Finance and accounting - next target for the robot revolution?

Chris Middleton Profile picture for user cmiddleton September 14, 2015
The finance function will soon bend to the robot revolution, argues the Association of Chartered and Certified Accountants. Chris Middleton isn't sure this is a good thing.

I’m perplexed by a new  (ACCA) report on robotic process automation (RPA). Entitled The Robots are Coming? Implications for Finance and Shared Services, the document presents the views of ACCA’s own transformation, shared services and outsourcing advisory group on the rise of software robotics in automating the delivery of back-office finance processes. The group includes blue chips such as Kimberley-Clark, Unisys, and Deloitte.

The report’s opening salvo promises an incisive, insightful and hard-hitting debate on the whys and wherefores of automating more and more elements of the finance function, particularly any that involve human beings reading data from one screen and transposing it onto another.

But sadly, the ACCA’s report swiftly falls into the familiar pattern of most ‘investigative’ reports these days, by essentially saying: “show us the benefits, vendors, and we’ll buy the technology”. It never properly engages with its own premise.


The report suggests that the processes that are ripe for automation tend to lie at the periphery of the finance function, but I’d argue that finance and accounting has no ‘periphery’ in that sense, and I suspect that most auditors would agree.

Nevertheless, the report proceeds from an intriguing opening statement:

Finance leaders obsess about transformation levers: people, process and technology. But today’s solutions, save the requisite investment in an expensive ERP platform, have typically leaned heavily on the equation of people and process: cheaper people located offshore delivering transactions, plus added process improvement equals significant savings.

According to the ACCA, the concept of robots – in the form of software automating manual processes to deliver more efficient business services – is:

evocative, it’s high tech, but most importantly, it’s emblematic of what some see as the next step in the evolution of business process delivery: fewer people in favour of intuitive, machine-based learning technologies.

Remember: this comes from an organisation, the ACCA, that represents skilled human beings. And there’s another intriguing line in the report:

The next frontier for shared services may be... incorporating greater computing power and artificial intelligence into robotics, so that the lines between human judgment and automation become blurred.

Ignoring truths

That the ACCA might believe this to be a good thing is truly fascinating, but it ignores several obvious truths. First, the lines between human judgement and automation are already blurred, particularly when it comes to that most compliance-heavy sector and business function, finance.

This is not primarily because of the rise of software and/or hardware robots that can carry out tasks faster, cheaper, or more consistently than humans – which, for some reason, is the only scenario that analysts are obsessed with – but because of the rising numbers of organisations that instruct their employees to behave like machines, and thus remove the potential for human intervention. In accounting and finance, human intervention can be of paramount importance.

This phenomenon was explored recently in the first two of my Digital Dystopia reports, which looked, among other things, at what happens when skilled banking employees’ jobs are reduced to reading instructions off computer screens, within organisations that have already become giant compliance statements policed by algorithms.

Arguably, that relentless process across many industries and functions is already a giant leap towards robots’ colonisation of business, because if human talent, intuition, skill, and empathy have been stripped out of customer-facing (let alone back office!) tasks, then the next step is obvious: automation.

But is it desirable?

What do we want?

In any highly automated environment, the onus falls on the algorithm writer, what rules are being written, for whom, why, and – ultimately – for whose benefit. A cynic might observe that, in a world of questions that not enough people ask, fraud could become just as automated as any other business process invented by human beings to lower costs and maximize profits. For some reason this doesn’t seem to be a factor in the ACCA’s thinking.

There are other obvious truths. First, automation and robotics have been with us for decades, so why isn’t productivity dramatically improving? The answer is simple: productivity is measured by human output per hour worked, and if every task that has a measurable output is automated, then human beings are left with tasks that are much harder to quantify.

And there’s another, equally simple, truth at play in robotics, one pointed out by author Martin Ford in his sporadically excellent, if polemical, book, The Rise of the Robots. Robots don’t consume anything, apart from power. A world of rising automation is, therefore, one of falling human consumption.

But back to the details of the report. The ACCA admits that finance tends to be the most cautious function within any organization. On a professional basis, accountants tend not to be imaginative creatures, not least because ‘creative accountancy’ is a synonym for ‘dishonest’. Finance and accounting are process driven, heavily audited and highly regulated functions, and so department heads worry about the inherent risk of implementing new technologies in such an environment.

But the ACCA is seemingly undeterred:

Even the shift to ERP systems took significant time for finance to adopt, but today they underpin almost every finance operation. Single-instance ERP remains a deep ambition for many CFOs.

The goal is to perform all finance functions within the likes of SAP or Oracle with enabling systems and applications, with straight through processing as the end state. But the reality is that finance is far from attaining systems Nirvana, so manual work abounds even in the most evolved, the most transformed of finance shared services and outsourcing models. We still live in a spreadsheet world.

But is the goal for every organisation really using SAP and Oracle even more? And are spreadsheets really a bad thing in accountancy? Apparently, the ACCA thinks so:

Enter the opportunity for robots. As with any technology, there’s always a threshold that has to be crossed before mass adoption, a critical mass of implementations before robots become mainstream in the finance department. And that takes brave finance leaders to take the lead.

Brave – or foolhardy? Certainly, not everyone is convinced. The report quotes Deloitte’s Peter Moller as saying:

In my view, robotics will never change the role of ERPs in the core finance functions. If you’re got high volumes, you’re going to put in the proper solution using those traditional technology enablers.

Meanwhile, Unisys’ Chris Gunning believes that labour arbitrage in India and elsewhere still represents a better deal economically.

My take

There’s another factor at play that is often overlooked in overly simplistic arguments about robots: namely, the need to take care of the robotic infrastructure. Automating a task might mean taking it away from a human, but often the human is then given a new role: supervising the machine.

In this way, organisations increasingly start serving their own machines, by designing more and more machine-like processes to keep the machines fed with more and more machine-readable information, and begin to ignore those pesky, inconsistent human beings who persist in buying things from them and talking to them about human problems.

Coupled with the upfront investment in automation technologies – RPA technologies tend to be priced in terms of human equivalents, rather than as what they really are: simple rules-based applications – organisations may see their costs (and their risks) escalating, not falling.

And there’s another factor, too, which I’m surprised the ACCA apparently pays little attention to: skills. The report quotes Genfour’s James Hall as saying:

One criterion I use is the avoidance of effort... the best work to tackle first is the stuff that people least like to do, so robotics appears to be a help rather than a hindrance.

Again, this is a worryingly simplistic view, one that zooms in on a detail while ignoring a much bigger picture. Accountancy, like legal work, is a profession that requires years of study and qualifications before an inexperienced junior steps into the real world of work.

And how do those qualified but inexperienced workers learn the ropes of their profession? By carrying out routine but important tasks, thereby gaining insight into the workings of their organization as well as their professional responsibilities.

The more these routine tasks are stripped out of professional practices and either shipped overseas, or automated by robots (or both), the wider the gulf becomes between entering an organization and gaining more advanced knowledge about what your profession entails, because all the ‘bread and butter’ tasks that juniors are given so that they can gain knowledge and experience are being taken away.

This creates a truly perplexing scenario: IT and business professionals collaborating to make the world much easier for machines to run businesses, and much harder for human beings to bridge the chasm that lies between qualification and career advancement.

And one of the biggest flag wavers for this? A professional association. Go figure. But in that particular calculation, I’m with the ACCA: I’m not sure a spreadsheet will help.

Image credit - Robot calculator - CC0 Public Domain by pixabay

Disclosure - SAP and Oracle are premier partners at time of writing

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