There has been a lot of buzz in recent times about ‘big data’. This is a term for the mass of digital information now generated, allowing us to examine our world in new ways.
But one of the problems with having such large swathes of complex data is exactly how we can make best use of it. One of the most interesting is predictive analytics.
The main focus with this has been trying to predict the future movements of financial markets. But more relevant to the world of expense management is the way it is being used in policing.
The Los Angeles Police Department have a pioneering unit called the Real-Time Analysis and Critical Response Division. This uses a team of analysts, armed with sophisticated software, to identify where and when crimes are most likely to happen.
The software uses algorithms which analyse vast police data sets to search for patterns and trends in the way that crimes occur in the city. The LAPD say that using this information to target resources has helped cut some crime categories by more than 50 percent.
They say that it’s a technique which will only improve with time as more historic data becomes available to allow for more accurate and refined software.
It’s intriguing therefore to think of how similar methods could be applied to the ‘policing’ by finance teams of employee expenses. Powerful expense management software such as webexpenses now generates a rich source of data which could be used.
Webexpenses provides accurate data on everything from the basics of who is claiming and what they are claiming to specifics such as exactly when and where expenditures takes place.
By analysing historic data, the software could start to predict where and when problems within a company are most likely to occur. It could spot patterns of behaviour which suggest a finance team should keep a closer eye on certain employees or spending categories.
The predictive analysis could also help to refine an expenses policy by providing a prediction of the likely outcome of any changes made. Lower a certain allowance and it could estimate if this is likely to cause an increase in expense fraud.
One of the challenges faced by the LAPD has been the public perception of using data in this way - particularly with media references to the totalitarian world portrayed in the Minority Reports movie.
But as evidence grows to suggest the effectiveness of these methods, more police forces are now starting to adopt the technology. In the UK, it has been successfully used by Thames Valley Police who attribute predictive analysis to a six percent crime reduction in Milton Keynes.
You can find out more about how webexpenses is helping organisations of all sizes to successfully tackle the problem of expense fraud.