👉 👉 Introduction to Data Science for Business Decision-Making

Chapter - 8.1
Meaning, Nature, Properties, Scope of Data

There is a saying ‘data is the new oil’. Over the last few
years, with the advent of increasing computing power
and availability of data, the importance and application
of data science has grown exponentially. The field of
finance and accounts has not remained untouched from
this wave. In fact, to become an effective finance and
accounts professional, it is very important to understand,
analyse and evaluate data sets.

What is data and how it is linked to information and knowledge?

The idea of data is Data needs to processed When these

frequently described to as for gathering information. ‘information’ is
‘raw’ data, which is a we take the help of used for solving
collection of meaningless computers and software a problem, we
text, numbers, and packages for processing say it’s the use
symbols. data of knowledge.

Data Information = Data + Context Knowledge =

Information +
2,4,6,8.... 2, 4, 6, 8……… (Multiplication table of 2) Application of it

Amul, Nestle, ITC.... Amul, Nestle, ITC…… (Three FMCG

companies listed in NSE)
36,37,38,35,36.....
36, 37, 38, 35, 36……… (Highest
temperature in Kolkata for last four days)

2, 4, 6, 8……… (Multiplication table of 2)….(The table of 3 should start from 3)

Amul, Nestle, ITC…… (Three FMCG companies listed in NSE)….(These three
company’s financial performance
should be analysed to understand the Indian FMCG sector)
36, 37, 38, 35, 36……… (Highest temperature in Kolkata for last four days)…….
(The sale of ACs may be estimated using this information)
 Nature of Data

Descriptive data: Some Graphic data: A picture or

Numerical data: Any data times information graphic may tell thousand

expressed as a number is a may be deciphered in stories. Data may also be

numerical data the form of qualitative presented in the form of a

information. picture and graph

At Hindustan Unilever, we have always strived to grow our business while protecting the
planet and doing good for the people. We believe that to generate superior long-term
value, we need to care for all our stakeholders – our consumers, customers, employees,
shareholders and above all, the planet and society. We call it the multistakeholder model
of sustainable growth. With more people entering the consuption cycle and adding to the
pressure on natural resources, it will become even more important to decouple growth
from environmental impact and drive positive social change.

Chapter - 8.2

Types of Data in Finance and Costing

The kinds of data used in finance and costing may be quantitative as well as
qualitative in nature.

Quantitative financial data: By the term Qualitative financial data: However,

‘quantitative data’, we mean the data some data in financial studies may
expressed in numbers. The quantitative appear in a qualitative format e.g. text,
data availability in finance is significant. videos, audio etc. These types of data
The stock price data, financial statements may be very useful for financial analysis.
etc are examples of quantitative data. As For example, the ‘management discussion
most of the financial records are and analysis’ presented as part of annual
maintained in the form of organised report of a company is mostly presented
numerical data. in the form of text.
 Types of data

Nominal Scale: Nominal

scale is being used for
categorising data. Under
this scale, observations
are classified based on
certain characteristics.

Interval scale: Interval scale is used for categorising

and ranking using an equal interval scale. Equal
intervals separate neighbouring scale values. As a
result of scale’s arbitrary zero point, ratios cannot
be calculated.

Ordinal Scale: Ordinal scale is being used for classifying

and put it in order. The numbers just indicate an order.
They do not specify how much better or worse a stock is
at a specific price compared to one with a lower price.

Ratio scale: The ratio scale possesses all

characteristics of the nominal, ordinal, and
interval scales. The acquired data cannot
only be classified and rated on a ratio scale,
but also have equal intervals.

The differentiation between the four scale types is based on three basic
characteristics:
(a) Whether the sequence of answers matters or not
(b) Whether the gap between observations is significant or interpretable, and
(c) The existence or presence of a genuine zero.
 👉
Chapter - 8.3
Digitization of Data and Information

In plain terms, digitization implies the process of

converting the data and information from analogue to
digital format. The data in the original form may be
stored in as an object, a document or an image. The
objective of digitization is to create a digital surrogate
of the data and information in the form of binary
numbers that facilitate processing using computers.

There are primarily two basic objectives of digitization.

First is to provide a widespread access of data and information to a very large group
of users simultaneously.
Secondly, digitisation helps in preservation of data for a longer period. One of largest
digitization project taken up in India is ‘Unique Identification number’ (UID) or
‘Aadhar’

Why we digitize?

There are many arguments that favour digitization of records. Some of them are
mentioned below:
Improves classification and indexing for documents, this helps in retrieval of the
records.
Digitized records may be accessed by more than one person simultaneously.
It becomes easier to reuse the data, which are difficult to reuse in present format
e.g. very large maps, data recorded in microfilms etc.
Helps in work processing
Higher integration with business information systems
Easier to keep back-up files and retrieval during any unexpected disaster
Can be accessed from multiple locations through networked systems
Increased scope for rise in organizational productivity
Requires less physical storage space
 How do we digitize?

Phase 1: Justification of the proposed digitization project

At the very initiation of the digitization project, the accrual benefit of the project
needs to be identified. Also need to compute the cost aspect of the project and the
assessment of availability of resources. Risk assessment is an important part project
assessment. For the resources that may be facing quick destruction may be required
an early digitization.

Phase 2: Assessment
In any institutions, all records are never digitized. The data that requires digitization
is to be decided on the basis of content and context. Some data may be digitized in a
consolidated format, and some in detailed format. The files, tables, documents,
expected future use etc are to be accessed and evaluated for the assessment. The
hardware and software requirements for digitization is also assessed at this stage.
The human resource requirement for executing the digitization project is also
planned. The risk assessment at this level e.g. possibilities of natural disasters, and/or
cyber attacks etc also need to be completed.

Phase 3: Planning
Successful execution of digitization project needs meticulous planning. There are several
stages for planning e.g. selection of digitization approach, Project documentation,
Resources management, Technical specifications, and Risk management.
The institution may decide to complete the digitization in-house or alternatively by an
outsourced agency. It may also be done on-demand or in batches.

Phase 4: Digitization activities

Upon the completion of assessment and planning phase, the digitization activities start.
The Wisconsin Historical Society developed a six-phase process viz. Planning, Capture,
Primary quality control, Editing, Secondary quality control, and storage and
management. The planning schedule is prepared at the fist stage, calibration of
hardware/software and scanning etc is done next. A primary quality check is done on
the output to check the reliability. Cropping, colour correction, assigning Metadata etc
is done at the editing stage. A final check of quality is done on randomly selected
samples. And finally, user copies are created, and uploaded to dedicated storage space,
after doing file validation.
Phase 5: Processes in the care of records
Once the digitization of records is complete, there are few additional requirements arise
which may be linked to administration of records. The permission for accession of data,
intellectual control (over data), classification (if necessary), and upkeeping and
maintenance of data are few additional requirements for data management.

Phase 6: Evaluation
Once the digitization project is updated and implemented, the final phase should be a
systematic determination of the project’s merit, worth and significant using objective
criteria. The primary purpose is to enable reflection and
assist identify changes that would improve future digitization processes.

Chapter - 8.4

Transformation of Data to Decision Relevant Information

To make the data turn into user friendly information, it should go through six core
steps:
1. Collection of data: The collection of data may be done with standardized systems
in place. Appropriate software and hardware may be used for this purpose.
Appointment of trained staff also plays an important role in collecting accurate
and relevant data.
2. Organising the data: The raw data needs to be organized in an appropriate
manner to generate relevant information. The data may be grouped, arranged in
a manner that create useful information for the target user groups.
3. Data processing: At this step, data needs to be cleaned to remove the unnecessary
elements. If any data point is missing or not available, that also need to be
addressed. The options available for presentation format for the data also need to
be decided.
4. Integration of data: Data integration is the process of combining data from
various sources into a single, unified form. This step include creation of data
network sources, a master server and users accessing the data from master
server. Data integration eventually enables the analytics tools to produce effective,
actionable business intelligence.
5. Data reporting: Data reporting stage involves translating the data into a
consumable format to make it accessible by the users. For example, for a business
firm, they should be able to provide summarized financial information e.g.
revenue, net profit etc. The objective is, a user, who wants to understand the
financial position of the company should get the relevant and accurate
information.
6. Data utilization: At this ultimate step, data is being utilized to back corporate
activities and enhance operational efficiencies and productivity for the growth of
business. This makes the corporate decision making really ‘data driven’.
 Chapter - 8.5
Communication of Information for Quality Decision-making

In a sense, a judicious use of data analytics is essential for implementation of ‘lean

finance’, which implies optimized finance processes with reduced cost and increased
speed, flexibility and quality. By transforming the information into a process for quality
decision making, the firm should achieve the following abilities:
(i) Logical understanding of a wide-ranging structured and unstructured data and put
on that information to corporate planning, budgeting and forecasting and decision
support
(ii) Predict outcomes more effectively compared to conventional forecasting techniques
based on historical financial reports
(iii) Real time spotting of emerging opportunities and also capability gaps.
(iv) Making strategies for responding to uncertain events like market volatility and
‘black swan’ events through simulation.
(v) Diagnose, filter and excerpt value from financial and operational information for
making better business decisions
(vi) Recognize viable advantages to service customers in a better manner
(vii) Identifying possible fraud possibilities on the basis of data analytics.
(viii) Building impressive and useful dashboards to measure and demonstrate success
leading to effective strategies.
The aim of a data driven business organization is develop a business intelligence (BI)
system that is not only focused on efficient delivery of information but also provide
accurate strategic insight into the operational and financial system. This impacts the
organizational capabilities in a positive manner. This makes the organization resilient to
market pressures and create competitive advantages by serving customers in better
way by using data and predictive analytics.

Chapter - 8.6
Professional Scepticism Regarding Data

A deeper understanding of hidden insights that lie underneath the surface of the
data set need to be explored, and what appears on the surface should be looked with
some scepticism.
The emergence of new data analytics tools and techniques in financial environment allows
the accounting and finance professionals to gain unique insights into the data, but at the
same time creating very unique challenges while exercising scepticism. As the availability
of data is bigger now, analysts and auditors not only getting more information, but also
is facing challenges about managing and investigating red flags.
 Chapter - 8.7
Ethical Use of Data and Information

The five basic principles of data ethics that a business organization should follow are:
(i) Regarding ownership: It is unlawful and unethical to collect someone’s personal data
without their consent. The consent may be obtained through digital privacy policies or
signed agreements or by asking the users to agree with terms and conditions. It is
always advisable to ask for permission beforehand to avoid future legal and ethical
complications.

(ii) Regarding transparency: The objective with which the company is collecting user’s
data should be known to the user. For example is the company is using cookies to track
the online behaviour of the user, it should be mentioned to the user through a written
policy that cookies would be used for tracking user’s online behaviour and the collected
data will be stored in a secure database to train an algorithm to enhance user
experience.

(iii) Regarding privacy: As the user may allow to collect, store and analyze the
personally identifiable information (PII), that does not imply it should be made publicly
available. For companies, it is mandatory to publish some financial information to
public e.g. through annual reports. However, there may be many confidential
information, which if falls on a wrong hand may create problems and financial loss.

(iv) Regarding intention: The intension of data analysis should never be making profits
out of others weaknesses or for hurting others. Collecting data which is unnecessary for
analysis should be avoided and it’s unethical.

(v) Regarding outcomes: In some cases, even if the intentions are good, the result of
data analysis may inadvertently hurt the clients and data providers. This is called
disparate impact, which is unethical.