For most accountancy professionals, digital adoption is viewed through the lens of efficiency. However, organisations increasingly recognise the broader benefits of digital adoption. By embracing digital technology, companies are more likely to have a competitive advantage, offer enhanced customer insights and exhibit more decisive leadership and data governance processes.
Adopting new technologies remains limited and unbalanced, with an apparent gap between larger organisations and small and medium-sized enterprises (SMEs) or small and medium-sized practitioners (SMPs). Larger corporations and prominent accounting firms are more inclined to adopt new technologies. Importantly, they may also emphasise seeking a competitive edge through initiatives related to digital transformation.
There’s a significant opportunity to deepen the understanding and involvement with widely applicable technologies like AI and Machine Learning in accountancy and finance. Could this be the year for companies to provide further attention to digital process technologies?
Evolution of accounting software
Basic accounting software such as VisiCalc emerged in the 1970s and ’80s, allowing for improved efficiency, accuracy and analysis compared with manual methods. Still, these early programmes quickly reached limits in reporting, data sharing and workflow. The development of enterprise-wide accounting systems such as SAP and Oracle in the 1980s and ’90s moved accountancy to a client/server model, enabling faster reporting, improved data security and consolidated views across departments and locations. Challenges then emerged from system speed, connectivity and cost.
The rise of cloud-based accounting and software as a service (SaaS) such as QuickBooks Online and Xero in the 2000s signified the next development phase. Benefits for personnel included increased mobility, collaboration and automation but also raised concerns about data security, privacy and reliance on internet connectivity.
Today, we find ourselves in a world being propelled by digital technologies, including AI, sensors, robotics and networks. As these technologies improve, they are disrupting previous economic and industrial models. This phase has coincided with the broader adoption of automation into accounting processes, with ‘bots’ that can handle repetitive, rules-based tasks such as data entry and report generation alongside advanced analytics for faster insights derived from massive datasets.
Technologies on the digital horizon
AI and big data have seen an enormous increase in activity over recent years. Other digital technologies, such as digital twinning, blockchain, connectivity and storage facilities have received substantial interest, as have autonomous systems such as robots and self-driving cars. Some of these technologies have enormous benefits for accountancy, from identifying inconsistencies, predicting trends, evaluating risk, analysing system performance, as well as data entry and reconciliation automation.
Artificial intelligence systems are significant because they can automate complex tasks, make predictions and provide insights based on vast amounts of data. These technologies are advanced but still developing, with new models and methods regularly introduced. According to Stanford University’s Artificial Intelligence Index Report 2022, global AI private investment doubled between 2020 and 2021, totalling $93.5 billion in the latter year. Generative AI OpenAI’s ChatGPT is the fastest-growing technology product ever. It only took five days to reach a million users, surpassing all previous benchmarks by a significant margin.
Among accountancy professionals, there is general agreement that AI has the potential to make processes more efficient and effective. The adoption of AI models inevitably introduces ethical considerations and challenges. Finance teams have a critical role to play in helping ensure AI models are used ethically and effectively across the organisation. The circle of accountability requires that finance professionals keep up to date with the latest developments in AI technologies. Secondly, actively collaborate with teams, driving innovative solutions around this emerging technology.
Big data can examine large, diverse data sets to uncover hidden patterns, correlations and insights. In the accountancy profession, big data analytics is the basis of anomaly detection, identifying inconsistencies in financial statements, predicting future revenue trends and evaluating risk factors for audits.
Digital twinning’s ability to provide a virtual replica of a physical system is crucial because it allows companies to analyse the performance of systems, predict failures and simulate scenarios. In accountancy, digital twins could be used to model a company’s financial systems, allowing for scenario analysis and improved financial planning.
Rapid advancements in advanced robotics technology are becoming more prevalent across manufacturing, healthcare and logistics industries. Blockchain’s significance lies in improving transaction security, transparency and efficiency. It’s an evolving technology with growing finance and supply chain management adoption. In accountancy, blockchain could revolutionise auditing by providing a verifiable and tamper-proof record of transactions.
The road to adoption
Adopting new technologies is challenging, often requiring significant change management and, at times, a steep learning curve. After adopting new technologies, professionals must learn new tactics, transforming traditional practices. The mixture of practical adoption challenges and overcoming these learning curves determine the pace and extent to which different organisations, sectors and economies adapt and whether a particular technology is likely to be widely applicable.
This is an exciting but challenging context for business leaders and finance professionals, who are often looked to for a clear assessment of the potential of any technology for their organisation and a wide range of stakeholders. Integrating technical proficiency with strategic insight is paramount to fully harnessing the potential of technologies like AI. This synergy establishes a solid foundation for effective communication and collaboration across teams.
