Hopefully, those of you completing on-line tax returns for last year will have done them by now and you'll be wondering what 2014 has in store for the world of accounting and finance. Well, the good news is, the IMF has just increased it's growth forecast for the UK, now predicting a nice growth of 2.4% which is a great deal better than the previous 1.9%. Business investment remains relatively weak, so we’ll see…
Traditionally, Accounting and Finance departments have been viewed by outsiders as simply the number crunchers of the organisation, sitting quietly at their desks playing with their calculators and spreadsheets. This is not the case. The introduction of new technology has meant that Accounts departments have also had to move with the times. Darwin once said, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”
Accountants are pivotal to any business, they are what make the wheels turn. Without cash, there is no business. With this in mind, it is imperative that Accounting professionals understand how new technologies will impact the business as a whole. This is being taken so seriously that the ACCA itself has written a paper aptly named "Digital Darwinism, thriving in the face of technology change" that looks at the various technology trends that they predict will reshape the accounting profession and business landscape in a significant way.
One of these is the mobile phone. If we look at the impact of mobile phones on accounting, it’s interesting to firstly note that the number of mobile phones overtook landlines as early as 2002. People seem to have their phones glued to their hands. Bearing this in mind, by exploiting mobile devices and various targeted apps, accountants and their respective businesses can create new products and services, can predict financial performance with greater accuracy, have the anytime anywhere effect, support collaboration across the business and have a much more connected workforce.
Big data and how to collate it is a rapidly growing market. The technology for collating it and analysing it is now becoming more affordable. This means businesses are now looking at it’s potential to change audit and forensic accounting, identify risks, improve decision making and lower costs. It also gives you the valuable tool of turning emerging patterns into business insights.
Artificial Intelligence and Robotics is another area that Accounting and Finance professionals need to be aware of. Computers are already automating a lot of the menial tasks previously done by us mere humans, but what's the impact on accounting professionals? First and foremost, it means less costs. If we can now automate a task, it's one less salary to pay. It also means we can scale up with less cost to the business. Also, an automated service means a 24/7 service with less costs via the mobile devices previously discussed, again saving money for the business.
Cybersecurity is a key area that impacts Finance. Cyber-attack! The end of the world is nigh! People love a good cyber-attack story and the impact on business profits can be huge. If a company’s site has been compromised, would you bank with them? Shop with them? Probably not. Accountants are acutely aware of the need to keep up with the latest technologies as far as this risk is concerned. Because of this we have seen a tightening of procedural security, physical and environmental security and technical security.
The use of Cloud has hugely impacted the way we do business and has in turn impacted the world of accounting. Everyone has probably utilised cloud in one way or another, be it via yahoo mail or Facebook in its public form, or via a private cloud. Either way cloud is of benefit to a business in a number of ways. For instance, it reduces management overheads and allows you to share information easily and quickly. Accountants are already exploiting cloud, and its benefits and systems for bookkeeping and accounting were some of the first applications available as on-line services. ACCA predict huge growth in cloud usage amongst accountants in 2014-15.
A really obvious one when looking at the Accounting arena and the impact of technology is the evolution of payment systems. They have transformed how money changes hands nowadays and it's still evolving! When was the last time you used a cheque? Developments in technology are creating safer ways to pay, and faster ways to pay thus improving cash-flow. If your transaction is complicated you can automate it. What's not to love for an Accounting professional? There are numerous other points that can be added to this list.
Another area of technology impacting the way businesses operate is virtual reality. It allows a business to try out new models for example, without having to inject massive amounts of cash. It also allows businesses to create different approaches to reach their customer base. How many businesses have we seen enter the world of gaming to reach their target audience? It is also predicted that by 2020 it will be possible to use virtual environments to engage with data (Garner 2010). So, instead of Accountants drilling into the cells contained in a spreadsheet (we'll still be using these apparently…), smart software agents will look at how people currently work and then create simulated environments with contact, based on their findings. Users will then use these to interact with and manipulate representations of the underlying data.
Digital service delivery is also something companies are exploiting. It's an area that’s already reshaping business models and accountants need to embrace it. It allows organisations to monetize underused assets. It also allows them to automate repetitive, high volume, time consuming tasks. How long before a purchase ledger clerk is a thing of the past? Interestingly, 64% expect to embrace digital service delivery in the next two years.
Social media is an interesting one when it comes to finance, as historically the use of social media wasn't extensively encouraged within the financial arena. This is starting to change. Social media is a powerful tool for businesses. It helps them promote, recruit, build brand loyalty, test new products, ask opinions… the list is endless. With regard to accounting and finance, caution needs to be exercised with social media for confidentiality reasons but it potentially has a lot to gain.
To quote the ACCA:
"As enterprise social functionality improves, social tools will become more useful to the finance function. In an ideal world, collaboration software will develop situational awareness that enables it to contextualise processes and the roles and relationships of participants. In the context of finance, for example, software needs automatic understanding of the difference between general exchanges and any that must be tightly controlled – such as exchanges between tax and finance departments. "
We can say that the points raised are important to all individuals within any business. Accountants and Finance professionals though, are seen as the advisors of an organisation. They need to be aware of trends and changes. Over the past few years technology and the advent of new technology, has had a massive impact on how organisations run their businesses. If we don't keep abreast of these changes then it is highly likely we will end up with an obsolete business. As an advisor we need to be able to forecast, reforecast and stay on top of changes or we get left behind. Quite a responsibility for someone perceived as a mere number cruncher!