Six digital trends CAs need to know in 2017
With the sophistication of technology evolving at an ever-increasing rate, what are some of the trends CAs should look out for in 2017? Andrew Harbison finds out.
1. Digital twins
The term Internet of Things (IoT) has been around for a while now. It refers to smart devices (a smartphone for example) and how they connect to other software, sensors or networks. An example of IoT at work would be someone controlling their home thermostat via an app on their phone.
Digital twins builds on this by using data collected by IoT via sensors on objects to create a digital copy of a physical object.
The data collected can then be used to simulate real world conditions in a digital platform and play out potential scenarios in order to log the outcome. This could be applied to the stress put on a jet engine during a storm, how a city electrical gird would cope with a power station failure, even a person’s health and wellbeing can be tracked and analysed.
Last year, Big Four firm EY formed a strategic alliance with GE Digital “to develop and deliver Industrial Internet services based on the Industrial Internet of Things (IIoT)”.
The two organisations are using digital twins to explore “new streamlined and lower-cost operating models for industrial companies, and new business models for the industrial manufacturers who supply them".
Blockchain, the shared digital ledger, was created to keep track of the digital currency Bitcoin.
But it has since become apparent that the potential for the software stretches much further than keeping track of Bitcoin. It has already been used to improve food safety in some American supermarkets, people have been married via blockchain and it has even been used to create the first ‘decentralised space agency’.
And it seems that the popularity of the software is set to increase, with Market Reports Hub predicting that the market for the software will grow from $210.2 million in 2016 to $2.3 billion in 2021.
All of the Big Four firm are currently working with blockchain, however KPMG has advised caution when using the software.
In a report published last year titled Hong Kong Banking Outlook 2017, James McKeogh, a Partner at KPMG China, said that while it was clear the technology has the “ability to save time and money, blockchain technology also raises significant legal and regulatory issues".
3. Machine learning
Machine learning is at its core a form of artificial intelligence (AI). It is a process where a computer has the ability to learn independently without being specifically programmed to complete a task or analyse data.
The more data that is fed into the computer, the more it can learn.
For CAs and accountants in general, machine learning brings the opportunity to cut down on time spend on essential but onerous tasks.
Over the next year, the use of machine learning and AI in general will become increasingly common in the day to day workings of an accountant.
Companies are also using this technology in the fight against fraud. Amazon, Microsoft and PayPal have all integrated machine learning into their processes to better spot when a fraudulent transaction has taken place.
The AI has the ability to spot uncharacteristic behaviour on a customer’s account faster than a human can as it learns the patterns of users, meaning it stop a criminal quicker than ever before.
4. Augmented and virtual reality
Over the past two years we have witness the resurgence of virtual reality (VR), with tech giants Sony, Microsoft and Google all offering their own VR experience.
Although VR has most recently been applied in the arena of computer games, the technology does offer some interesting business applications.
For product developers, VR and AR present a unique opportunity to view a 3D representation of their creation for pre-production testing at diminished risk and cost to the business.
Auto manufacturer Audi has its own virtual dealership called the ‘Audi VR experience’. This allows the showroom to be brought to the customer through the use of a set of VR goggles and headphones, allowing the customer to stroll around a digital dealership.
5. Increased digital security
Last year many big businesses and financial institutions found themselves at the centre of hacking scandals, with attackers stealing the personal information of millions of their customers.
2017 could be the year in which new and innovative ways of protecting data are introduced to keep up with the equally innovative methods hackers are using to get their hands on the data.
Security on personal devices such as phones, tablets and smart watches are also likely to get a boost. As these devices become more connected to the IoT, the opportunities for hackers to break into those devices increase.
6. The gig economy
The gig economy refers to a section of the labour market that is made up of employees taking on short term jobs or ‘gigs’ instead of full time work.
Uber, Deliveroo and Jinn are just a few companies making the most out of this new way of employing people. The idea is that the employee is paid based on how many ‘gigs’ they complete.
For people working for Uber that would be how many people they pickup and drop off, for Deliveroo employees it would be how many deliveries they complete.
The popularity of this way of working is increasing, but it doesn’t come without complications for both employer and employee.
2017 will likely see the gig economy face continued scrutiny from HMRC, the Office for Tax Simplification (OTS) and various unions. At the end of last year, the OTS released a paper stating that there is a danger of “significant compliance issues” attached to workers in gig economy companies.
Are workers employed or self-employed? In what way, do they interact with the tax system? What role does the company play in regards to tax? These questions will likely be drilled into during 2017 and could significantly change the face of the gig economy. One to watch.