How Accounting & Finance go forwards by looking backwards
Written by Andrew Codd on December 1, 2017
Accounting & Finance has been around since the earliest enterprises were established however there are two types of finance teams now emerging, those embracing digital disruption and those who aren’t.
This digital disruption I talk about has arrived in the guise of what commentators are calling the fourth industrial revolution or Industry 4.0, and in some cases has turned some areas of accounting & finance completely upside-down as well as rapidly impacting other areas. So what does it mean for us?
Looking backwards to look forward
As trained accountants we have a lot of value to offer our organisations and a so career in finance should be fun, rewarding & full of purpose but this period of change and adjustment is likely to be discomforting and sometimes it can be difficult to acknowledge all the challenges out there and know where to look for help. So how about we take a step back to look at our history, how we’ve developed our strengths in the numbers so that we can then can step forward with a bit more confidence?
From clay tablets to taxes
Let’s not forget Accounting & Finance has been around since the earliest enterprises were established dating as far back as 2000 BC to Babylonian times when the first accountants used to inscribe financial records and outcomes on clay tablets, which was well before they were called “bean counters” who were the so-called people who collected taxes from the harvests of the land on behalf of the king of England.
Adapting through revolutions
The first major disruption our profession faced was probably in the second half of the 18th century from a series of industrial revolutions. These transitions came in three phases and are marked by going from:
- muscle power (agricultural) to;
- capitally intensive machine power (Industry 1.0) to;
- adoption of scientific management & mass production techniques (Industry 2.0) to;
- the arrival of personal computers and networking technologies on our desks (Industry 3.0).
By the way all of these forced us to evolve and develop respectively methods of financial analysis ratios in particularly deconstructing various rate of investor return on their capital investments, management and cost accounting techniques for mass production & variance analysis, then after we introduced spreadsheet modelling for financial planning and analysis with the new computer power we had, all culminating to where we are today with the fourth industrial revolution which is best considered to be about having enhanced cognitive power augmenting human production.
Caterpillar to Butterfly
The development of our profession has not been linear, in fact it’s been a bit more evolutionary like a slow-moving caterpillar who has hatched from its egg as is taking its time to evolve to the next stage like our profession did from 2000BC to the first industrial revolution in 1800AD (i.e. circa 4 millennia). And similar to the caterpillar’s evolution we start to speed up going through our egg & larva (20 days) & pupa/chrysalis phases (10 days), as we more rapidly developed our tools & techniques during the earlier industrial revolutions to where we are now, on the cusp of radically transforming like the caterpillar does, emerging as a butterfly with the ability to take-off and add even more value to our business partners in this digital age.
So can we survive this digital revolution, remain relevant and continue to add value? Yes, of course we can and we should gain confidence from the previous evolutions our profession has been through, as long as we are open-minded to adapting and improving how we serve our organisations and stakeholders then this should be possible.
What do you think? Can accounting & finance be confident about the future of digital disruption & Industry 4.0? Let’s all contribute to make this another resource for other aspiring finance business partners so please like or add your comments below.