The digital workforce and the finance function

Artificial intelligence provides Chartered Accountants with an opportunity to upskill for the digital future.

As a Chartered Accountant, your professional training  – irrespective of when you trained – will have focused on value-add, whether it related to client service delivery or on internal firm processes. With developments in the digital space, these activities are now more prevalent than ever and are impacting on the role of many Chartered Accountants, the make-up of teams that Chartered Accountants oversee or work in, and career progression considerations.

What is the digital workforce?

The digital workforce involves robots performing tasks that a human previously used to. These aren’t like the robots depicted in sci-fi films, but software robots. A digital employee is a team member that is trained to carry out a process just like any employee, but they work 24/7, 365 days per year and are more cost-effective than a regular employee.

This technological innovation is what’s known as robotics process automation (RPA) and it is impacting the finance function in many ways. RPA software vendors such as Blue Prism and Automation Anywhere are some of the fastest-growing companies, whose products are becoming embedded in many organisations around the world now – especially banks and other large blue-chip businesses. This concept isn’t new, though. Yes, the technology is new, but businesses have been streamlining processes for decades. Think of the many finance processes that have been outsourced or offshored in the past 20 years, for example.

Why has it come about?

There are many reasons for the emergence of the digital workforce, not least the advancement of technology and its increasingly competitive cost. The biggest driving force, however, has been the significant process improvements businesses have gone through over the past decade, which has come about largely due to the investments that have been made in implementing sophisticated enterprise resource planning (ERP) and customer relationship management (CRM) systems.

The ERP market is estimated to reach $42 billion globally by 2020. If you think of the large players like SAP and Oracle, their applications are configured in such a way that their customers have had no choice but to streamline and re-engineer their business processes to align to the functionality of the system. As a result, finance departments have benefited from standardised processes across the board, which has enabled RPA vendors to easily map and develop software to automate those processes.

Four finance functions being currently transformed through automation

Accounts payable and accounts receivable: these functions are generally prone to human error and lack accuracy in the workflow. RPA has enabled organisations to improve accuracy in their accounts payable (AP) and accounts receivable (AR) workflow, such as quick account closure, and reduce the likelihood of human error with technology like optical character recognition (OCR) for paper invoices.

Payroll: RPA hasn’t been deployed for payroll as easily as other finance functions given the sensitivity of data in payroll, such as an individual’s bank account details. However, process re-engineering means that elements of payroll – such as time-record validation, for example – are starting to be automated in many businesses now.

A large bank going through a systems upgrade can have 100 contractors on-site, each submitting timesheets that include daily rates or hourly rates. This can be a time-consuming task for a payroll administrator to verify. With RPA, a robot can check for employees’ missing time entries and reconcile hours worked against budgeted hours on a daily basis. This would add significant value for a programme manager and allow them to manage their budgets more accurately.

Tax: RPA is prevalent in many tax teams at the moment, primarily in the areas of tax provision and tax compliance. For example, RPA can be used to populate VAT amounts or validate information by referencing against a checklist, ensuring an error-free process with shortened pay-back periods.

Automation, coupled with natural language processing, can analyse a statement that compares current tax outcomes to previous tax activity, thus flagging inconsistencies and opportunities for reconciliation.

There is a growing need for compliance reporting, no matter which market you operate in. A digital workforce can be augmented with existing tax employees to provide these reports, which can save a finance function further headcount and eliminate error – as well as morale-busting repetitive manual activities.

Accounting: accounting has been slow to incorporate a digital workforce, given the many human touch-points in the process. To allow for automation, finance leaders are re-designing business processes with the ultimate goal of achieving “continuous accounting”. This is where data is extracted, transformed and loaded automatically into accounts on a daily basis. Imagine the amount of time a management accountant would save at month-end if she didn’t have to source and input data.

Another facet of accounting that is being automated is the general ledger. Software robots are running journal entries, reconciling accounts and maintaining accurate accounting master data. From an audit perspective, RPA is a great tool for monitoring controls. Again, think of the value-add potential of automation for an auditor in a business with over 500 controls for month-end.

What does this mean for finance leaders?

To utilise a digital workforce in a beneficial manner, finance leaders must be committed to analysing each business process systematically and re-engineering the steps to allow for effective automation. It is important that finance leaders start small in their digitisation journey, rather than embarking on big-bang technology implementations.

Multinational CFOs that have created global shared service functions to replace their country-to-country finance teams are best positioned to realise the benefits of incorporating RPA into their teams, given the process improvements needed for such a structure to work. It is imperative, however, that change is managed effectively and employees understand the benefit of being freed from repetitive tasks.

It is inevitable that a digital workforce will ultimately replace some employees. However, it should primarily be realised as augmented intelligence, which has been defined as an alternative conceptualisation of artificial intelligence (AI) that focuses on AI’s assistive role, emphasising the fact that it is designed to enhance human intelligence rather than replace it.

While it is widely recognised that finance leaders are under increasing pressure to cut costs, they still need to develop sound resource planning and strategies for the redeployment of staff to ensure that productivity is optimised.

What does this mean for finance professionals?

The rate of change in technology in the workplace has never been quicker, which has made adapting to change such an important characteristic of a good employee. Change is inevitable, so having an open mind can help one adapt to any changing scenario quickly and with ease.

The question every finance professional should be asking themselves is: “What parts of my job can be automated?” If the answer is 60% or above, you must begin to upskill and flip that ratio. The functions that should be considered when learning new skills are strategy and technology. An employee can add distinct value to their company though strategic initiatives geared towards increasing profit or time efficiency.

One characteristic that has stood the test of time is attitude. Businesses will always have a need for employees who are enthusiastic and passionate – the future looks bright for positive people who are willing to change their skills and, even more-so, move beyond their core areas of technical expertise to develop complementary skills. For example, a tax-qualified Chartered Accountant could pivot into the technology area where elements of tax are currently being re-invented. This could be both value-adding for your employer and career-enhancing for you.

The next wave of change

In acknowledging the acceleration of technology’s advancement, it is prudent to begin thinking about the next wave  of change. We are now in the midst of the fourth industrial revolution, where unparalleled amounts of data are being produced and consumed on a daily basis. It is the existence of this data that allows machines to be trained to think and act like a human, popularly known as machine learning.

The ability to extract meaningful insights from data and apply those insights in a way that benefits the organisation, in effect becoming a ‘data literate’ resource, will ensure employment well into the future. There are many tools that allow you to extract and model data sets, and these are commonly taught online or in any statistical post-graduate course. Also, visualisation tools with user-friendly ‘drag and drop’ functionality allow you to present this data clearly. Indeed, there is a growing appetite from investment and asset management firms for data literate finance professionals who can extract, model and present data as actionable insights.

Unless you are working for an e-commerce business or a start-up hedge fund, it is likely that you are part of many other white-collar professionals working for large corporates where data literacy isn’t an in-demand skill yet. Interestingly, the many corporate restructures we have seen over the past 12 months indicate that middle-management is the most threatened position. Paradoxically, managers who are data literate will likely be among the most valuable employees. The ability to derive value from the truth will determine the difference.

James Alexander is emerging technologies lead at Azon Recruitment Group.