INNOVATIONS THAT WOULD AFFECT ACCOUNTANTS IN NIGERIA IN THE NEXT DECADE

"INNOVATIONS THAT WOULD AFFECT ACCOUNTANTS IN NIGERIA IN THE NEXT DECADE" - PAPER PRESENTED BY SEGUN-MARTINS OGUNYEMI AS GUEST SPEAKER AT CALEB UNIVERSITY IMOTA, LAGOS NIGERIA ON 27TH JUNE 2018

What is INNOVATION?

Innovation can be defined simply as a "new idea, device or method". However, innovation is often also viewed as the application of better solutions that meet

• new requirements,
• unarticulated needs, or
• existing market needs.
  

Innovation isn’t just an idea but the process of translating it into action.

Major Types of INNOVATION

Two major types of Innovation are:

Sustaining Innovation

Seeks to improve existing products. It does not create new markets or values, but rather merely develop existing ones.

Disruptive Innovation

Means to reinvent a technology, business model, or simply invent it all together. Some of the examples of disruptive innovation are Airbnb, Uber, Taxify etc.

Disruptive Innovations

As explained earlier, A disruptive technology is one that displaces an established technology and shakes up the industry or a ground-breaking product that creates a completely new industry.

Examples of Disruptive Innovations are:

• The personal computer (PC) displaced the typewriter and forever changed the way we work and communicate.
• Email transformed the way we communicating, largely displacing letter-writing and disrupting the postal and greeting card industries.
• Cell phones made it possible for people to call us anywhere and disrupted the telecom industry.
• The laptop computer and mobile computing made a mobile workforce possible and made it possible for people to connect and collaborate from anywhere.
• Smartphones largely replaced cell phones and PDAs and, because of the available apps, also disrupted.
• Cloud computing has been a hugely disruptive technology in the business world, displacing many resources such as disc, flash drives etc
• Social networking has had a major impact on the way we communicate and it has disrupted telephone, email, instant messaging and event planning.

Disrupting the Accountancy Profession

The accounting profession will face significant changes in the next decade. Accountants in turn will face significant opportunities and risks from digital disruption and rapidly evolving technology. 

The three major changes are

• Evolving smart and digital technology
• Continued globalization of reporting / disclosure standards, and
• New forms of regulation.

Smart & Digital Technologies

Accountants will use increasingly sophisticated and smart technologies to enhance their traditional ways of working, and these technologies might even replace the traditional approach. Smart software systems (including cloud computing) will support the trend toward outsourcing services and greater use of social media will improve collaboration, disclosure, engagement with stakeholders and broader communities. Social media such as Facebook, Twitter, and Google search) will reveal more data.

Globalization

Globalization will create more opportunities and challenges for members of the accounting profession. While globalization encourages the free flow of money from one capital market to another, enhanced overseas outsourcing activities and the transfer of technical and professional skills will simultaneously continue to pose threats to resolving local problems (with different cultural, financial, and tax systems). Accounting professionals are likely to see themselves having a role in this transformation.

More Regulations

Increased regulation, and the associated disclosure rules, will have the greatest impact on the profession for years to come. For example, increased regulation is imminent because of massive tax avoidance, transfer pricing, and money laundering.

Many professional accountants and tax practitioners will be affected by intergovernmental tax action to limit base erosion and profit-shifting (BEPS). 

Key Shifts and Impacts

The future profile of the profession will include key shifts and remarkable impacts such as:

• Accountancy will be automated and cloud based.
• Accountancy will harness the power of big data.
• Accountancy will integrate non-traditional financial information.
• Accountancy will be more efficient and mobile.
• Accountants will be able to deskill time-consuming and repetitive work
• Accountants’ roles are and will continue to change radically.
• Accountants will need to re-skill to retain their emerging role as the gatekeeper of corporate data.
• The profession must develop new ways to measure and value technology costs and benefits for the world of cloud computing and social networking.
• The accountancy profession will shrink as software vendors build progressively more finance expertise into self-learning products and services.
• The CFOs of the future will need to know as much about technology as they do about financial management.
• Unless accountants embrace technology they will follow the dinosaur into extinction – individually and as a profession.
• By 2025 audits may well be real-time. Regulators will conduct them automatically pulling data in from business systems and sensors embedded in everything – from stock to livestock and even human beings.
• If accountants do not position themselves as subject matter experts on emerging trends such as crowdfunding and new payment platforms then other professionals will.
• Accountants through emerging technologies will be more participatory in the areas of Business Intelligence, Business Analytics and Business Planning.
• Accountants must exploit emerging technologies to attract talent and to develop and manage existing talent.

Emerging Trends

Big data

Big data is a term that describes the large volume of data – both structured and unstructured – that inundates a business on a day-to-day basis. But it’s not the amount of data that’s important. It’s what organizations do with the data that matters. Big data can be analyzed for insights that lead to better decisions and strategic business moves. There are five concepts associated with big data: volume, variety, velocity, veracity and value.

Internet of Things (IoT)

IoT is the network of physical devices, vehicles, home appliances, and other items embedded with electronics, software, sensors, actuators, and connectivity which enables these things to connect and exchange data, creating opportunities for more direct integration of the physical world into computer-based systems, resulting in efficiency improvements, economic benefits, and reduced human exertions.

Cloud Computing

This is an information technology (IT) paradigm that enables global access to shared pools of configurable system resources and higher-level services that can be rapidly provisioned with minimal management effort, often over the Internet. Cloud computing relies on sharing of resources to achieve coherence and economies of scale, similar to a public utility. It enables organizations to focus on their core businesses.

Artificial Intelligence & Machine Learning

Artificial Intelligence (AI) was first coined in 1956 by John McCarthy. AI involves configuration of machines to perform tasks that are characteristic of human intelligence. This includes things like understanding language, recognizing objects and sounds, and problem solving. At its core, Machine Learning founded in 1959 by Arthur Samuel is simply a way of achieving AI. It is a way of giving machines access to data and let them learn for themselves. Recall The Terminator, The Matrix, Robocop…

Enterprise Resource Planning (ERP)

ERP is the integrated management of core business processes, often in real-time and mediated by software and technology. ERP is usually referred to as a category of business-management software  typically a suite of integrated applications that an organization can use to collect, store, manage, and interpret data from these many business activities. Examples are Sage, SAP, Oracle, Ms Dynamics Navision, AX and so on.

Blockchain

A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography.  Each block typically contains a cryptographic hash of the previous block, a timestamp, and transaction data. By design, a blockchain is resistant to modification of the data. It is "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way".

Nuggets

“The only constant in the technology industry is change.” - Marc Benioff

“Information technology and the Internet are rapidly transforming almost every aspect of our lives - some for better, some for worse.” - John Landgraf

“Once a new technology rolls over you, if you're not part of the steamroller, you're part of the road.” - Stewart Brand

“The key is to embrace disruption and change early. Don't react to it decades later. You can't fight innovation.” - Ryan Kavanaugh

Way-forward

Every accountant in this generation and generations to come need to realise that disruptive innovations are real. In order to remain relevant and create values as accountants we need these three:

1. Intellectual curiosity
2. Love for technology
3. Entrepreneurial mindset.

When you are prepared you minimise the burdens and maximise the benefits.

Be Prepared! Be Digital!!

‘Segun-Martins Ogunyemi is the Principal Consultant at Pro Logic Ideas Consulting, a Financial and Management Consulting Firm based in Lagos Nigeria. @SMOgunyemi