From Documents to Divination: technology-driven changes in accounting

From Documents to Divination: technology-driven changes in accounting

Accounting and finance professionals are facing a rapidly changing landscape of competitive services, cloud-based DIY solutions, and a rising demand for the delivery of more meaningful financial data and guidance in real time.   Technologies supporting accounting and other business processes are being transformed right in front of us, and this transformation is creating new opportunity and introducing new challenges more rapidly than ever before.  Accounting and finance professionals must embrace this transition from documents to divination (from paper-handlers to providers of analysis and insight) in order to retain relevance with their clients.  Where after the fact accounting, financial reporting, and compliance work was enough to sustain the professional accounting firm, practitioners are now feeling the pressure to deliver more process support, operational structure, and proactive financial guidance in order to stave off the encroachment of competitive providers.

The driving force behind this shift from reactive to proactive has been the development and improvement of document imaging and OCR technologies.  While this aspect of technology development may seem to be little more than a way to turn paper documents into more easily managed digital files, it really means much more than that and is causing businesses to re-evaluate their approaches to information management and reporting due to changes in priorities for data collection and analysis.

When you consider that everything in business used to be handled with paper, you begin to recognize why it’s taken us so long to get to this point.  Businesses generate a LOT of paper, and it takes a lot of time to manually record, summarize, and distill that paper-based information into a meaningful report.  Because tax compliance and the development of financial statements is a basic requirement for all businesses, the priority was to collect and store documents related to those aspects of reporting.  The sheer volume of paper created a necessary focus on the accounting fundamentals; little more could be done in anything close to a meaningful timeframe.  Businesses generally failed to collect or analyze other valuable business information, simply due to the time, complexity and cost involved in gleaning it from paper records.

As digital imaging emerged, businesses began to recognize the value of turning all that paper into electronic files.  These e-pictures could be stored, shared, and managed more efficiently than paper documents.  As businesses were able to gather more of their documents in electronic form, they found that collecting and storing different types of document-based information was a little easier.  Document and electronic records management solutions emerged, assisting businesses by replacing physical file cabinets with electronic ones, and helping demonstrate the benefits to the entire organization of structured document management and information access.

As businesses began to collect and use more information from operational level processes (enabled through electronic document and software data integration technologies), operational and information technology professionals began playing a larger and more direct role in overall business reporting, sometimes creating friction through involvement in areas which were once the exclusive domain of the CFO.

The big change came when technology allowed digital documents to become digital data.  Electronic documents are neat, but data is truly useful.  Data can be collected, analyzed, compared and contrasted.  The value of a business isn’t truly reflected in its financial statements.  The value is in the data, and how that data might be leveraged to create a business advantage.   This is why “big data” is important.

Electronic data interchange, software-based data integrations, and software that can recognize information on a paper document and turn it into data: these are the key advancements in technology which are driving recent and rapid change.  Digital dashboards, KPI reporting, forecasting and scenario playing, and predictive analytics are the tools of today’s relevant accounting professional, and these tools and the intelligence they help to provide is serving to increase the value of the role of the business CTO, CIO, and the data-savvy CFO.

Accounting professionals must seek deeper levels of involvement in the selection and implementation of process support systems and data collection tools in order to help provide the appropriate structure and proper controls.  Rather than being a consumer of data collected in the business, accounting professionals should be among the