When you think about the changes we’ve seen in Accounting and Finance departments in the last 15 years, it’s incredible. Recently I was asked by our CEO to compile my company’s historical performance over the last 15 years for some certain performance indicators. As I looked through our old financial reporting files I was reminded how far we’ve come. From Lotus 123, to Excel, to large multi-dimensional data cubes, tier one ERP systems, clearly we’ve made huge progress.
I think a lot about what the future of Corporate Accounting and Finance looks like. I have only been in my career a little bit less than a decade and have seen some pretty substantial change. I have served on teams implementing systems and witness how organizations deals with the change from a 10-year old GL to a state of the art ERP more than once. This kind of evolution in field leads me to ask, What’s next? How will my job change in the future? And more importantly, what should I do now to stay relevant?
The Corporate Accounting job as we know it will not exist in 10 years.
Well, those companies currently 10 years behind the curve might still employ $75,000/year spreadsheet builders and journal entry posters, but larger companies (especially those on the cutting edge) will no longer have the need for this role.
Economically feasible ERP. The future of corporate accounting will not include manual reconciliation of bank accounts, accrual of revenue and expense, or manipulating data in Excel to create journal entries. Even today with the implementation of tier one ERP systems such as SAP, organizations can automate the reconciliation of their bank statements, transaction by transaction. Today we can build rules in ERP systems to reflect accounting principles at the transaction level. Up to now most of these systems have only been feasible for larger companies. As time goes on, this same technology will become economically feasible on a smaller and smaller scale. As this happens, the role of the average accountant will change from being a month-end processing, reconciling, data-pusher to being a systems design, oversight, and monitoring role. Accountants will see that systems are built to best reflect the business and accounting rules so that automation will result in streamlining transaction recording. Accountants will aid in systems enhancement design and implementation. They will spend more of their time understanding the financial results than recording and reporting them.
Visual, interactive reporting. Accountants will no longer produce reports. Instead they will help implement interactive reporting systems which can slice and dice the underlying data in a way the user can really find value. Again, some of this already exists today, but will be available on a smaller and smaller scale. The CEO will not receive a PDF with all the month-end accounting reports, instead the CEO will access a system like Spotfire or SharePoint to see their interactive financial dashboard. This dashboard will show financial and non-financial metrics together in one place and will be interactive so the CEO can drill down into areas of interest, yet maintain a higher level understanding for areas that seem to be falling within expectations. The dashboard will use visual representations of numbers to give a quicker understanding for results. The interactivity of this reporting is as important as how these dashboard metrics are identified and calculated. Many “old” reports will be eliminated due to the ability for the user to select the parts of the business they want to analyze. Accountants will be partners in developing and maintaining these tools. They will spend time researching variances and analyzing results instead of creating reports in Excel and putting together PDF docs to email out to their business partners.
Social collaboration. Email will die. Actually, I think email, just like fax and snail mail will always have its place. But no longer will email be used to get work done on a daily basis. Instead internal communication will be based on social networks. These social networks will facilitate collaboration and communication. Email will still be used for “memorializing” or documenting outcomes of important decisions, but all transitory, productive correspondence will occur in the corporate social network. This will change how accountants work because no longer will things like budget variance reports need lengthy email correspondence. Instead, collaborative commenting can document the reasoning behind variances. When needed, other lower-level members of the company can be asked to provide explanation or other input as the network can efficiently extend the conversation to more and more people in the company.
Continual forecasting. Budgets and the concept of creating a budget once a year has already come into question by innovators in the field like Steve Player. Those such as him argue why a company with constant business and constant need to make decisions would look 14 months into the future once a year, then as the year continues have visibility nearer and nearer in the future, while using older and older projections. The business decision lead time doesn’t look different if you’re in October than it does if you’re in January, yet current annual planning processes operate as if that were true. Companies will move towards continual forecasting, always looking forward a certain amount of time into the future. The amount of time will depend on their decision lead times. Accountants will facilitate this process, but unlike the all-encompassing annual budget process, the forecasting process will be less involved, more automated, and a regular routine. Accountants will help their business partners understand where they are going as they automate the production and reporting of the forecast figures, again, spending more time analyzing and less time producing. Forecasting assumptions and system enhancements will be managed by the accounting arm of the company. Learning from prior errors in forecasts, accountants will help innovate changes and enhancements to the process.
Nothing I just mentioned is novel. Tools exist today that can do everything I envision. But the corporate world takes a while to adapt new technology and new business practices. The pace of change in business is usually overestimated, with peoples’ imaginations outpacing bureaucracy and compliance inefficiencies. The impact of those changes is typically underestimated, with the failure for those to realize what impact small changes can have on entire corporate cultures.
The question to ask yourself is how have you positioned your skill set to ensure your future relevance? If your core competency is transactional processing and reconciliation, you might consider investing in some education in BI or forecasting. Are you prepared to provide the same level of value where technology is more prevalent than today? Are you helping push your organization forward, realizing these changes on the horizon, to help stay competitive? What ways can you focus today to improve your marketability in context of this change?
These are all questions I’ll answer in my next post on what the most important skills are for the future of corporate accounting.