How Technology is impacting the Accounting discipline (part 1)

LightCastle Analytics Wing
April 10, 2014
How Technology is impacting the Accounting discipline (part 1)

Every accountant knows that accounting is the language of business. That language has gone through many changes throughout the ages. But through all the changes, technology has always played a part in making the accountant’s job just a little easier. This advancement in technology has enhanced the accountant’s ability to interpret and analyze statistical data and values efficiently and effectively. He/she now has the ability to infer the language of business with such ease that the accountant has now become a corporation’s most trusted business adviser.

We can start way back in the beginning, where the earliest extent of accounting records that follow the modern double-entry form. Back then, the abacus was the only tool used to keep track of calculations in business. As technology advanced, which is a blessing for us, really, so did the speed and proficiency of the accountant’s job. Then came programs such as Microsoft Excel, an accountant now had an electronic spreadsheet. The job became less tedious with less of a margin for error.
We are in the “era of big data” now, and from predictive analytics to decision making, big data is everywhere. Companies worldwide, the techs such as Amazon, IBM and Google are looking to leverage new algorithms in areas of machine learning to deal with their data to get the benefits of the growing technologies. Data analysts are looking for the “right” kind of data, based on which to make their models to predict the future. Like any other profession, big data will make a huge impact in the accounting profession and disciplines.
While scientists, in the Big Data Initiative at MIT CSAIL and at IBM Research are working on big data research, accountants and finance professionals are finding ways to use big data to measure all kinds of business risks including organizational and investment risks. This is assisting their risk assessment procedures and helping them to analyze organizational performance in turn. As the importance of data in a business grows, accountants are becoming more practiced in measuring its intrinsic value as an organizational asset.
Today’s accounting professionals who understand the importance of the internet, will use the internet to execute major business processes in the enterprise for Electronic business (e-business). E-business allows the accounting firm to coordinate activities for internal management and combines the clients’ relationships with the use of digital network. Accounting professionals can also communicate outside the organization with Web technology using the creation of an Extranet. This allows the clients to have limited access, linking to a portion of the accounting firm’s Intranet to import and export files back and forth. Linking electronically increases efficiency and cuts down on travel costs ultimately reducing operational costs.
Another strategic software application is the Supply Chain Management (SCM) system. This helps businesses manage relationships with their suppliers and provide the visibility and automation. This assists you to proactively plan, source, schedule, produce, store, transport and trace supply chain activities, in activities industries with distribution-intensive supply networks.
To go a step further, cloud computing is becoming popular today. It is a service that is being provided over the internet to permanently store data and use business applications over a remote server which is shared by many other users. This means, the risk of data loss can be minimized by the use of cloud computing! With the rise of mobile technology and the cloud, this also means that an accountant can use the cloud based software from anywhere in the world, while changes get updated real time – ensuring that business owners can also stay connected to their data and the accountants all the time.
The next decade will see industries transition to a Cloud-enabled world where work can be accomplished anywhere, anytime. This will especially be true of the accounting profession. To best serve their clients, accounting professionals need to embrace new technologies quickly, understand the best way to incorporate those technologies into the business processes and proactively guide their clients through full adoption. However, the tendency to hinge on technology has its own share of problems such as data loss through power failure, dangers of hackers stealing data, computer fraud etc. Let’s just say, there will always be a loophole in every security system no matter how seamless it seems, that’s the screwed reality I suppose, and if we continue to develop our technology without wisdom or prudence, our servant may prove to be our executioner.

WRITTEN BY: LightCastle Analytics Wing

At LightCastle, we take a systemic and data-driven approach to create opportunities for growth and impact. We are an international management consulting firm which creates systemic and data-driven opportunities for growth and impact in emerging markets. By collaborating with development partners and leveraging the power of the private sector, we strive to boost economies, inspire businesses, and change lives at scale.

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