At the end of March, I will be presenting to the Management Accounting Research Group at the London School of Economics, alongside Robert Hodgkinson, ICAEW’s technical director. Our challenge is to talk for 45 minutes on the impact of IT on finance functions.
This is proving to be no easy task, as we try to assemble a wide range of academic and practical evidence on what the impact of IT has actually been and what it might be in future.
The basic argument is that management accounting, and the role of the finance function more broadly, is based around the flow and use of information. As IT radically changes the way that information is captured, processed, analysed and communicated, it should have a significant impact on the way that management accountants do their jobs. However, has this really been the case? And what is likely to change in the future?
There is no doubt that IT has automated many of the transactional processing activities that take place in organisations. There has been growing use of shared service centres and outsourcing for a variety of finance activities. Accountants have vastly more information available to them for reporting and control purposes.
But the impact of IT still seems a little limited. The surveys summarised in ICAEW’s Finance Function Framework report show that accountants in business still spend the same amount of time doing the same type of stuff as 20 years ago. Academic research shows no new management accounting techniques. While there are some interesting case studies around how accounting practices have evolved in specific organisations to adapt to new IT systems, there is still little evidence of a major shift in what finance functions actually do and the tools and techniques which are used.
With the explosion of ‘big data’ and the rapid improvements in computer ‘intelligence’ (for example, IBM’s Watson computer, which beat human contestants on the game show Jeopardy) is this likely to change? Will we see sophisticated analytical tools and techniques increasingly impact on the role of the finance function?
Indeed, there are many questions to consider. What is the role of new surveillance technologies in controlling employees? Will new forms of information delivery, such as through mobile and tablet devices, change the way that managers use information and lead to different demands on the finance function? Could crowdsourcing techniques ever replace the need for financial expertise?
As we try to answer these questions, we welcome any comments on your experience to date, and how you think IT may impact on finance functions of the future.