A new ACCA report looks at 10 technology trends that will force finance professionals to change the way they do business – or go out of business. ACCA’s Faye Chua explains
This article was first published in the November/December 2013 International edition of Accounting and Business magazine.
From the incised clay tablets of the Sumerian scribes to the computers of the modern world, accountants have always been at the forefront of emerging technologies. But the world has now entered an era of ‘digital Darwinism’, with technology evolving too fast for many to adapt. As the rate of change accelerates, people, businesses, even entire countries are struggling to stay abreast of the latest developments, let alone understand them well enough to exploit them – and the rapid rate of change is unlikely to slow down.
All this change is underpinned by the internet and the growing availability of affordable broadband access. It has democratised knowledge and technology – moving power from the hands of the few to the fingertips of the many – and changed the main drivers for technology adoption.
New research drawing on input from ACCA’s Accountancy Futures Academy, analysts, management consulting firms and members of ACCA and IMA (Institute of Management Accountants) aims to highlight the emerging challenges and opportunities, and offer insights to help accountants and businesses prepare for this new world of possibilities. It focuses on 10 technology trends with the potential to reshape the business landscape significantly.
We list them here, ranked in order of importance.
Internet-connected mobile devices such as smartphones and tablets are constant companions and crucial components in the personal and professional lives of billions. Yet even before many organisations have met the challenges of bring your own device (BYOD), a much more significant trend has emerged – BYOX, or bring your own anything.
Individual employees have moved beyond using their personal devices to connect to the corporate network and are now choosing which apps they use for business – corporate data will follow. In the longer term, ‘smart dust’ (tiny chips embedded in all sorts of everyday objects to collect and transmit data) and the ‘internet of everything’ (the near-universal connection of devices and objects to the internet) lie in wait.
2. Big data
Around 90% of the world’s data has been created in the past two years by the output from barcodes, phone signals, digital images, transactional databases, personal location records, statutory reporting systems, online searches, radio frequency identification tags, social data, video clips, website visits, and so on. ‘Big data’ describes the vast amounts and many types of structured and unstructured data being produced. Exploiting this huge nexus of contextual relationships, information and data will demand people with analytical and interpretation skills, who can sift the data haystack for patterns and information of value to businesses.
3. Artificial intelligence and robotics
Forget androids and R2D2, it’s software ‘bots’ that matter here, automating complex and repetitive processes and tasks, and using stored knowledge to guide users. Software now has built-in expert knowledge and the capacity to ‘learn’ how to improve its own processes and performance. Accountants increasingly rely on this built-in expert knowledge to work efficiently and effectively, particularly in rule-based areas such as compliance. Banks are using bots to automate account closures, direct debit cancellations, audit reports and other processes. Within five to 10 years, many other finance processes and services will follow suit.
There is ever more data to steal and ever more connected devices that it can be stolen from. The increasing reliance on digital technologies exposes organisations to a host of both deliberate and non-malicious threats. Maintaining security is a never-ending process that will demand more and more resources. Over the next five to 10 years, experts expect the criminal threat to grow, along with the use of nanotechnology. Beyond 2025, biotech-engineered bacteria may also be able to contain electronic circuits. If made capable of reproduction they could become impossible to avoid. The security industry has so far met each new threat with a solution; unless it can find ways to test for and detect this new type of biological pathogen, concepts such as privacy and security could become a distant memory.
5. Educational technologies
Games and social tools are making learning more fun, simulations and augmented reality are making it more immersive, and intelligent algorithms are personalising the process and tracking achievements.
An even more radical development is MOOCs (massive open online courses), which offer access to interactive online courses on a vast scale; enrolment is often open to all and many are free.
And it doesn’t stop there. In 20 years’ time, accountants may not need to spend three or four years training. Who knows where this will go? Is it too radical to suggest becoming an accountant (or any other professional) could mean uploading data to a brain chip that contains all the required technical expertise and using this in combination with artificial intelligence to make professional judgements? The accountant of the future might be an ‘augmented’ person or exist only virtually as a cloud-based software agent.
At its simplest level, cloud computing is about using internet-based technologies to provide or gain access to IT resources held on physically remote computers. Third-party providers in the cloud ecosystem will be taking over many more business processes over the coming decade, including HR, operations and sales, and finance and accounting. It will take longer for the cloud-delivery service model to displace traditional on-premise systems or traditional accountants. But as the cloud converges with technologies such as mobile and big data and they become more mutually reinforcing, unanticipated changes will arrive.
7. Payment systems
Traditional notions of money and currency are fading. The world is on the brink of a fundamental shift in how goods and services are bought and sold online and offline, driven by consumers’ transition to mobile devices and digital wallets. Analysts predict increased dependence on a new type of mobile device app, the digital payment adviser (DPA), which recommends the most appropriate payment product for a purchase. DPAs will encourage the purchase of day-to-day products and services using alternative currencies, such as loyalty points and social currencies, and there may be a resulting shift in power from banks and payment card issuers to customers. This seems likely to become more apparent over the next five to 10 years as payment mechanisms and platforms proliferate, and alternative currencies gain traction.
8. Virtual and augmented reality
Computer modelling and simulation can create ‘virtual environments’ and simulate a physical presence that can interact in these and in the real world. Mixed ‘augmented reality’ systems can overlay human perceptions of reality with sound, graphics, photos, videos and other types of sensory data. Wired gloves, head-mounted displays, exoskeletons and other devices make the experience more immersive, by allowing people to interact with virtual and remote objects. By 2020 simulated virtual environments will permit active engagement with data. So rather than drilling into a spreadsheet’s cells, smart software agents will assemble simulated environments, allowing users to manipulate virtual representations of the underlying data.
9. Digital service delivery
More sectors will need to exploit digital technologies to add value to their services and meet consumers’ changing expectations. As more services are provided digitally by all sorts of entities from government departments to small accountancy firms, and developments such as XBRL (eXtensible Business Reporting Language) facilitate progressively more automatic and electronic data exchange, there may be a disintermediation 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 and validated by smart software.
Historically, IT innovation was driven by big business and the military, but blogging, instant messaging, internet telephony, and sites for sharing pictures and music have been driven by individuals. As enterprise social functionality improves, social tools will become more useful to finance. In an ideal world, collaboration software will develop a situational awareness that enables it to contextualise processes and the roles and relationships of participants. In finance, for example, it would offer automatic understanding of the difference between general exchanges and any that must be tightly controlled – such as between tax and finance departments.
Faye Chua is head of future research, ACCA.
"The world has now entered an era of ‘digital Darwinism’, with technology evolving too fast for many to adapt."