As businesses go digital, accounting takes on a new meaning

Traditionally, accounting systems have focused on the rear-view mirror, capturing information about economic transactions that have occurred. Now, however, digital data can point to future economic exchanges. Al Bhimani writes that, if accountants are to retain their usefulness, rather than recording retrospective insights, they must report on predictive insights based on data analysis that is much wider than what accounting information systems have been set up to do. 

 
The relationship currently evolving between digital technologies and financial information is the biggest transformation in the history of business decision-making. When businesses were adopting computer technologies last century, innovations in accounting emerged. Tools such as target cost management, activity-based costing, cost of quality reports, and the balanced scorecard started to be advocated by financial managers, scholars, and consultants to help managers steer increasingly complex business environments. The focus was on new metrics and indicators. The evolution of digitalisation today is entirely different: it enables decision-makers to visualise what they could not have conceptualised or understood about their business. Digitalisation means more data that can help enterprises think up novel products, new services, and operational innovations. But to achieve this, financial intelligence producers must face up to the need for change.

Data that is considered important is not what it used to be. Three trends are ongoing. First, accounting systems capture information about economic transactions that have occurred, but digital data can point to economic exchanges to come. The finance professional needs to veer toward reporting predictive insights based on data analysis that is much wider than what accounting information systems have been set up to do. Business decision-makers require pointers to what’s coming, not recapitulations of where they’ve been. If accountants are to retain their usefulness, they will need to learn to read the signs and directions which digital data reveal.

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Πηγή: blogs.lse.ac.uk