Baseball’s Data Revolution - Key lessons for Internal Audit
in Learning | PAFnow | Audit

Webcast “Baseball’s Data Revolution - Lessons for Internal Audit

Key takeaways

Author: Katharina Laumann, PR Manager and Editor at PAF

Since the early 1990s, data has had a tremendous impact on baseball and has transformed the league, from player selection to defensive positioning on a single game basis. At the latest since “Moneyball,” it’s been clear that data plays a critical role in leveling the playing field between teams, even if they don’t have big budgets. But only if it is used efficiently.

Today, thanks to tremendous technological advances such as motion capture, even more data is being collected - over 7 terabytes in each game. But the biggest change is how that data is now being linked to player development. In baseball, data is being used to actively drive change by tapping into untapped potential, identifying talent, and targeted improvement of players' skills and techniques.

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In a similar way, data is also changing the business world. If we understand how successful baseball teams drive change, then we can learn from that how and why internal auditing needs to drive change as well. Process Mining is the key technology in this regard, as it allows auditors to connect data and real-world processes.

In our webcast, “Baseball’s Data Revolution - Lessons for Internal Audit,” Brian Mensink, partner at KPMG USA, talked about the lessons we can learn from baseball to drive the data revolution in internal audit and business. Here are his key takeaways:

1) Driving Improvement from Within: Understanding Processes
When data analytics entered baseball, it gave players, coaches, and strategists a whole completely new way of looking at the game. It became very easy to unlock untapped potential (new talent, from the club’s own junior talent pool), or to find the root causes of problems, such as why a player suddenly had a drop in performance.

Similarly, Process Mining allows auditors to look at and understand the actual process in a completely new way, compare and contrast variants (benchmarking, compliance testing) determine variants with problems (bottlenecks, compliance violations, SoD violations, etc.), and identify the root causes of those problems.

2) Revisiting Fundamentals – Challenge the Status Quo
Viewing the game through the “data lens” revealed that what was considered conventional wisdom in baseball encouraged injuries. Only scientific and data-driven analysis revealed the flaws in these conventions used throughout the league.

For auditors, this means understanding and challenging the fundamentals of their audit process. The way internal audit works needs to change, away from the old approach of walk-throughs, which is prone to subjectivity and bias. This may mean that auditors need to “forget” what they think they know and let data guide them to a new perspective. But doing so can provide better ways for internal audit to become more dynamic, better at identifying problems, and better at addressing challenges.

3) Empowering a Culture of Data-Driven Continuous Improvement
In baseball, KPIs are ubiquitous. But they’re not just used for tracking or monitoring. Instead, readily available data has led to a form of data-driven self-awareness, thanks to immediate feedback.

Players and coaches are using data to reach their full potential. Effective use of data, paired with the right tools, attracts talent because it creates an environment where talent can develop to its full potential.

For auditors, this means that their role is increasingly to foster a culture of continuous improvement. This will ultimately drive value and attract talent. It also means they will work smarter, not harder, to meet growing expectations for audit insights.

4) Making the Data Meaningful
The triumph of data analytics in baseball, is due to a few individuals who knew how to read and translate the data that already existed. The impact was enormous and created a whole new subset of professional field.

In the future, every company will need someone who can understand data and turn it into meaningful insights to drive change. With Process Mining, that person doesn’t have to be a techie. Connecting real data and processes gives auditors the power to turn data into insights and action.

5) Get started
Early adopters of data analytics in baseball gained a competitive advantage that others have had to, and in some cases are still trying to, catch up with.

Internal audit should expect similar changes from new technologies such as Process Mining. The change is already underway, so now is the time to decide whether you want to race ahead of the competition or play catch-up later. Staying ahead doesn’t even require a large investment, just deploying and embracing existing technologies.

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