A future finance perspective when line of separation between man and machine is blurring out!
The world is rapidly changing and disrupting the way we perform our job, elevating the parameters to perform the jobs and even in many cases changing the job to be performed. SAP is also not secluded from it. In this blog, I am focusing more on the core areas of accounting, reporting, taxation and auditing related to Finance and trying to see through the trends where opportunities can be capitalized.
The way we recognize the accounting impact in our books have changed dramatically since the inception of double entry accounting system in 1340. There is no need of army of accountants and most of the transaction processing has been automated in the latest and greatest innovations in ERPs like S/4HANA. In day to day operations, finance accountant is almost not performing any journal and everything has capability to get posted triggered from the various business event, like goods movement, automated provisioning etc. If person is trying to make posting manually, the system is intelligent enough to impose pre-defined rules and can guide the user to make posting in a Do-It-Yourself style.
So what’s next? There are a lot of innovations currently happening and many keys lying in future looking for the right door to open. Like:
– How about an ERP where you just define or redefine the business process and system self-adjust with the backend setup, configurations, adjustment in existing data happening automatically on the fly eliminating the need of IT for system setup for business process.
– The accounting role is already among the top 10 candidates for automation. However, there is a need for automated checks to ensure that setup is according to the legal requirement of accounting standards. This ensures a faster real-time audit of system and prevents the possible accounting frauds due to manipulations. A latest example is that Indian government is able to send notices to defaulting individuals under “Operation Clean Money” by using the enhanced data analytics from various sources for world’s second populistic country.
– There can be AI based consulting also, so that enterprise shoot a question and AI is able to provide various solution approaches with detailed setup/ risk etc. leveraged from past experiences thought to machine, latest technology/trends information and ability to compare. And as machine try to mimic man more, it is possible that it suggests solution based on the emotion of user or by sensing/studying the politics of various user hierarchy in the organization.
– The solutions need to think beyond industry, as now enterprises are not only limited to their core operations, e.g. telecommunication companies are now providing media services also, technology companies providing financial services also or dealing in real estate also and so on. So harmonization of processes across industry might also be a pressing need in future.
– The accounting data is already huge and rapidly growing and thus ERP need to process it at lighting fast speed to identify the key insights. But huge data is also good, as only with this ERP can be trained enabling it to do machine learning with more accuracy. The cost of storage and processing power is already reducing exponentially following Moore’s law.
– Triple accounting system is already getting popular in the form of Bitcoin which used Blockchain technology. It consists of debit and credit side as in double entry system and additionally a receipt which is a cryptographic signed acknowledgement of transaction. The system is so sophisticated and complex that proper accounting is must and will remain the apple of the eye for auditors and government agencies.
However, to unearth the pearl from this oyster, the resources have to get re-skilled else there is possibility that they will get killed by this digital disruption. More than half of Fortune 500 companies of Y2K year have already been off-boarded from the list. But man is naturally programmed for survival. The key will be to keep your core competencies and adopting those continuously by leading and participating in the eco-system rapidly changing in digital environment.