In the late 1970s, my first job was as a cost accountant for Honeywell’s smoke detector product line. The only technology at my fingertips was a 10-key calculator used to add columns of product cost numbers and compute variance analysis for the plant manager. The task was tedious, so I visited the information technology (IT) department to ask them to write a program to automate the analysis.
They rejected my request and looked at me like I had wandered into the department by accident. The only process improvement gained from the experience was mastering the 10-key calculator with my left hand, allowing me to write with my right hand to work faster.
Times have changed as technology rapidly transforms the management accounting function. Natalia Maslova, EY blockchain lead, says, “Today we face another wave of automation enabled by technology innovations across all areas of an organization. Accounting and finance professionals are getting more and more involved in business-led technology projects on a regular basis–helping their organizations to assess opportunities, defining future state business requirements and implementing solutions.” How can management accountants become involved and make a difference in their organization’s technology initiatives through their accounting and business knowledge, ability to leverage technology, educating their organizations, and rethinking and reengineering business processes?
ACCOUNTING AND BUSINESS KNOWLEDGE
Knowledge is power. Because management accountants are responsible for cost analysis, performance measurement, and planning and control, they’re the organization’s accounting and finance experts. Management accountants have their fingers on the pulse of business activities. As the financial eyes and ears of their organizations, they can provide critical insight into business processes and requirements. There’s no substitute for management accountants’ knowledge and experience to ensure that accounting systems meet their organization’s needs; their voices must be heard. They should be involved in analyzing accounting and business systems needs and requirements, systems selection and design, implementation, and management. Without management accountants’ involvement, there’s a risk that management accounting interests will be overlooked, hampering the function’s effectiveness. Management accountants’ human capital is a priceless asset for their organizations.
Tools, technological innovation, and increasingly powerful computer hardware and software are driving accounting activities and business processes. And with these changes come exciting and unprecedented opportunities for management accountants to support their organization’s business information management functions. They must look to the future potential of digital systems and focus on business process reengineering and innovation. In their book What to Do When Machines Do Everything (Wiley 2017), Malcolm Frank, Paul Roehrig, and Ben Pring caution organizations to avoid the temptation of following a “doing digital” vs. a “being digital” strategy. “Doing digital” is a shortcut that bolts a solution onto an existing system like complying with Sarbanes-Oxley Act internal control reporting by mapping XBRL (eXtensible Business Reporting Language) tags to general ledger balances after the fact instead of implementing a digital XBRL global ledger to record transactions with digital tags. The first approach is manual; the second approach is digital. The latter solution reengineers the traditional general ledger to an electronic process, providing organizations with an electronically driven process that facilitates digital analysis and reporting.
EDUCATE THE TEAM
Management accountants can play an important role in educating their organizations about business process feasibility. For example, there’s a lot of buzz about blockchain, an emerging technology that’s making foundational changes to the performance of business and accounting activity. While it has enormous potential, its technical complexity and lack of mainstream business applications challenge organizations to figure out how to apply it to a company’s business processes. Smart contracts can be created with a blockchain to create self-executing, highly secure, decentralized contracts (such as real estate closing contracts). Management accountants may not understand the technical nuts and bolts of this blockchain, but they’re capable of preparing business cases that address required resources such as hardware, software, number of people, and scheduling. Unless management accountants can make the business case and prepare a cost-benefit analysis, an organization should reject such projects. According to Maslova, “In case of limited awareness among the key stakeholders, it’s important to help everyone in the organization understand the basics of the technology as well as its benefits.” Management accountants are well-positioned to perform this role. Process automation is the future of accounting and can add value to an organization.
RAISE YOUR TECHNICAL GAME
Helen Brand, CEO of ACCA (Association of Chartered Certified Accountants), recommends that accountants develop a digital quotient (DQ) to lead their organizations into the Digital Age. ACCA’s Professional accountants—the future: Drivers of change and future skills (http://bit.ly/2DodYJd) defines DQ as “the awareness and application of existing and emerging digital technologies, capabilities, practices, strategies and culture.” Accountants’ willingness to stay abreast of new technologies and lead their organizations into the Digital Age—not to become a technical expert—is the objective. To assess your DQ, take a short test at http://thefuture.accaglobal.com/digital. Then make a plan to raise your DQ.
PARTNER WITH IT
Management accountants must embrace IT and adopt tools and technology to improve business processes. They must partner with IT to address the opportunities and challenges raised by technology. Management accounting and IT can no longer operate as siloed organizations. Eric Cohen, director of Assurance and XBRL Architecture at Auditchain and a founder of XBRL, says, “IMA has been driving management accountants to become involved in their organizations as ERP systems experts; if they aren’t active in selecting and monitoring internal controls, systems and procedures, they won’t be able to ensure they are getting what they need to do their jobs.” Become involved and engage in your organization’s technology initiatives so you can do your job.
The opinions included are those of the author and not necessarily those of the U.S. Air Force Academy, the U.S. Air Force, or any other federal agency.