How the fourth industrial revolution is impacting accountancy

Our recent webinar was all about the fourth industrial revolution – the way technology is transforming the accounting industry and the resultant changing role of the accountant.

Speakers discussed how accountants can leverage technology to drive business success, how to maximise the benefits of cloud systems, and how best to approach technology investment decisions. With opportunity often comes risk, so overcoming challenges associated with technology was also discussed. Finally, our panel talked about what the future of accounting might look like, bringing in AI and machine learning, and predicting what the industry will look like in 15-20 years.

Emma Smith, Managing Editor of Accountancy Age, drew upon the expert knowledge of the panel. The speakers were:

• Tim Wakeford, Vice President, Financials Product Strategy, EMEA at Workday
• Mark Farrar, Chief Executive, AAT
• Chetan Mistry, Director, Smith & Williamson
• Noel Tagoe, Executive Vice President, Academics, The Association

Listen to the webinar on demand here.

1. The role of the of the accountant is changing

A key benefit of technological developments is the removal of the need for slow, manual processes, enabling accountants to spend more time on adding value to the business. Also, cloud technology has lowered the infrastructure support costs for organisations. New technology allows a greater analysis of business drivers, using insight and actionable analytics to achieve a competitive advantage.

Accountants are therefore moving away from bookkeeping and stewardship to become strategic business partners. Routine and process-driven roles will decrease while roles which require thinking outside the box will be in demand. Accountants have grasped this “inexorable tide” of technology overall, but the challenge lies in completing day jobs in time to deliver the change of the future. Many people’s daily routines are so hectic, that even thinking about different ways of working is impossible.

Most accountants have come round to the idea that change needs to happen, but the delivery of change is still in its infancy. Some customers also still need persuading that technology is the way forwards. They need to remember that their competitors are using technology to drive growth, so they must too.

2. Technology is disrupting the accounting sector

Key developments have led to better processing power and the ability to store more data. Accountants can work faster but also look at more, which is massively impacting the way they work.

Specific developments include cloud technology and big data, both of which are affecting all businesses, not just accountants. Clients are more empowered by data and technology too.

There is no underestimating the power of technology. It will change the unit costs of the finance function and the pricing models of the future.

3. With change, comes opportunity

Technology has enabled finance teams to do three key things at pace: produce and create value, shape how it is done, and tell the story of how it is achieved. In the past, finance was focused only on cost, whereas now it can contribute value creation and value preservation.

In particular, accountants can make use of software-as-a-service (SAAS) technology, which allows access to individual applications and is hosted on the cloud. As well as lowering infrastructure costs, set-up costs are cheaper and the speed of implementation is greatly improved.

Cloud technology is also secure and allows seamless updates to be performed. The level of insight which can be obtained from it far surpasses anything that is possible on an On Premise system and any changes, such as adding new companies, can be almost instantaneous.

4. Accountants should take time when investing in technology

Before making an investment in technology, accountants must understand how it ties in strategically with their business. They should look at the value proposition and apply this to both their staff and clients. Cost does not bear as much weight as it once did, but it is still a consideration. Resources and time needed for implementation should also come into the mix.

To ensure successful technology implementation, accounting firms should have plans in place and the right kind of partnerships to help with this. The technical side is often well looked-after, but people can be more of a barrier. The necessary question to ask is are people using the technological platforms in the way they are expected to use them and therefore getting optimum output?

Seamless implementation can only be achieved with a project team who understands what needs to be achieved conceptually and then technical teams and solutions providers working together to make this happen.

5. Cloud technology is a game-changer for accountants

One tangible benefit of cloud technology specifically is mobile working. People can access their data anytime, anywhere, which has fundamentally changed the way businesses operate.

The ability to perform real-time reporting has also transformed organisations. More information can be pushed directly into the hands of business leaders in the format they want it.

Traditional technology tells you the who and the what, but not the why. Cloud ERP technology works in a totally different way, for example recording people’s names against revenue transactions. The linking of non-financial information into general ledgers means accountants can offer richer services now.

6. There are challenges with cloud technology to overcome

Security is a major issue. We need to protect software, hardware, and data. With GDPR coming in May, there is also the consideration of permission to access data. There has been carnage with big corporations such as Carillion going bust recently which has led businesses to worry about what will happen if their suppliers go into liquidation. It is important that accountants are aware and prepared for this.

Training is another challenge. People have a key part to play in technology and they must be taught how to make the most out of it. Time is vital. Not everyone will grasp using new technology overnight and businesses must allow for this. They should empower staff to try it out and eliminate any fears of failure.

Trust is also a barrier. People often lack confidence in new systems, but they will change their minds the more they use it. Getting staff involved in User Acceptance Testing is a good way to tackle this as people are then involved in the technology journey, learning about it while testing it.

7. The future of accounting is varied and bright

Drivers such as Blockchain, Making Tax Digital, and Open Banking are changing work for accountants, and they need to get ahead of the game and ensure they are not left behind.

AI and machine learning do form part of the future for accountancy, and this is a good thing. There is no need to worry about accuracy. There will always be qualified accountants checking any figures produced by automation and verifying that they are correct.

Accountants should stand back and think very carefully about their objectives around technology. Move quickly, get with this change, and stay agile. This revolution cannot be ignored.