Last month I wrote about Robotic Process Automation, its impact on finance and accounting technology, and how I see RPA as an impactful stop-gap measure for organizations unable to take advantage of fully automated API integrations, either because of cost or legacy technology limitations. However, as the future becomes more connected, web integrations can extract, transform, and transfer data more efficiently. Regardless of how the data is managed, whether through RPA or a direct integration, there is another technology that, when added to the mix, becomes the key value driver – and that is Artificial Intelligence (AI). Combined with AI, RPA becomes less of a mimic and more of a virtual assistant.
So that brings us to Artificial Intelligence and how it appears to be one of the key technologies that will indeed unlock the future of finance and accounting.
What do we mean by Artificial Intelligence?
First, let's define Artificial Intelligence. According to one site, it's defined as:
"...the simulation of human intelligence processes by machines, especially computer systems. These processes include learning (the acquisition of information and rules for using the information), reasoning (using rules to reach approximate or definite conclusions) and self-correction."
* For a deeper dive, that site distinguishes between "weak" and "strong" AI and might be worth checking out.
How does this impact finance and accounting? Let’s start with "the acquisition of information". The ERP system for an organization is the official recording of your business events and transactions. Everything your organization does with any financial impact is represented. The result is that the accounting system can generate and store enormous amounts of highly relevant data. That data can provide a lot of useful information about trends, exceptions, opportunities, etc. As our colleague Aaron Harris, CTO of Sage, said in a Forbes article last year, "We’re getting to a point where the future role of the CFO resembles that of a data scientist more so than an accountant."
The ability of financial management systems to augment this financial data with operational data via API integrations, as we mentioned in our last article, makes the finance and accounting department the stewards of this valuable data set for AI analysis.
Artificial Intelligence and machine learning are already helping CFOs, and employees across organizations, sift through an avalanche of emails, corporate communications, and busy calendars to better manage their time. Additionally, and more specifically in the finance department, these technologies will help detect problems and anomalies, automate repetitive tasks like those associated with the period-end close, and analyze and predict trends. AI can flag and reduce instances of fraud, identify non-compliance, help enforce corporate policy, and consolidate reporting from disparate and less structured data sets. Larger organizations are already incorporating these technologies but, as with all new tech, small and mid-market adopters will have more opportunities to reap the benefits as costs come down and the technology becomes more accessible.
When will we see it impact finance and accounting?
Don't expect to see these changes overnight and don't worry that technology will replace your accounting team. The midmarket will likely start to see AI appear in the form of anomaly detection and human "augmentation." Be skeptical of what is offered to you - if it sounds too good to be true, it likely is - but also be prepared to incorporate these technologies soon, because the technology is coming.
In my next post, I'll provide more specific thoughts on what you as an accounting and finance team can do to prepare for AI, so that when the technology becomes accessible to your organization, you can effectively take advantage of it.
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