How to: a CAs guide to navigating digital disruption
Digital transformation is poised to deliver a radical shake up to the accountancy sector. Will Mathieson CA, Director of DataTracks, highlights how financial services can navigate digital transformation.
In our busy and sometimes chaotic business life it is often a struggle to clear the decks and concentrate on what really needs to be done. To start with it is useful to agree what we mean by "digital transformation". Like all buzz terms it can be used to sell just about any point of view, or indeed any product.
1986 – a time for manual trial balances
There has been a constant drip feed of digital change for years. My sons (one of whom is also a CA) would not believe how we worked when I qualified in 1986, with its manual extended trial balances and manual Scottish cash books. The changes since then have in aggregate been "transformational". To that extent then, change is a constant.
It is not news that things change. However, there appears to be something more going on, and it is related to speed of change. We have reached a point at which significant technological changes in associated areas have compounded and combined to open the door to an era of unprecedented innovation and change.
Whilst all industry is subject to this change, this particular wave is going to have a particular impact on the administrative and accounting activities of businesses and individuals.
It may be that we look back on this era as the accountancy profession's own mini "industrial revolution".
Challenge 1: non-value activities
To thrive, companies and accounting practices alike will benefit from continually reviewing how they manage non-value creating activities. The main advantage of outsourcing these is strategic. Why? Because it liberates the most valuable resource of all – time to develop, adapt and grow.
Have you ever felt that the trees are getting in the way of seeing the woods? Most of us have, and solving this is one of the most fundamental challenges in running any business.
Challenge 2: manage change
Adopting the principle of incremental improvement is one way of managing challenge. The Japanese have a word for it - kaizen: the translation of kai which means to change, and zen, which means good.
Essentially it means improving what you can, when you can, and allowing the impact to compound over time.
Often this concept is thought of in terms of production efficiency in an industrial context. We believe it relevant to our sector when it comes to making the many small changes that are needed to bring around transformation. This means making incremental improvement now rather than waiting for a larger, possibly unmanageable, change later.
The extent of change over the next five years remains to be seen. What is clear is that there is a significant wave of change and so digital transformation has to be a key component of business strategy for accountants.
Challenge 3: breaking silos
There has never been a time when it has been more necessary to liberate you and your staff to address how to handle change. The rate of change is accelerating, and its scope broadening. Putting aside the macro challenges such as globalization, the environment and Brexit, in the accounting world things are really getting interesting.
Transformation isn’t just about technology, it’s also concerned with opening communication flow, and inspiring employees to integrate. By encouraging business collaboration, agile and empowered teams can respond quickly and effectively to change.
Challenge 4: disruptive technologies
The Cloud, SaaS, automation, cyber security, disruptive business models, AI, virtual reality and the rest are adding up to fundamental change over the next five years. Some have already manifested in things like HMRC’s “Making Tax Digital” initiative which will impact those in smaller practices.
Our clients, organizations, regulators and society have an expectation that we will not only embrace change, but generate it, in order to lead them to a better place. Those that drag their feet are likely to incur the displeasure of all to the detriment of their business. They will also miss out on the fulfillment that can be gained from generating positive change.
We don’t know what will be next, but we do know there will be another “next”.
iXBRL tagging and DataTracks
iXBRL technology is an example of how technology can be approached. The fundamental technology has multiple potential applications that may help your clients. XBRL is a way of standardizing data from dissimilar sources without entering them into a central database. It is a potential winner when the source data is "messy" and not under unified control. It may be part of the solution set for some of your clients and business intractable issues.
Find out how DataTracks wins you time by handling your iXBRL challenges
About the company
Will Mathieson is a Director of DataTracks. He is a CA with a BA in Economics from the University of Stirling. Following a successful career with Shell he originated DataTracks, the iXBRL Managed Tagging Service.
With a track record of more than 12 years, DataTracks is the most experienced global provider of XBRL and iXBRL services in this relatively new field. DataTracks prepares statements for filing with regulators in the UK, Ireland, USA, Singapore and India.
It applies similar technology, quality control and professional expertise to all the regions that it serves, allowing clients to benefit from a large scale, well controlled operation. In the UK companies use the service directly but it is also a favourite with accounting practices, including six of the UK’s top 10 accounting firms.
This blog is one of a series of articles from our commercial partners.
The views expressed are those of the author and not necessarily those of ICAS.