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Summary of Research Carried out by IMA, ACCA and the Accountancy futures academy (Nov 2013)

The accounting profession is in the midst of a technology revolution, with cloud computing, mobile devices, social media, Big Data and Payment tools making the most impact.  Our discussion for this morning will be centered on five out of the ten game changers identified in a survey carried out by ACCA and IMA.

The report on the survey is titled DIGITAL DARWINISM: THRIVING IN THE FACE OF TECHNOLOGY CHANGE

 According to Charles Darwin’s On the Origin of Species, it is not the strongest of the species that survives, nor the most intelligent, but the one that is most adaptable to change.

 As trusted advisers to business, accountants and finance professionals are expected to lead, not follow. The profession has historically been quick to identify and then exploit the potential of emerging technologies: from the earliest known records of commerce, to the earliest commercial computer systems. Accountants’ enthusiastic use of the first programmable computer and widespread adoption of the spreadsheet helped to turn accountancy into the profession it is today. Embracing emerging technologies will turn it into the profession it aspires to be tomorrow.

Whiles discussing these trends, we must all be mindful of the fact that the cost of connectivity will continue to go down due to better platforms like 4G as against 3G and also the release of frequency being used by analog TV and Radio.

ACKNOWLEDGEMENTS

I will like to acknowledge the research team IMA, ACCA and the Accountancy futures academy for carrying out this research.  I will also like to acknowledge Chris Gentle (Partner and head of research Deloitte) for writing the foreword to the research.

According to Chris Gentle  “ 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.

Technology has already made business global. We can collaborate and share information as quickly and easily with business contacts on the other side of the world as with colleagues at the other side of the building.

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. The future will not be like the past and we will all need to adapt. Accountants and finance professionals must be open to the changes created by cloud computing, mobile devices, payment gateways and social platforms, and face up to the demands of cybercrime and enhanced compliance request.

Research Findings

Eight-seven percent of the accountants surveyed said that their companies could be doing more to leverage technology, but fewer than 15% said they were very confident in the ability of their companies to understand and manage emerging technologies.

The survey found that most companies do not have a written plan for emerging technologies. Only 4% of small companies (fewer than 200 employees) have such plans, compared with 35% of midsize companies (201–500 employees) and 46% of large companies (500 or more employees).

Companies are far from adopting, or preparing to adopt, new technologies. For example, 90% of large firms either already have implemented or will implement social media and smartphones within three years. Also quickly becoming part of the technology foundation for large companies are cloud and software as a service (84%) and tablets (74%).

Smartphones top the list for midsize companies (71%) and small companies (62%), with the cloud ranking second for both (67% for midsize companies and 46% for small companies).

Cloud and mobile

Cloud computing and the use of smartphones and tablets are tightly intertwined.  The survey identified the following as potential benefits from cloud computing:

  • The ability to work anytime, anywhere;
  • The ability to serve clients in any location;
  • Improved security and backup procedures;
  • Improved collaboration with clients and supplier.

 

Mobile devices, of course, are ideal for connecting to cloud-based services when out of the office, a scenario becoming increasingly common in the accounting profession. More than 80% of accountants reported that they do at least some work outside the office, with the number of hours worked ranging from an average of 5.8 for accountants at midsize companies to 8.6 for accountants at large companies (accountants at small companies averaged 6.5 hours out of the office).

The most-cited reason for working out of the office was client/supplier visits, both local and out of town. Also popular was doing work from a home office. The use of mobile devices with the cloud creates opportunities for accountants to provide faster and more efficient client service.

In addition to improved client service, the top reasons for adopting mobile devices include increased productivity and improved work/life benefits.

Eighty-five percent of accountant’s at large companies reported using a smartphone, a note book , or both, compared with 71% at midsize and 50% at small. A plurality of accountants use smartphones but not notebooks , and the survey participants were much more likely to use both a smartphone and notebook  than just a notebook. Accountants at large companies use the most mobile apps, an average of 5.4 each, compared with 4.3 at midsize and 2.3 at small.

 

Social media

Accountant’s in large companies spend nearly 7 hours a week, on average, using social media for personal activity and 5.6 hours for professional purposes. At midsize firms, the averages were 3.8 hours and 2.9 hours, respectively, compared with 3.3 and 1.8 at small firms.

LinkedIn ranked as the most popular social media tool for professional use. Following is a ranking of the most popular social media services for individual accountants:

  • LinkedIn (68% among large firms, 74% among midsize firms, 70% among small firms);
  • Facebook (64%, 50%, 61%);
  • Twitter (42%, 21%, 9%);
  • Professional online communities (28%, 19%, 16%); and
  • Blogs (23%, 10%, 12%).

At the company level, Facebook is the most popular social media tool among midsize firms and tied with LinkedIn for the top spot among large firms. LinkedIn is the preferred social media choice of small firms, but only slightly ahead of having a firm presence in professional online communities.

The professional benefits of social media cited most often by survey participants include:

  • Knowledge sharing;
  • Interacting with other professionals in accounting;
  • Generating new business;
  • Finding new clients; and
  • Interacting with other professionals who can support the business.

Big Data

Data analysis skills appear to be a huge potential growth area for accountants, 67% of whom in the survey said that they expect Big Data to impact the accounting profession.

Why is Big Data such a big deal? One reason, the study reported, is the astronomical increase in the amount of information being produced, a growth fueled in part by social media.

“There’s no question that social media is contributing to the demand for better data analytics,” the study reported. “Facebook has more than 1 billion users and Twitter can easily exceed more than 400 million tweets in a given day. That’s a lot of data, but only a limited amount is relevant.

“The biggest challenge companies have today is how to mine all that data to better and more profitably serve their customers,” the report said. This challenge can create opportunities for accountants. The role of data scientist is a natural fit for the accounting profession  and plays right into one of their strongest skills.

Payment Systems

Traditional notions and concepts of money and currency are fading. The use of cash is diminishing, cheques are being phased out and use of debit cards, pre-paid cards and the myriad of alternative electronic payment platforms is increasing. Banks increasingly provide their services online; statutory payments are increasingly made electronically; payment options using mobile phones are proliferating; there are many ways to make and accept payments for goods and services and to access start-up and working capital finance and trade finance instruments.

Virtual currency

There are virtual ‘digital currencies’ such as Bitcoin, Linden Dollars and Ripple in today’s marketplace. A virtual currency has a value in real-world currency and/or can be used to buy goods and services. The Linden Dollar is the unit of trade in the virtual world , where players can use it to buy and sell goods. In addition, Linden Dollars are a centralized virtual currency with a central repository, and it can be converted to and from real-world currencies.

Skills needed for next decade

Rank Skill Standard Score
1 Knowledge of data extraction tools in the mining of business intelligence 75
2 Use of tools that support data modeling and analysis 72
3 Knowledge management skills 59
4 Project management skills 57
5 Change management skills 57
6 Knowledge of new approaches to funding and product development 57
7 Ability to use technology to attract, develop and manage talent 57
8 Knowledge of emerging payment platforms 56

Conclusion

Accountants and finance professionals have a significant role to play in the increasingly connected and interconnected ecosystem that will emerge as  technologies in this report come together to create the ‘new normal’.

The internet and cloud-based resources are reshaping various aspects of business. : from the way we finance, resource and develop new and existing enterprises, to the way we create, buy and sell products and services. Nothing in the future is certain, and the unforeseen interactions between these technologies promise to be both interesting and challenging.

 Summary of findings

Technologies Key impacts and implications What we have to do as accountants

Mobile /Cloud

Big data

Cyber security

Payment systems

Educational technologies

Social technologies

·         Faster and easier access to technology resources

·         A more connected world and workforce

·         Opportunity to automate more business processes and services

·         De-skilling of the accountancy profession

·         Vast amounts of data

·         Enhanced compliance and decision-making

·         New ethical challenges relating to data gathering and analysis

·         Challenges to data security and sovereignty

·         Challenges to traditional role of the profession

·         Expectation of access to accounting  resources 24/7, on any device, anywhere

·         Separation of skill and expertise from professionals

·         Explore new ways of establishing costs

·         Prepare for changing working patterns

·         Assess risks and address security

·         Plan timing for adoption and implementation

·         Develop change management skills

·         Enhance data analysis and interpretation skills

·         Recruit digital natives

 

·         Use technology to add value

·         Anticipate new regulation

·         Learn enough to know which questions to ask to gain insights

·         Adapt to meet changing business needs

·         Manage expectations of internal and external customers

 

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