been deeply engaged in a rare exercise that aims not only to anticipate the future, but also to develop strategies that will help the profession adapt to the disruptive changes heading its way. This process, CPA Canada Foresight: Reimagining the Profession, has involved round tables, online discussions, scenario planning and a lot of hard thinking about the rapidly evolving relationship between accounting and technology. “The Way Forward,” a report released last year, lays out a road map for addressing two key questions that emerged out of the Foresight process: In what ways can professional accountants help unlock value for the organizations they serve? And how can the profession embrace change and react quickly and innovatively to new developments in the business community while continuing to support our members and act in the public interest?

There was broad consensus that a central part of the profession’s future lies in mastering and re-shaping a data-driven economy. A recent visioning exercise conducted by the federal government identified digitization in key sectors—health, bioscience, advanced manufacturing and agri-business—as crucial to Canada’s economic future and well-being. And with that digitization comes an explosion of digital information. Data has become a kind of medium of exchange that flows through the veins of our economy. And as with any currency, data only has worth when society has established principles about how it is valued, measured and traded. That presents an opportunity for CPAs, who are well positioned to provide oversight and governance of “data value chains.”

If a data value chain seems like an obscure concept, consider the analogy of a more familiar value chain: oil and gas. The chain begins with exploration activity and test drilling, and then extends across multiple sub-sectors: refineries, pipelines, distribution and so on. Different sorts of professionals work at each stage: geologists, process engineers, high-skill pipe fitters and marketers, to name a few. The value chain also requires high-level oversight by professionals who can measure the value of the resource, integrate sub-systems and ensure regulatory compliance. Often, these professionals are CPAs.

The same structure should exist for data value chains. They depend on the flow of digital information rather than the flow of oil, but they share many of the characteristics of other value chains. Instead of process engineers and geologists, data value chains depend on experts like data brokers, software engineers, data analysts and programmers. And rather than drilling for oil, they collect data, exchange it, analyze it and provide solutions as to how to use it, such as feeding it into an artificial intelligence application. Big tech firms routinely glean valuable insights from the large data tranches they amass, and with the right standards, data value chains can serve other organizations of all scales—even those that are not currently in the business of managing pools of data.

Like oil and gas, data value chains will require the right professionals and standards to ensure good governance and value maximization. They’ll need to operate within an overarching framework—not unlike the performance management systems or accounting and auditing standards used today—that allows companies to take advantage of this resource. That calls for a new set of professional skills focusing on enterprise-wide governance and using information as an asset. As trusted advisers, CPAs are well suited to step into that role.

Their duties will encompass working with a range of emerging disciplines and professions in the management of operations linked to the effective flow of information both inside and between organizations:

Data management. To leverage the value of the data pools they possess, companies will need to create records-management systems, deploy data-collecting devices and sensors, organize and grade the information gathered, and ensure the retention of metadata (data that describes other data).

Data segmentation. Operationally, data value chains must be properly segmented so that the right professionals manage the right components: cleaning up raw data, putting it in standardized formats, then aggregating, de-identifying, pooling and mining it for insights. Someone will need to determine what roles data engineers, data controllers, artificial intelligence experts and data scientists should play at different points on the value chain.

Data valuation. Increasingly, the share value of publicly traded companies is associated with data and intellectual property. Yet much of this value isn’t reflected on balance sheets and financial statements. CPAs should take the lead in developing approaches for valuing that data so companies can figure out how to monetize it.

Data standards. Effective oversight and governance can only exist if there are open, shared standards that allow various players at different points in the value chain to share data. There needs to be a common set of rules about financial or operational tasks, ranging from valuation and benchmarking to technical interoperability. Critically, standards, guidance and data KPIs will be required to clarify the roles and responsibilities of participants in data value chains.

Data governance. As companies increasingly digitize, collect and share more data, and find new ways of monetizing it, there will be a growing role for professionals with the skills and experience to tackle important ethical and regulatory issues arising from privacy law compliance, cyber-security and appropriate data use.

While we’ve singled out data value chains as a vital component of Canada’s economic future, today’s ground-level reality is that the vast majority of data analysis still occurs within single organizations. The risks and uncertainties associated with data sharing between organizations, even between divisions or branches in the same organization, are inhibiting the open flow of data. That poses a risk—and presents an opportunity—not just for the accounting profession, but the economy at large. Just as we wouldn’t be able to reap the benefits of oil and gas, agriculture and manufacturing without good governance and standards, we won’t have the capacity to compete in the global data economy of the future without similar frameworks.

That’s why we will need foundational standards to bring transparency to data value chains, establish common parameters, allow for interoperability and set verifiable data governance rules to establish and maintain trust between participants and with regulators. These standards are vitally important because they will ensure data is valid and trustworthy—precisely what is needed to help decision-makers make informed choices that drive success. Because the accounting profession is so versed in standards setting, assurance, valuation and governance, it is exceptionally well positioned to provide necessary oversight as the data value chain ecosystem develops and takes root. “CPAs have a lot of experience building frameworks that ensure financial information is consistent, comparable and reliable,” says Tashia Batstone, CPA Canada’s senior vice-president of external relations and business development. “Financial information is just one form of data. We have to take the skills we already have as they pertain to financial information, the most critical piece of data that businesses used in the past, and apply those skills to broader forms of data, which will become increasingly important for businesses in the future.”

CPA Canada is represented on the steering committee of the Data Governance Standardization Collaborative, a multi-stakeholder initiative led by the Standards Council of Canada. The Collaborative will identify where the development of standards would help the country to capitalize on the benefits of data while managing security and privacy risks. In addition, CPA Canada has signed a memorandum of understanding with the CIO Strategy Council to explore the development of guidance to help frame these issues.

To continue this process, the profession is building on the Foresight process and designing a consultation strategy so that CPAs can begin the granular work of supporting standards, gaining experience in an emergent discipline and establishing themselves as authorities. In a domain that will become vital to Canada’s 21st-century economy, CPAs have a golden opportunity to take the lead and, in so doing, enable the evolution of the profession.

Read the original article on CPA Canada’s website