What Is Crowdsourcing?'

Accurate forecasting is crucial for businesses. For many years, companies and accounting firms have relied upon traditional forecasting methods to provide predictions, but times are changing. As technology advances, and we embrace the digital age, crowdsourcing is becoming increasingly commonplace. The infographic below explains what crowdsourcing is and provides an insight into how it works and why it is beneficial. This particular image relates to a research study carried out by a team at the University of Alabama at Birmingham. Crowdsourcing works by gathering information from a large pool of people, most commonly via the Internet. Participants may be paid for their input, but this is not always the case. The aim is for companies to collect data that informs decision-making and provides ideas and insight and to gauge a more accurate idea of earning potential for investments. Well-known examples of crowdsourcing platforms include Wikipedia and Waze. For this study, researchers analyzed the performance of Estimize, an open network that has over 3,000 contributors. According to the infographic, crowdsourcing estimates beat Wall Street consensus in 67% of cases. For the project, the team compared the performance of Estimize with other earnings platforms (including IBES) and statistical forecast generators. Crowdsourcing was found to be beneficial in forecasting earnings and anticipating earning expectations within the market. The higher the number of participants, the more accurate the forecast. Results were particularly impressive when combined with other analysis methods, including the use of IBES forecasts. With technology evolving, crowdsourcing looks set to become an increasingly integral tool for business accounting and data analysis.
Infographic Design By University of Alabama Birmingham