Archives For Digital Darwinism

2015: Year of the Robot?

accapr —  12 January 2015 — 2 Comments

DP_Headshot1

By David Poole, CEO of Symphony Ventures 

Automation of business processes through Robotic Process Automation and Artificial Intelligence is the subject of a great deal of speculation. Is the accounting profession on a collision course with these game-changing technologies? Is the future bleak or bright for today’s Accountant?

In the recent ACCA white paper, Digital Darwinism: Thriving In The Face Of Technology ChangeFaye Chua and her contributors make some very insightful predictions about the emerging role of technology in accountancy. The chapter on Artificial Intelligence (AI) and Robotics offers an interesting view into the potential role process automation can play in improving systems, reducing costs, and increasing accuracy. As an accountant by training, I am fascinated by what the future holds for this industry.

While far from envisioning a world where mechanical robots can credibly take over the complex and intuitive role of the accounting professional, I believe software robots, or Robotic Process Automation (RPA), are indeed capable of handling labour-intensive tasks in a highly efficient manner. These software robots don’t sit at a desk, but toil quietly behind the scenes, easing the burden of routine monthly tasks including data collection, reconciliations, complex journal entries, compliance testing and master data management (to name but a few). Once ‘taught’, they faithfully follow the processes accurately and reliably until told to stop. They don’t mind working 24/7 or skipping lunch breaks. They never quit, and a fleet of them can upskill as fast as you can say ‘copy/paste’. Millions of bits of data can be processed, analysed, and computed more quickly and efficiently by a handful of digital accountants than by dozens (even hundreds) of junior assistants.

An inevitable trend

The fact that robots can access multiple systems at once and make complex calculations means that as long as a process can be documented and the data is digital, the software can do the work.  The accounting world is well served by very good ERP and finance software which has automated many accounting tasks and created enormous value over the past 20 years. However, there are still a very large number of accounting staff and, some might say, more now than prior to the advent of ERP systems. It’s these human roles that are the target of robotic assistants.

So, how, you might ask, do you take advantage of this trend rather than being thrashed by it? It’s an important question, because automation in accounting is inevitable, and having a plan is critical.

Planning for Automation in Accounting

Your goal in the early days should be to gain a comfort level with automation and introduce it in ways that encourage adoption (rather than resistance).  One such area is for Digital Labour automation to take over the most onerous of tasks so that accountants can focus on the high-value work that best takes advantage of their background and knowledge. This will also create more fulfilling roles for junior staff as they can focus on analysis rather than process. Conservative estimates have such automation infiltrating most accounting offices within the next five years.

The robots can either work as assistants to teams of accountants, making them far more efficient, or can take over entire tasks and work independently in the background. For instance, it’s possible for robots to manage bank reconciliations in real-time and then escalate complex issues as they arise to a human colleague. And, as some have foreseen, the robot may then learn how to solve that problem independently next time it arises.

Areas of Opportunity

Once a comfort level has been achieved, one need not look far to find ripe areas of opportunity for automation. Firstly, look for areas where interfaces with business systems are either nonexistent or only partially implemented. This is robot nirvana. Robots are very efficient at completing integrations extremely quickly, cheaply, and often more reliably than building interfaces to legacy systems. For example, collecting, summarising, and posting sales data, order data, commitment data and so on.

Secondly, there is an ever increasing demand for analytics and reporting to add value to the business.  Robots can rapidly access data from multiple accounting and business systems and present results and insights to a human colleague. For the time being, robots are not as capable at interpreting the results of the analysis in the context of a specific business or industry. However, it’s only a matter of time before even the most nuanced and complex cerebral tasks are being automated as well – thanks to Artificial Intelligence software development being one of the hottest and fastest growing areas of R&D.

The Numbers

As accountants, it’s important that the numbers add up – that this is not just a management fad. Well, they do. All of the tasks described above can today be achieved at a fraction of the cost of employing humans. A single software robot can cost a small percentage of an FTE and yet perform the tasks of multiple humans, work longer hours, and do so with far more consistent results. They can also do so in a format that is highly compliant and auditable. Obviously the set up and implementation of a digital workforce is not straightforward and requires professional help and advice. Typically, however, even with the upfront investment and time taken to implement such automation, it is not uncommon to see a break-even within one year and a 3-4x payback on the initial investment over a period of three years.

With such a clear business case, the march of the robots is inevitable. The question is not ‘if’, but ‘when’ will you need to take a long hard look at the potential of Robotic Process Automation and Artificial Intelligence in your finance function? Many organisations are creating specific automation budgets for 2015 to start to develop their knowledge and capabilities around these new technologies.  The potential across the organisation, not just in finance, will be material in the coming years. Automation projects truly are transformational, but without the huge systems and wholesale restructuring that went along with ERP-grade transformations of the past.

The robots are indeed coming. The value they bring is real, and the competitive advantage they enable is significant. So make 2015 the year of the robot, and begin investing in the future of your profession and your firm.

Advertisements

Digital service delivery

By Jeff Thomson, CMA, CAE, IMA President and CEO

Automation: we’re seeing it everywhere – from checkout lines at supermarkets to the way accounting departments file reports. These days, it seems that most organisations across a wide array of industries are employing some kind of digital service delivery. The goal: to increase efficiency, customer satisfaction, and market penetration.

While some new companies may be fully digital from the start, most organisations are at an intermediate stage, adopting tools such as self-service bots on retail websites, finding value in the analysis of large data sets, or using the eXtensible Business Reporting Language (XBRL) to file statutory returns electronically.

Exploiting such emerging technologies as web-based business processes, e-commerce, mobile commerce (m-commerce), and cloud-based software and services can enable an organisation to:

  • automate repetitive and time-consuming tasks
  • streamline complex business processes
  • replace human interaction with machine-to-machine and person-to-machine interaction
  • reshape business models to make the most of available resources
  • access and provide public services more easily and cheaply, and
  • monetise underused assets.

Take XBRL, for example. So far, most XBRL adoption has been driven by regulatory compliance. This has improved data access for investors and other stakeholders all over the world. But it could do even more to enhance the automated exchange of data internally and along supply chains. How? If businesses and professional bodies around the world can co-operate to produce the required taxonomies, if software developers strengthen their existing products and create new ones, and if businesses advocate for change – the positive impact of XBRL could be even greater. (Of course, it’s also possible that another technology could come along and make XBRL obsolete).

Further, as more and more accounting services are provided digitally, there may even be a dis-intermediation of the accountant’s role in regulatory compliance. The systems of businesses and those of regulators could eventually become so interconnected that they can exchange information automatically after it has been verified by smart software.

The fact is, if firms don’t embrace automation and enhance their services, they risk obsolescence. According to a report by ACCA and IMA, Digital Darwinism: Thriving in the Face of Technology Change, the majority of accountants intend to avoid this: 64% said they expect to embrace digital service delivery within the next two years and 31% said they’ll do so within two to five years.

While some firms and organisations are using digital technologies to provide real-time collaborative advice and services, others may need to do more. Those that miss the window of opportunity risk becoming casualties of ‘Digital Darwinism’. Fortunately, the evolutionary process brings both good news and bad: No entity is too big to fail or too small to succeed.

Read more about the technology trends that are impacting the accounting profession at www.roleofcfo.com.

cloud computing

By Raef Lawson, Ph.D., CMA, CPA, vice president of research, IMA

Some metaphors are perfect, enabling you to conjure up a precise image in your mind. Other metaphors: not so much. If you’re confused by the term ‘the cloud,’ you’re not alone. But ‘the cloud’ is easier to understand than you think – and it has the potential to reshape the business and accountancy profession over the next decade and beyond, according to a recent report from ACCA and IMA, Digital Darwinism: Thriving in the Face of Technology Change,

In the early days, ‘the cloud’ was simply a metaphor for the internet. As this evolved from a network that connects millions of computers into a network of interactive computing platforms, the metaphor evolved too.

Organisations of all kinds now supply and use a growing range of cloud-based IT resources ‘as a service’ rather than ‘as a product’. Physically remote software applications, computing power, and data storage can be accessed online from fixed and mobile devices, providing benefits that can include:

  • 24/7 access
  • ability to scale up and down to meet demand
  • reduced up-front costs
  • pay-as-you-go charges based on consumption
  • lower management overheads
  • reduced maintenance costs
  • rapid implementation times
  • easier data-sharing and collaboration.

As with many types of technology, levels of adoption vary across geography, industry, size and type of organisation, and profession. In our profession, accountants are already exploiting different types of cloud and cloud-based services. For example, systems for bookkeeping and accounting were among the first software applications available as online services.

There are two types of cloud deployments – public and private – and each brings its own challenges. A recent survey of IT professionals (IDG Enterprise 2013) found that private cloud deployments outnumbered public ones. That’s likely the result of concerns over public cloud resources, including data security, privacy and sovereignty, and the transmission and storage of data outside national boundaries. Many of these concerns are driven by regulations, such as the UK Data Protection Act and the US Patriot Act.

There are other areas where public cloud services and their consumption-based, pay-as-you-go approach can create challenges for accountants and their organisations. For example, lack of integration between systems and their associated data can be a barrier to efficiency. Other concerns range from the expectation that IT systems will be (because they are online) available at all times to the widespread misconception that pay-as-you-go is always the most cost-effective way to resource IT.

Despite these and other challenges, most organisations will continue to access IT resources using both traditional and cloud-based systems well into the foreseeable future. What’s more, the ACCA and IMA research found unanimous agreement on the significance that cloud computing will have as it becomes increasingly adopted by accountants and the finance function; some 72% expect this to happen during 2014-2015.

You can read more about this and other technology trends that are impacting the accounting profession by visiting the ACCA and IMA website, www.roleofcfo.com.

education

By Raef Lawson, Ph.D., CMA, CPA, IMA Vice President of Research

Take a glimpse inside any classroom today and you’ll notice something obvious: digital technology is reshaping education. And it’s not only changing what’s inside the classroom, but what’s going on outside classroom walls as well, in the comfort and privacy of learners’ homes and offices.

This fact, and its implications for the accounting profession and business landscape, is just one of the trends identified and analysed by a recent report from ACCA and IMA, “Digital Darwinism: Thriving in the Face of Technology Change,”

Of course, the advent of digital technology is nothing new. It began with the internet and as digital technology has evolved and expanded, so has its capacity to allow access to innovations such as live and interactive online classrooms, as well as their latest incarnation: massive open online learning courses, or MOOCs.

In tandem with the acceleration of digital technology, educational techniques also are changing, reflecting the new demands of computer-based learning and exploiting the new possibilities created by emerging technologies.

Employees, employers, teachers, and education providers are just beginning to explore the myriad possibilities, but as the role of digital technologies grows, so does the potential for:

  • increasing flexibility, access, and choice in education
  • customised, personalised, and optimised learning
  • attracting and retaining younger generations in the workforce
  • increasing the global mobility of professional talent
  • higher levels of student engagement
  • innovative approaches to lifelong learning
  • new educational business models
  • a rich, diverse, and inclusive virtual education ecosystem, and
  • a global, knowledge-based economy where creativity and innovation are the benchmarks of success.

Digital technology is underpinning an even more radical educational delivery system – MOOCs – which offer access to interactive online courses on a vast scale. Among their unique features, MOOCs usually offer enrolment to anyone, regardless of their level of education, and many (though not all) MOOCs and their learning materials are free.

Fortunately, accountancy training has been quick to employ emerging technologies and tap into their potential to enrich learning. For example, there are several global web-based classes where students can interact in a virtual classroom, in real time and with a live tutor.

Among other examples, the software provider SAP (known among accountants for its enterprise resource planning systems) is working with the Hasso Plattner Institute to provide MOOCs on topics that support people who work in the SAP ecosystem. And employers such the insurer Jardine Lloyd Thompson (JLT) are using MOOCs as an alternative to classroom-based solutions and off-the-shelf e-learning tools.

These developments, and others like them, make it clear that digital technology is here to stay. The question now is only how best to adapt and use this technology to enhance access and ease of learning for all.

You can read more about this and other technology trends that are impacting the accounting profession by visiting the ACCA and IMA website, www.roleofcfo.com.

cyber security

By Warner Johnston, head of ACCA USA

As we head deeper into the 21st century, it is already clear that developments in digital technologies are going to affect the world even more radically over the next 20 years than in the last 20 years. As new digital technologies emerge and converge they will reshape lifestyles and business activities, how economies develop, and how countries are governed, in revolutionary ways.

Digital Darwinism: thriving in the face of technology change, is a report by ACCA and IMA that focuses on the top ten technology trends that could impact the finance profession. One of the trends identified was cybersecurity; a topic that we’ve been focusing on in the United States over the past two years.

Information is now collected, stored and shared using numerous software and devices. Unfortunately, reliance on these digital technologies exposes individuals, organisations and entire countries to a host of both deliberate and non-malicious threats. Theft of digital information has overtaken physical theft as the most commonly reported fraud, and the relative insecurity of the small and medium-sized enterprises (SMEs) is making them a growing focus for cyber-attacks. As ever more products and services are provided, sourced and accessed online the security of data and systems becomes increasingly complex and their governance becomes increasingly important.

All organisations need to:

  • understand the nature and likelihood of cyber-threats
  • identify, assess and mitigate existing and emerging risks
  • implement and maintain strong controls and policies to govern data privacy and security
  • educate users on emerging risks, such as those associated with mobile devices and social media
  • plan for increasing complexity, and
  • make technological risk a board-level concern.

Cybersecurity is an area where an organisation can achieve limited outcomes by working alone. To combat emerging cybercrimes effectively and catch and punish attackers; companies, industries and governments will need to collaborate to:

  • share information on cybercrime, and
  • create consistent, uniform and better global regulations.

These steps will enable them to provide citizens and businesses with appropriate protection from cyber-attacks. In order to effectively combat the growing range of emerging cybercrimes and catch and punish attackers, companies, industries and governments will need to collaborate to:

  • cooperate and share information on cybercrime
  • create consistent, uniform and better global regulations, and
  • provide citizens and businesses with appropriate protection from cyber-attacks.

Cybersecurity has become so complex and multifaceted that expertise is needed just to understand many of the risks, before the viability of the products and services that promise to address them can be considered. Accountants are acutely aware of the need to take adequate steps to protect computer systems and data against a growing range of deliberate and accidental cyber-risks. In the research cybersecurity was the leading technology priority, and 79% of respondents expect the need to assess, protect and mitigate cyber-risks to increase in significance over 2014–15.

On the face of it, there seems to be an association between security concerns and action to address risk, but what appears to prompt such initiatives is not the awareness of specific risks but the feeling that risks in general are multiplying, becoming more threatening and leading to higher losses.

Read more about the technology trends that are impacting on the accounting profession at http://roleofcfo.com/

Also learn more about Dr. Darren Hayes, CIS Program Chair at Seidenberg School of CSIS at Pace University – a key ACCA USA partner in our cybersecurity research, and a participant in the Digital Darwinism report by ACCA and IMA.