Big data: adapt or die

The rise of the ‘chief financial technology officer’ heralds the end of the traditional CFO role, says Helen Brand

The future of the accountancy profession lies at the intersection of finance, technology and information, and the next 10 years could see the emergence of new professional hybrids in senior management or on boards: the CFTO – chief financial technology officer – and the CFIO – chief financial information officer.

More recently, ACCA and IMA’s latest futures research, ‘Digital Darwinism: thriving in the face of technology change’, has pointed to greater technological involvement for CFOs across the world with demands that their roles engage with big data and other strategic technology trends, critical to business growth and profit. There is already a more business strategic role for finance professionals who are now taking a broader technology remit.

But the profession needs to move beyond the crystal ball gazing about hybrids and how technology impacts on the work accountants do. The key issue now is how the finance function adapts to the fast evolving technology to better serve businesses in future.

Accountants and finance professionals need to understand digital technologies well enough to gauge their potential impact on business, on the profession and the relationships between them.

The research report specifically considers this very challenge over the next decade, focusing on technologies which are expected to present accountants and finance professionals with different challenges and opportunities and which would also demand an array of responses.

Can today’s professionals meet those challenges head on and become the hybrid professional of the future?

Mobility and big data

A faster, more connected workforce with the tools to be more efficient and productive will enable finance to improve the services it provides to clients inside and outside the finance function and throughout accountancy practices.

Finance professionals must identify and educate business on the costs and risks associated with mobile-driven trends, create and enforce appropriate cost, data and process controls, identify the finance services and processes that work best ‘on the move’, and exploit the knowledge of workers who have grown up using digital technologies.

There will be challenges, such as the need for high-quality data, security and privacy as well as legal issues relating to big data, but it also provides a big opportunity for many accountants if they exploit it correctly. The profession needs to explore new ways to manage, analyse, and extract value from big data, ensure that data is protected and used ethically, but at the same time applied strategically and keep abreast of specialist and emerging systems that help accountants to exploit deep data pools most effectively. It is here, within the big data arena, that accountants can further emerge as the techno finance chiefs businesses need.

Artificial intelligence – in audit and tax

There’s nothing mysterious about this. Current systems are already making use of artificial intelligence and robotics. Finance professionals of the future need to engage with this phenomenon instead of fearing it or abandoning this to the information systems department. Computers, software applications, machinery and robotics are already automating boring, complex, demanding and repetitive tasks and processes – and often doing them more cheaply or with greater accuracy and reliability than human beings.

Within five to 10 years, many other finance processes and services will change. Specialist software applications already automate some processes and then present the results to expert users who use their professional judgment to review them and make any necessary adjustments, in areas from audit to tax.

But as more processes are automated and become autonomous, more highly skilled jobs could become obsolete.

The regulatory focus on rules makes some areas of accountancy ideal for automated systems that could become more effective than individuals carrying out that work, but the challenge lies in identifying what can and cannot be automated, deskilled or commoditised, as well as how those systems are best communicated and measured to show success. Therefore, there will remain a need for the profession to use artificial intelligence and robotics for the benefit of the business and not just see these technologies as a threat.

Cyber security

Cyber security is looming large on everyone’s radar, and not just for the finance profession. Yet the costs of ensuring a safe cyber sphere falls with the accountants. Internal audit and the growing number of accountants who have chosen to develop expertise in this area, makes them the gatekeepers of financial data security.

This means that in practice, all accountants and finance professionals will have a central role to play in recognising the threat to individuals and SMEs by cyber threats, as well as educating the workforce about the existing and future risks. This will entail constant monitoring and identifying of technology-related business risks, and with that comes the need to put in place the relevant defences to mitigate or reduce those risks. There is a wider role too for the accountants in that the value of deploying the specialist tools and expertise is recognised across the business, including the board.

Education

This is one of the areas where emerging technologies could turn out to be as much of a burden as a boon to the profession as education in the profession has to constantly change to factor in new developments in technology.

This is a vast area for the profession to keep on top of, not only as individuals, but also collectively. Finance professionals will need to constantly reassess the way the profession is educated to reflect the emerging technologies.

In addition to spotting the areas of accountancy most likely to be deskilled by technology accountants need to use new technology to support knowledge transfer within the profession.

Consider the emergence of Massive Open Online Courses (MOOCs) and hybrid learning models. What’s to stop those learning platforms being used in the profession?

Education is a broad ‘technology’ and so there is bound to be overlap with other technological advances. For example, where MOOCs meet big data, new insights will emerge into how people actually learn, which will turn education into a more data-driven science.

Cloud and payment systems

There are many potential benefits of cloud technology including reduced costs, easier access and data sharing. Many of these benefits also create challenges, such as difficulties in monitoring, controlling and analysing IT costs. With this in mind, the profession must become familiar with the range of cloud IT options and more demanding of cost data from cloud service providers. Cloud also raises the challenge of clarifying national and international tax regulations and other laws relating to cloud.

As the ways in which people buy and pay for goods and services multiply and alternative (to banks) finance emerge, accountants and finance professionals will need to keep up to date if they are to maintain their pivotal role as advisers.

What this means in reality is that the finance function will need to be fully competent with the latest payment platforms and mechanisms, including peer-to-peer systems; the drivers behind changes to back office systems such as accounting and treasury management, and ensure that emerging platforms and services are properly regulated. New trends, such as a shift away from cash and the rise of the virtual environment – and virtual money such as bitcoin and equivalents – will also need to be factored into a business’ strategy.

Virtual and augmented reality

Existing and emerging technologies in this area are already helping some professions to visualise complex data, enhance products and services, and work more efficiently, and accountancy will follow.

To get the most from this and to help business do likewise, accountants and finance professionals will need to identify the niche technologies with the most potential, assess the scale of business opportunities, consider areas of application, such as data visualisation, where augmented reality overlays can benefit finance, explore the potential for simplifying the communication of complex finance-related information to non-finance stakeholders, and compare the operating and ownership costs of virtual and physical assets.

The point is that while virtual reality seems a far cry from the finance function, accountants cannot ignore it and can potentially obtain mileage from it.

Digital service delivery

A transformation is already under way and the profession will not be able to escape the impact, as digital connectivity reshapes culture, business models and working practices. Some businesses, such as Amazon and Netflix, are dependent on the digital model. Even the accountancy sector is going digital, albeit alongside more traditional service delivery, with client self-service offerings.

Yet, the profession could do more to enhance the efficiency of the finance function and to develop new products, services and processes. The recruitment of professionals who are digital savvy and the implications of business, advisers and regulators becoming more connected and exchanging data automatically are some ways the profession can stay on top of changes to digital service delivery.

If firms do not embrace automation and enhance their services they risk becoming obsolete. The research shows that accountants intend to avoid this: 64% expect to embrace digital service delivery within the next two years, 31% within two to five years. So although some firms and organisations in other sectors are using digital technologies to provide real-time collaborative advice and services, many need to do more.

Social engagement

Finance potentially has much to gain from a more social technological approach and the profession know it. Our research showed that 59% of respondents expect widespread adoption of social technology by the profession within the next two years and 29% within the next two to five years. Over 9% expect to feel the impact on the finance function between five and 10 years from now and just 2% expect no impact on accountants and the finance function.

The professional benefits of social technologies are just starting to emerge. While accountants look forward to developments such as faster period-end processes and improved collaboration, the profession can influence short-term decisions about adoption and investment, and highlight areas of risk. The finance function needs to adapt to meet the changing expectations of new entrants to the finance profession and customers inside and outside the finance function, businesses and practices.

Imperatives for the profession

Accountants and finance professionals need to understand digital technologies well enough to assess their potential impact on business, on the profession, and the relationships between them.

As IT has become increasingly integral to business and accountancy, the role of the profession has expanded. It has become not just an enthusiastic adopter of emerging technologies but the first resource for many businesses that are looking for advice on their use and adoption.

Emerging technologies will shape the future for individual accountants and those with and for whom they work. All accountants will need to consider their approaches to and influences on technology use, adoption and decision-making processes now and in the future.

By thinking ahead, the profession can take a more proactive than reactive approach to digital technologies and reshape it, rather than simply being reshaped by it.

Helen Brand OBE, is chief executive, ACCA, www.accaglobal.com

 

Helen Brand |Chief executive, ACCA

Brand is chief executive of ACCA and a member of the governance committee of the International Integrated Reporting Council (IIRC)...

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