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Reinventing finance for a digital world

Dr Noel Tagoe was the opening act of our recent careers conference. Here’s how he sees the future…

August 2018

The first thing Dr Noel Tagoe told delegates to our ‘Being Global: Future-proofing your career in accountancy’ was that their future and the future of the profession lies in the digital world.
He emphasised that the environment in which organisations are operating is changing rapidly, in unpredictable ways, and those who don’t change with it risk being left behind.
He said we all know the technologies transforming industries, and these include: AI, autonomous vehicles, big data analytics and cloud; custom manufacturing and 3D printing; internet of things and connected devices; robots and drones; social media and platforms; and blockchain.
The problem is that the impact of these changes has become increasingly complex and finance must support all these approaches. The performance challenge that finance professionals must answer is how they can preserve value in the face of such unprecedented and disruptive changes.
Tagoe stressed that when it comes to data it is not all about accountants collecting or processing the information. Rather it is about ensuring the integrity of data and using the data in different ways. He said that communicating is not the same as reporting – it goes much deeper and further.
There are, he explained, five ways of getting value out of data: make decisions; understanding customers; develop customer value proposition; enhance operational efficiency; and monetise data.
Tagoe said that the changes in organisational ecosystems also calls for new ways of costing.
We have the traditional costing of manufacturing mechanical direct costs. This moved to ABC/ABM, which brought in computer-aide and indirect costs. The next move will be into digital costing, where new and emerging techniques will be needed to measure service, digital and platform businesses.
There has also been a dramatic move away from tangible value to intangible value. In 1975, business valuations were split between 83% tangible and 17% intangible assets. In 2015, it was a complete reverse with tangible values only accounting for 16% of the balance sheet and 84% coming from intangible value.
Finally, Tagoe looked at business models. Here he felt the need to have an end-to-end view of the organisation was paramount.
When it comes to the challenge of automation he said he liked the idea that AI gives humans superpowers! Machines will do the transactions and predictions, but finance professionals will be needed to lead, empathise, create and judge.
He smiled when he said that in the past creative accounting may have been deemed a bad thing. But professional bodies now need to create creative accountants who feel at home in their digital world.
• CIMA will be unveiling it new syllabus later this year.

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