What is robotic
And what does it mean
for management accounting?
Robotic process automation: The next big thing
Preparing for a wave of new
Advances in technology are fuelling global competition and driving the evolution of radical new business models. Consumers are better informed and empowered. Operating margins are getting tighter and business survival rates are shortening.
So what’s next?
We’re constantly reading and hearing about a wave of new digital technologies that threaten yet more disruption. It’s widely predicted that new business models based on cognitive technologies are set to overwhelm incumbents
in many sectors.
… new business models based on cognitive technologies are set to overwhelm incumbents in many sectors.
Of course, there will be new opportunities too. But many people are concerned that these automating technologies could make lots of people’s skills obsolete and redundant.
Take care–but don’t fall behind.
Management accountants are disciplined, rational and measured, and ensure that an enterprise is managed for all its stakeholders.
They often don’t risk backing the wrong horse or using new technologies before they’re proven.
So naturally, they are vigilant of exaggeration and hype–but they don’t want to be behind the leading edge.
Fig.1 CGMA report, ‘Re-inventing Finance for a Digital World’
Riding the new technology wave
The adoption curve shows that process robotics is the next big thing you should consider.
That’s because cloud computing is
well-established, while advanced analytics and visualisation are already being used by the early majority. In-memory computing and cognitive computing (artificial intelligence, machine learning and natural language processing) are at the early adopter stage, but are still behind process Robotics.
And blockchain is only used by innovators, mostly still at the proof of concept stage.
Process robotics is now at the inflection point of the early adopter stage. And it is the next big thing you should consider.
The adoption curve shows that Process Robotics is the next big thing you should consider.
What’s RPA all about?
And how does it help with everyday tasks?
‘Automation’ describes an action that’s conducted independently of human intervention.
Early forms were mechanical or, later, electrical. We’re already in the age of computer-enabled automation–and exciting new forms, enabled by cognitive computing, are on the way. The term Robotic Process Automation (RPA) may sound as though it’s about replacing people with androids–robots that resemble humans. In reality, the ‘bots’ in RPA are more like the Macro facility
Taking the drudgery away
These bots are software that can span different systems.
This means RPA can automate many routine ‘swivel-chair processes’, where people take data from different systems to be combined, analysed or simply actioned. So RPA is not about androids taking human jobs. It’s about software bots performing many of the routine processes currently performed by highly skilled knowledge workers–such as accountants.
In short, it frees professionals from laborious tasks and allows them to focus on adding value.
RPA is straightforward to implement. Because it sits on top of current systems, it can be deployed without re-programming or making any changes to current systems.
In fact, the proof-of-concept stage of an RPA project can be completed within just a couple of weeks, and it can be rolled out a month or two later.
So RPA is a relatively inexpensive way of providing work-arounds and making legacy systems more efficient.
But be carefulit can also mask the need for an upgrade, weakening the business case for a major systems replacement initiative.
RPA is not about androids taking human jobs.
How much confidence do you have in your finance function’s ability to introduce RPA?
Bots and humans working together
RPA is a simple form of automation. That makes it a good starting point for those at the beginning of the automation journey–bots follow instructions and perform tasks as instructed, faithfully replicating a human’s actions.
But they’re not perfect. They have to be kept
up to date, and a person with a good understanding of the process will need to take over any transactions they cannot handle.
RPA is a relatively inexpensive way of providing work-arounds and making legacy systems more efficient.
Automation: some of the pros and cons
Less labour time
Ease of implementation:
Works with current systems (no need to ‘rip out and replace’)
Speed (proof of concept in two weeks, working inside two months)
Good governance is vital (you need to know where the bots are buried).
Bots need to be maintained or amended: they work best alongside people who are familiar with the processes.
RPA can delay recognition of the need to replace legacy systems.
RPA in the
The role of bots in an
Routine tasks such as combining data from different sources are common in the finance function.
As the accounting staff performs these tasks daily, their deep understanding means they’re best placed to build, amend and maintain bots as processes change, or the underlying software is updated.
RPA allows computer software to capture and interpret data from the business’s applications to complete the steps that form a process.
It does this by following a prescribed sequence of steps, much like a person might, to:
- log into an application.
- open an attachment.
- search a database.
- find, copy and paste structured data.
- run calculations.
- complete templates.
- send reports or files to others.
So bots can be part of an integrated workforce, working alongside people to take over relatively simple tasks and allowing humans to spend more time on higher-value activities.
Bots allow “…humans to spend more time on higher-value activities.”
At its simplest, RPA Builder software learns from humans about how they carry out a sequence of steps in a process. Then, the software builds a bot to automate the work by following those same steps as rules in a set order.
And, because RPA software is compatible with the business’s other software, it can access the same user interfaces that people normally use.
Learning from the experts
The best people for RPA Builder to learn from are those who carry out the task and are most familiar with it. Their knowledge of the underlying process will also be needed when change is needed later.
So they should be around for the long term, working alongside the bots and focusing on higher-value activities such as resolving any discrepancies that the bots escalate to them.
Some professional development may be needed to prepare them for this role.
To what extent does your finance function use RPA?
"RPA: Do We Lose Control?" with Edward Brooks of The RPA Academy (New York, USA). GBD4
Making the most of your
It is already clear that automation is the direction of travel. So you need to learn to work with RPA technology or risk losing relevance.
Businesses need to increase efficiency, reduce error rates and deliver operational excellence. And RPA is the next step on a journey towards enabling intelligent automation through cognitive computing.
If IT people implement RPA, their priority will be to deliver solutions that enable cost savings. So the business case will almost invariably promise savings–but it will fall to others to use the technology and actually deliver those savings. Remember, as is often the case with change projects, the technology is the easy part. The hard thing is bringing engaged people with you on the change journey.
Get your people on board
An RPA project in the finance function is more likely to be successful if the people who understand the processes being automated are engaged and enabled to achieve the savings.
And they will benefit too. They will enhance their career prospects as they develop important new
change-management skills. They might even become champions of the new technology who help roll it out across the business.
Exercise the management accounting mindset.
Learning to support agile working is easy for management accountants. That’s because they already inform and facilitate the management and control cycle–a learning cycle that’s consistent with the rational, measured and commercial management accounting mindset:
- information is assembled
- decisions are reached
- actions are taken
- performance is measured
Finally, outcomes are reported, ensuring accountability and facilitating action that improves performance.
Learning to support agile working is easy for management accountants.
Asking the right questions is key.
In practice, managers are often allowed to rack up expense and opportunity costs for too long on favoured but uneconomic initiatives.
Management accounting prevents this from happening, asking the right questions and explaining commercial realities.
Control is essential
In a highly automated environment, much of the transactional and reporting work of the accountant may become redundant.
But the management and control cycle will always be an essential discipline–someone must always be in control, asking questions and continuously looking for ways to improve performance.
Agile–driving speed, scale
We recommend that organisations use Agile principles when investigating RPA as a means of improving performance. These allow resources to be focused on the most promising initiatives, meaning viable products or services can be developed quickly and rolled out to market at scale with confidence.
How does Agile work?
Agile is all about developing a culture where the management and control cycle speeds up and management accounting reigns.
It involves starting in a low-cost, experimental and iterative way that enables:
Progress is reviewed objectively. No blame or shame attaches to individuals whose projects don’t meet expectations–such projects are dropped quickly, so valuable lessons are learned at a low cost.
Only projects that meet expectations in successive rapid rounds of development and testing are developed to full functionality.
Getting started on RPA : The essentials
- Conduct some basic background research. Learn more about RPA. Read articles in Financial Management magazine and major business journals and white papers published by the Big Four and other leading consulting firms. And, of course, look at the resources available at the CGMA® Store.
- Look at RPA Builder software. Some can be downloaded for free. Study the criteria used in the rankings published by credible experts such as Forrester Wave or Gartner. Attend a trade fair and talk to RPA vendors.
- Prioritise processes that could be automated in your organisation. Look at the reasons behind the current level of human intervention and consider the potential for automation.
- Build consensus with relevant colleagues and potential senior sponsors in the business. Engage enthusiastic people who currently carry out the processes that will be automated.
- Apply the Agile principles – and use your management accounting mindset.
Flint Hills Resources
Fostering expertise, trust
The June 2018 edition of Financial Management magazine featured instructive articles about the introduction of RPA at Flint Hills Resources (FHR), a subsidiary of Koch Industries.
While FHR could afford to bring in external expertise, they decided to engage and develop their own people to run the project in-house for very good reasons: expertise, trust and continuity. In short, an enlightened employer decided from the outset to engage and involve the finance people whose roles would be affected in the automation of routine finance processes.
This approach ensured the success of the project and provided important development opportunities for these people. Many have been empowered by the automation of routine activities, enabling them to spend more time applying their analytical skills and management accounting mindset–whether in finance roles or subsequent automation projects across the business.
Furthermore, FHR now has the talent in-house to automate processes. Having fostered a culture that embraces change, it is better positioned for the next stage in automation.
FHR used a 'citizen developer' approach, asking employees to understand and use the tools to automate processes.
Scott Bender, CPA, CGMA, the director of automation and modernisation
Ref: ‘Empowering the human element in automation’, Jack Hagel, Financial Management magazine, June 2018
More time for managing, thinking and innovating
“Today, FHR uses optical character recognition (OCR) software coupled with its RPA software and other applications to automate the purchase to pay process.
When a vendor sends an invoice, the OCR software reads it and exports the data to an Excel table. The bot then pulls the information from Excel and enters it into the appropriate accounting system. The bots know which data go to the homegrown system, which go directly into Oracle, which go into IBM Maximo, and so on. If necessary invoice information, such as a purchase order number, is missing, then an error message is sent to an FHR employee, who in turn investigates the discrepancy.
The processing time is about the same as before. But because the process is automated, employees have more time to focus on managing and reducing invoice discrepancies, forward-thinking financial analysis, or coming up with ways to make other processes more efficient through automation.”
'Empowering the Human Element in Automation'
Jack Hagel, Financial Management magazine, June 2018
The management accountant
The key role of learning
Accountants need to be alert to the potential for new technologies to transform business models. And they must understand how finance can take advantage of these technologies to automate much of what they currently do.
This will enable them to contribute more to ensuring the success of their business, and themselves, in the digital age. RPA is not rocket science. It is a simple form of automation. But an appetite for learning and self-development is essential.
The importance of lifelong learning
Through planning, budgeting and performance analysis, management accountants are
well-placed to ensure resources are allocated to
where the returns or prospects are best. The mindset, honed over many cycles of management and control, leaves management accountants well-placed to contribute to the Agile approach enabling solution development and implementation.
Automation threatens many roles but those who can adapt will survive and thrive. Nevertheless, continuing professional development will be
more important than ever, as subject matter knowledge is perishable.
Fortunately, CIMA working with the AICPA through the Association of International Certified Professional Accountants, is well-positioned to support members with the learning resources they need to ensure their employability and enhance their career prospects.
Automation threatens many roles but those who can adapt will survive and thrive.
Explore more automation resources
Explore more automation resources here.
Chartered Global Management
CGMA is the most widely held management accounting designation in the world. It distinguishes more than 150,000 accounting and finance professionals who have advanced proficiency in finance, operations, strategy and management. In the United States, the vast majority also are CPAs. The CGMA designation is underpinned by extensive global research to maintain the highest relevance with employers and develop competencies most in demand. CGMA designation holders qualify through rigorous education, exam and experience requirements. They must commit to lifelong education and adhere to a stringent code of ethical conduct. Businesses, governments and not-for-profits around the world trust CGMAs to guide critical decisions that drive strong performance.
Association of International Certified
The Association of International Certified Professional Accountants (the Association) is the most influential body of professional accountants, combining the strengths of the American Institute of CPAs (AICPA) and the Chartered Institute of Management Accountants (CIMA) to power opportunity, trust and prosperity for people, businesses and economies worldwide. It represents 650,000 members and students in public and management accounting and advocates for the public interest and business sustainability on current and emerging issues. With broad reach, rigor and resources, the Association advances the reputation, employability and quality of CPAs, CGMA designation holders and accounting and finance professionals globally.
Peter Simons, BBS, MBA, FCMA, CGMA
Associate Technical Director of Research–
Head of Future of Finance Research
Association of International Certified
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