In 1963, Leon C. Megginson, a professor of management at Louisiana State University, noted that according to Charles Darwin’s On the Origin of Species, it is not the strongest of the species that survives, nor the most intelligent, but the one that is most adaptable to change.
New business models are posing a threat to conventional models. For Example, Netflix and YouTube have diverted audience from the conventional TV business, Online Taxi services (Uber) have changed the conventional transportation business model.
Below are the world companies which created the history of mankind by achieving the first trillion dollar market capitalization. Three of them are related to digitization and technology while other two are energy and one is Insurance sector. It is very evident from this that how technology is placed higher in the world and how much expectation people and organisations have towards this.
Trends in Technology
Cloud (Storage, Applications i.e. ERP, CRM & Analytical platform)
The way we have access to business applications has changed so far, and is changing constantly. It is estimated that in the coming years, all desktop applications shall have been replaced with the cloud based applications. It all depends upon the internet access, security issues and reliability of communication lines.
Cloud based technology is providing benefits of having applications, computing power and data storage at a remote place. These can be accessed online as and when required. Its benefit of 24/7 access, easily sharing of data and low overhead costs are compelling companies to adopt it.
As per International Data Corporation, spending on public cloud services and infrastructure is about to reach at US$ 370 billion by 2022 form US$ 210 billion in 2019. Industry wise consumption is given below.
Software as a service (SaaS) is largest spending category which mainly consist of applications of enterprise recourse management (ERP) and Customer relationship management (CRM).
Infrastructure as a service (IaaS) is 2nd largest spending category which consist of data storage devices and servers.
Platform as a service (PaaS) is the third consumption category but this is expected to grow at faster pace then the IaaS till 2022. It consist of data management software application, integration, data access, analysis and delivery applications.
Spending on such services means the Business Processes, including HR, Operations, Accounting, marketing and Finance shall be taken over by third parties i.e. ERP, CRM & Data analytical tools.Accountants have initially used the system for book-keeping and accounting only as online. Now there is increasing number of tools for the other roles i.e. payroll and budgeting.
The impact of this on Accounting is huge as even the most complex processes will be automated and businesses have to adopt these technologies as they rise, failure to adopt these technologies shall pose a big risk to them of falling behind and becoming irrelevant.
The big amount of increasing Data
By 2025, IDC says worldwide data will increase by 61% to 175 Zettabytes. Note to be taken that the data in 2018 was 33 Zettabytes only.
It’s really hard to imagine 175ZB of data, but David
Reinsel, senior vice president at IDC, explains it in a video accompanying the
announcement, which is hosted by Seagate. A zettabyte is a trillion gigabytes.
Now multiply that 175 times.
To cope with this increasing data, organisation are already spending money on sophisticated tools as mentioned above in the world expenditure on public clouds.“If one were able to store 175ZB onto BluRay discs, then you’d have a stack of discs that can get you to the moon 23 times,” Reinsel says in the video. “Even if you could download 175ZB on today’s largest hard drive, it would take 12.5 billion drives. And as an industry, we ship a fraction of that today.”
Appsruntheworld.com published an article in December 2019 and says that ERP market is going to reach at US$ 96.7 billion in 2023.
They listed top public limited companies and the tool which they are using for ERP, HCM and ATS. Below is the top list.
| Company | ERP | HCM | ATS |
|---|---|---|---|
| Walmart | SAP S/4 HANA | Workday HCM | Workday Recruiting |
| Exxon Mobil | SAP S/4 HANA | SAP HCM (HR) | SuccessFactors Recruiting |
| Apple | SAP S/4 HANA | SAP HCM (HR) | In-House ATS |
| Berkshire Hathaway | Oracle ERP Cloud | Oracle HCM Cloud | Oracle Taleo |
| Amazon.com | In-House ERP | Workday HCM | In-House ATS |
| UnitedHealth Group | Oracle E-Business Suite | Oracle HCM Cloud | Oracle Taleo |
| McKesson | SAP S/4 HANA | Workday HCM | Workday Recruiting |
| CVS Health | SAP S/4 HANA | Workday HCM | IBM Kenexa BrassRing |
| AT&T | SAP ERP ECC 6.0 | Workday HCM | Oracle Taleo |
| AmerisourceBergen | SAP S/4 HANA | Workday HCM | Oracle Taleo |
| Chevron | SAP S/4 HANA | Workday HCM | SuccessFactors Recruiting |
| Ford Motor | SAP S/4 HANA | Oracle HCM Cloud | IBM Kenexa BrassRing |
| General Motors | SAP S/4 HANA | Workday HCM | Oracle Taleo |
| Costco Wholesale | SAP S/4 HANA | SAP SuccessFactors HCM | Oracle Taleo |
| Alphabet | SAP S/4 HANA | Workday HCM | Google Hire |
Source: Apps Run The World, February 2020
They have also listed Top ERPs and their respective market share, SAP is leading the game. Below is the total market share which is indicated by them.
Connected world will create new opportunities for Accountants. Big data will have great amount of inter-rationship and information. Business shall need key expertise of data mining and analytical tools to deal with this data and to make quick and informed decisions. Many analytical tools are coming in the market to help business and accountants to help analyse. Big data capabilities and business intelligence tools are being added to applications such as Finance and HR. Accountants need to analyse now the big data on top of traditional analytical and BI tools.
Artificial Intelligence
We have been hearing about artificial intelligence since the industry evolution in the 20th century and this has gained momentum since the start of 21st century. In start mainly it has been to manufacturing organisation and the use of robots to automate process of manufacturing.
This has gained momentum now and as the internet is a big usage now so the usage of virtual bots has increase as well. The usage of NLP to interpret questions and then to integrate it with Inventory and CRM is making them very effective. IBM Watson is one of the example of modern AI tool which interpret and learn from the experience itself.
Accountants rely extensively on the expert knowledge built into software to work in a range of tasks - This is particularly important in rule based environment i.e. Audit and tax compliance. Such technologies has potential to transform the profession.
AI will continue to transform the many front and back desk office functions in the same way as they are already doing for manufacturing.
How the AI shall affect Accountants is best described In ACCA and IMA combined report "Digital Darwinism"
Mobile Usage
Mobile usage is one of the daily routines of everybody life. IDC forecasts the number of mobile units annual shipment to reach at 1.489 billion till 2023. In 2018, the same figure is of 1.402 billion. Multiple mobile manufacturers are there in the market but all are using a couple of Operating system only. in 2019, Android captures the 86.6% of the total market share. IOS has the 13.4% of the total market share. Below is the expected trend as per IDC.
In the long term, mobile technologies are going to be leading working tools. This is evident from the below mobile data traffic forecast which is increasing day by day.
Source: Statista.com
Soon all software of the organisations shall be connected and interlinked through mobile apps and these mini bite apps connected to clouds. As many organisation have already achieved this stage while many others are still lagging behind. Having achieved this 24/7 connectivity of all organisation data through apps, it shall make the decision making very fast.
Analysts suggest that this pace of technology advancement shall be multiplied in coming years by access to low cost internet and broadband. These two elements are key to future markets growth. This has decreased the distance and access to information resulting in access to masses with a single click which in in result decrease the gap b/w small and large organisations.
There is certain skill-set which Accountants of the coming years and of now has to capture to remain compatible with the market. ACCA and IMA mentioned below major categories in their combined report - Digital Darwinism.
Who knows what else is coming up tomorrow!
Stay focused and keep on adapting yourself with the technological advancement since a new CFOs' survey states that key candidates for the future accountancy are not those who knows much but are those who are willing to adapt themselves with the changing environment.
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Very informative. Thanks.
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