Jeff Thomson on The Digital Revolution
IMA® (Institute of Management Accountants) President and CEO Jeff Thomson presents his first post in his "Series for the Future." Jeff asks, “Is the digital revolution a ’friend or foe’ of the accounting profession?"
Hello, I'm Jeff Thomson, president and CEO of IMA, the Institute of Management Accountants. Today we will be talking about the “Digital Revolution: Friend or Foe for the Accounting Profession.” It’s the very first segment in our “Series for the Future” on Facebook Live. If you have any questions, comments, or thoughts to advance thinking in this area, please share them with us on our Facebook page. When you think about the title I chose for this first segment, "The Digital Revolution: Friend or Foe for the Accounting Profession," there's an awful lot of implications to that.
First of all, the term, “digital revolution.” Is it a revolution? Is it an evolution? Of course, what we're talking about is the fact virtually everything we're doing seems headed toward digitization. Generally speaking, we're talking about robotics, artificial intelligence, machine learning, and cognitive computing. What is the “friend or foe” all about? Well, the “friend or foe” simply means asking, ”Is automation good?” Going further, “Is operational efficiency good?” Of course, all of those things are good. They're friends of the accountant, the finance professional, and the industry. But what about the “foe” part? Are jobs going to go away? Are jobs going to be displaced? Will our profession continue to be relevant? Will it rise in relevance?
Let me share some of the headlines I’ve got in front of me and that you have probably seen as well, in your everyday environment as consumers, perhaps, even as professionals in the finance and accounting profession. These include, "Accounting Leaders Tap Technology as Their Top Concern." Another headline, "Robots Will Soon Be Doing Your Taxes: Bye-Bye Accounting Jobs." These are from very reputable organizations like Deloitte, the World Economic Forum, and so on. Additional headlines include, "Special Report: Automation Puts Jobs in Peril." Some go further and discuss the impact on jobs, "Automation and Anxiety: Will Smarter Machines Cause Mass Unemployment?"
The questions, “Friend or foe?” and “What will the impact of automation be on the profession?” are ones I've often commented upon. We all know that digitization and smart technology are not coming, rather they are here. Just look around you. Look at the advent of driverless cars, look at the fact that bots and robots are already automating inside of factories and other environments. The digital revolution is not coming, it's here. We should embrace this digital revolution as an opportunity, not just as a risk if our profession is to remain relevant and to increase in relevance.
The call-to-action or the sense of urgency is present because change does not come easily. We cannot sit back as professionals or as a profession. I'm not suggesting our profession will be obliterated and 10 years from now, it’ll be Jeff Thomson, the robot, speaking to you. But if we don't take action now, as a profession, in terms of learning new skills and new competencies, we will certainly lose our relevance and our influence over society, over stakeholders, shareholders, and organizations at large. So, we must take this seriously.
Now, there are differences of opinions on the pace, magnitude, and comprehensiveness of automation in terms of displaced or replaced jobs. But when you have the likes of Deloitte, PwC, The Economist, World Economic Forum, World Bank, Forrester, Gartner, and others talking, directionally about significant displacement of jobs or activities in our profession in the future, who cares what the number is? Let's take it seriously. Where's the call-to-action, the sense of urgency?”
Well, here it is. We already knew, before this digital revolution, the role of the accountant in industry was evolving and transforming. I was a CFO in industry a decade and a half ago and it was transforming then. I was expected, as the CFO in industry, to not only count the beans, but to create and sprout more beans. I was expected not only to fulfill my role as a value steward, safeguarding assets, closing the books, the audit, the internal controls, but, also, I was expected to be a value creator. Financial planning and analysis, M&A (mergers and acquisitions), decision support, insight and foresight skills were required. The role of the accountant and the CFO team in industry has been evolving to be that of a strategic business partner and a trusted business advisor.
The reason I'm going to pause right here before we talk about digital competencies is to emphasize management accountants need to be future-proof. The reason I draw the line there is because we already have a gap in competency. When you look at accounting education today, in terms of what accounting educators teach versus what's really done in industry, in the real world of business, there already is a significant gap because accounting education, for the most part, still tends to focus on tax audit compliance and regulatory reporting or financial accounting. We need to work together as an ecosystem (associations, academia, and corporations) to change that.
Let's fast forward now to what I believe we need to be doing in terms of retooling our profession for it , not only to remain relevant, but also to increase its influence. Here are my tips and my thoughts which are subject to your comments and thoughts as well.
First, as I indicated earlier, we have to embrace automation and this digital revolution. After all, when you think about accounting and finance professionals, we're responsible for two things, generally, operational efficiency in the short run and strategic planning and execution in the long run. Of course, the more routine, transaction-oriented, repeatable types of tasks are susceptible to automation, but that will help to reduce cost and increase efficiency. We see it happening today in audit, financial planning, and other activities and it's just going to increase. We need to not only accept it, but embrace it as an opportunity to create greater operational efficiency.
Beyond that, I'm a believer that the robot – the machine – will not replace us any time soon, for the breadth of human thinking, our ability to optimize, choices, and for our relationship management skills. What we need from the human is the ability to probe, to leverage and harness the power and value of the machine, but that's going to require new skills. Those new skills primarily fall into what I would call data science and data analytics. These are the skill sets and the competencies we, as management accountants and accountants in general, need to embrace and pick up, so we can ask the right questions, so we can leverage and harness technology, so technology does not replace us.
Specifically, if you just google “data science” or “data analytics,” you'll see skill sets around insight and foresight. Am I suggesting that every accountant needs to become a Ph.D. statistician? No. But do you need to have a working understanding of business statistics, data mining, data acquisition, data governance, data analytics (not just descriptive, but predictive), storytelling, and data visualization? Absolutely.
You know what, you're in a much better position to harness and leverage the power around you of soft and hard assets if you know the questions to ask, to probe, to be inquisitive. Therefore, yes, this is a call-to-action. If we step back and say we're going to, as a profession, outsource, not only the work but the thinking, the thinking around data science and data analytics, we make our profession much less relevant.
Why do I need the CFO? In fact, some are beginning to call the CFO the DFO, Digital Financial Officer. Why do I need the CFO anymore if they're going to close the books and do the routine tasks, but outsource the strategic thinking or the data and analytical thinking?
To conclude, IMA has an awful lot of resources in place and we are developing to be ahead of digitization, not behind it, starting with the CMA® (Certified Management Accountant). We recently added a specialty credential called CSCA® (Certified in Strategy and Competitive Analysis) on top of the CMA. Over the coming days, weeks, and months, you will see a steady stream of resources, education, and research in the area of the interaction or the intersection between accounting and data analytics and data science. It's the right thing to do. It's a necessary thing to do for the future of our great and proud profession. Thank you very much.