Accountancy feels automation creep as businesses turn to AI

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Mark Taylor finds out how businesses are adopting Microsoft’s Dynamics 365 resource to lever its AI capabilities and drive growth.

The hype and noise around Artificial Intelligence (AI) often makes it difficult to know if advancements are truly revolutionising accounting and auditing, or simply inflating expectations to an impossible degree.

The applications to automate and streamline bookkeeping tasks currently flooding the market are increasingly offering data-driven insights into customer behaviours, ensuring there is little escape from the march of AI in its various forms.

Alongside their ability to simplify routine tasks such as coding accounting entries, the latest cloud-based iterations are designed to further replicate the human element through data-driven tax planning suggestions, intuitive operational reports, and machine-crafted client goals.

AccountingWEB was invited to an event by digital transformation experts Xpedition to learn more about their partnership with Microsoft and how businesses are adopting the latter’s Dynamics 365 resource to lever its AI capabilities and drive growth.

Buzzwords

Before we go any further it is worth clarifying some buzzwords; AI is a general category where machines are programmed to show characteristics of intelligent behaviour or to “think” like humans. Machine learning is a subset of AI in which a system of algorithms automatically learns and teaches itself with access to data and without strict programming.

Existing technology is boosting the rapid advancement of supervised machine learning, but unsupervised machine learning, where the machine runs itself, is not yet within reach for our industry.

Here are the main takeaways from the day:

Change isn’t coming, it’s here

The accountancy sector has been understandably reluctant to proclaim AI a silver bullet in the same way other industries have rushed to adopt it, but anyone longing for the days of individual ledgers for each transaction to return is out of luck.

“You may think this is out there, but it is absolutely what is happening to us,” said Steve Georgiou of Xpedition. “We have seen the evolution of cloud, and AI is going exactly the same way. Habits from outside the workplace, like the use of smartphones to do everything, are coming into it, and big chunky integration projects have become a thing of the past.”

Last week Microsoft regained its position as the world’s most valuable company, surpassing rival Apple. There was an element of “slow and steady wins the race” about the Washington software giants revival.

None of what is provided is particularly new, but because Dynamics 365 plugs into and learns from everything else in the Microsoft universe, such as Office, it has an ubiquity and scale few solutions can match.

The most obvious advantage is firms can use the capabilities in Dynamics 365 to glean immediate insights from all existing Excel and email archives rather than bolting on a third-party vendor to do the same, probably at a greater cost.

The revamped customer relationship technology essentially allows agents to track a project from initial sale to final billing, with AI bots generating smarter opportunity management, project planning, resource management, team collaboration, and customer invoicing.

The robots aren’t going to steal your job…

Professional services experts earn their corn by comprehending the rules and regulations their client is bound by, and giving recommendations in easily digestible formats.

Through machine learning a computer can spot and apply patterns, using its own algorithms based on those patterns, and honing the scenarios based on feedback. However, tax planning decisions and other advice are still best worked out through human reasoning and context.

Without a human observing the input and output of systems, the AI tools within Dynamics 365 and its ilk can capture and present basic system data, but cannot as yet create intelligent response plans of the silver-bullet type.

And to hammer the point home, a recent survey by consultants Accenture found that even with the rise of robo-advisers, 68% of their clients would rather talk to a human adviser, despite their relatively equal performance predicting the market.

...but they make you better at it

It is not the case that overnight an AI accountant or auditor will appear to put everyone out of work, so thoughts turn to how we can use the technology to improve services and make better, more informed decisions.

The industry must consider how machine learning can be leveraged to strengthen and augment the role of auditors and accountants, and how corporate governance must adapt to counteract other risks to a business that machine learning technology presents.

One of the most crucial aspects of any business will be in the future of data governance, which will have to consider both data bias, and compliance issues. These are tasks that cannot be left to IT departments or compliance functions alone, as they do not have the expertise of holistic risk and control that accountants are skilled in managing.

A machine does not know what biased data looks like, but if that is the only data it is exposed to then its crunching will be polluted. Insights gleaned from data can only be effective if that data itself is clean, captured in consistent formats, and effectively managed.

If machine learning is properly applied, accountants can spend less time gathering and sorting data and more time diving in and mining proper insights from it, at a much faster pace.

This is what Dynamics 365 is driving at, and SMEs will have a decision to make on how far they want to jump with regard to licenses; some audience members were quick to point out there is such a thing as too much information.

For all its upsides, the prevalence of AI and its growing use in accountancy makes it easier to fall into the trap of choosing a technology in search of a problem, especially when under pressure. It’s crucial to consider first the business and use case that will drive the most benefit, and then identify the right technology to solve that problem.

Microsoft is of course betting organizations will want to go beyond automation to further understand customer needs and push more into the sphere of relationship mapping.

“The increased speed of business, no matter what industry or business you are in, is being felt by everyone,” said Ayeshna Hirani, Microsoft Business Central product manager. “Many of the conversations we have with customers are around how they keep up with the pace of change. They are having to think over the next few months, short-term, rather than five to 10 years, that is the reality today.”

‘Data is the new oil’

Microsoft and consultants McKinsey have both billed data the new oil. Data management is becoming the lifeblood of modern business, yet a heady mix of denial, negligence and ignorance is creating considerable challenges across the sector.

Xpedition sought to dispel fears over GDPR violations and was at pains to point out how Dynamics 365 has built in privacy-by-design and privacy-by-default methodologies to help business comply; it is two years since Dynamics 365 was first launched and a lot has changed in that time in regard to ethical use of data.

Microsoft Dynamics 365 attempts to avoid the creation of silos, where a patchwork of different data capture solutions leads to an environment that is virtually impossible to unravel. Although they have been around in IT for some time, the concept and importance of data lakes and warehouses is being rapidly introduced to the accountancy profession.

The message is fairly simple; before you can run behavioural analytics over data and understand where a client is going wrong, firms need to ensure the data they are analysing is all present and correct, which for some, particularly those who went all in on Big Data analytics before the market matured, has proved difficult.

“Only organisations that really recognise the full potential of data, and the insights that they can get from it, are the ones who will accelerate and can keep up with pace of change in the market,” said Microsoft’s Hirani. “Organisations are having to think about how they can better use the data they are capturing, even operations within the institution. It will help them make smarter decisions.”

Hope for the future

Tax software and bookkeeping are undergoing a period of disruption not seen for decades as technology such as that offered by Dynamics 365 automates many of the processes always considered manual. AI is powering this move to automation by making everything more intuitive and efficient, and is now spreading basic bookkeeping to other accounting functions, such as audit work papers.

The next step may be lowering fees related to technical aspects of accounting and tax preparation as more solutions become available, igniting competition, but also putting some firms at risk of extinction if they don’t keep up.

The future looks bright for the sector, and with increasingly complex tax laws and geopolitical shocks not showing any sign of abating the accountants of tomorrow are well placed to tap into AI and augment their skills to help guide clients through ever choppier waters.

About Mark Taylor

Mark Taylor
Mark Taylor is a financial services journalist specialising in legal and regulatory compliance, white collar crime and technology.

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