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SERVICES 4.0

SERVICES 4.0 (PART 2): WORKFORCE AUGMENTATION WITH TECHNOLOGY

IMDA, ISCA AND SAC

In the accountancy sector, the race is on to make use of technologies to provide services that are higher in the value chain, such as advisory and other professional services. The challenge of disruptive technologies that are upending the way people live, work and play has never been more keenly felt by the sector today and many accountancy firms are on their way to transforming themselves to be ready for a future where services are central to everything they do.

Services 4.0 is Singapore’s response to the socioeconomic shifts accelerated by emerging technologies, such as artificial intelligence (AI) and advanced interfaces, which will work together to improve customer experiences – sometimes running in the background to anticipate their needs and resolving issues without human intervention.

One of the key enablers of Services 4.0 is workforce augmentation. By automating many of the workflows and processes performed by humans today, innovative technologies are rapidly changing the face of accountancy. There are broadly three types of automation technologies, according to KPMG:

1) Robotic Process Automation

By making a set of rules for a machine, robotic process automation (RPA) automates repetitive processes to deliver results quickly and accurately. Since the “bot” sticks strictly to the rules given, it cannot adapt to new situations and needs to be told what to do when it encounters something unfamiliar.

2) Machine Learning

In this level of automation, a computer can take in large amounts of data and “learn” from the patterns within. A chatbot interacts with humans over time and understands how it can better respond, after gauging the past responses to its interactions.

3) Cognitive Augmentation

Computers that are “cognitive” can take raw, unstructured data and “make sense” of it. They can be asked to give an answer to a complex query and will be able to complete tasks that used to be completed only by humans.

The capabilities of a workforce automated by technology are limitless. In this second article of a four-part series on Services 4.0 and the accountancy profession, we share three ways that technology is helping to augment the workforce in different companies. These case studies also illustrate how technology enables the industry to move up the value chain in a Services 4.0 hub.

CASE STUDY 1

OLAM INTERNATIONAL: AUGMENTATION OF THE FINANCE FUNCTION

A leading food and agri-business company listed on the Singapore Exchange, Olam has embraced Services 4.0 by augmenting its workforce with RPA tools and more

Large manuals and heavy ledgers, Lotus 123 files and busy couriers running back and forth with paper documents were a common sight 25 years ago, when S.V. Padmanabhan started his finance career. Back then, he recalled, most of the work was done manually, because the Internet was not readily available across the globe such as in Africa, where Olam had extensive operations.

Now Olam International’s President and Global Head of Finance, Mr Padmanabhan said the need to make use of the technology/tools of the day has never been more urgent than today, as a wave of disruption washes up at the door of not just accountancy firms but of companies in every industry sector.

“In the past, we called it automation. Automation helped to remove many manual tasks in most of the ERP systems,” he said. With technology becoming increasingly sophisticated, bots and RPA now have the capability to do more.

Already, RPA and business analytics tools are rendering repetitive, manual tasks redundant and, in the coming years, he noted that machine learning, and AI will replace tasks that can be learnt faster and reproduced more efficiently. RPA, for example, has improved efficiency and accuracy because the tallying and matching that used to be done manually are being carried out by machines. This means accountants do not have to spend so much of their time reconciling the ledger line by line with both internal and external documents (say, auto bank recon, AR receipts application, etc), which frees them up for higher-value tasks. Accountants can be more proactive and business savvy, and go beyond being efficient number crunchers. Their role can evolve to being the business partners or co-pilots in the organisation. Though technology will contribute positively to the workplace, it will not replace the professionals in the sector, noted Mr Padmanabhan.

For example, timely data analytics can alert a business partner to a problem if a manager earned $50 on a trade but lost some of that through currency rate movement. Analytics can reveal information such as which customer pays on time, incremental margin from increased credit period, return on investments made, etc, thus enabling proactive action where necessary. In both of these instances, with machine learning to look into recurring patterns in the accounting books, the BU partner can derive insights much faster than if he had to comb through voluminous piles of data to detect anomalies.

According to Mr Padmanabhan, in a world where data is a commodity, in addition to analytical expertise, it is equally important for Olam’s finance team to continue to acquire soft skills including people, communication and influencing skills. What the company is currently facing, and working to improve on, is reflective of the challenges that the Singapore accountancy sector is facing as well.

“We (finance team) are working towards becoming world-class business partners,” he stated.

CASE STUDY 2

CA TRUST PAC: NEW OPPORTUNITIES THROUGH AUTOMATION

CA Trust PAC is a public accountancy firm which has embraced Services 4.0 by making use of RPA and machine learning tools to be more efficient and provide higher value-adding services

At CA Trust PAC, clients are advised to embrace technology as the firm is itself adopting the latest accounting tools. For example, with Xero, a cloud-based accounting service, CA Trust can automate a number of processes that used to be carried out by accountants. The process now starts with clients participating in the accounting process such as taking a photograph of an expense receipt, where the accounting entries to record the expense is automated within the accounting system.

Xero lets client-employees scan their documents, such as invoices or receipts, which are then automatically included in a company’s accounts. This means less work for both clients and CA Trust as they do not have to manually check each entry line by line, enabling both to see the forest rather than just the trees.

Paul Tan, Director of CA Trust, said that the compliance and assurance work that accountants do now will not attract high fees in the future, as the more mundane regulatory requirements will get cheaper with automation, and customers are demanding more value-added services.

He sees a future where accountancy firms would offer both the regular assurance services and the more lucrative advisory services, which their years of experience working with clients enable them to deliver.

He likened assurance to the “nasi” in nasi padang – the plain rice that is fundamentally important to both client and accountant – while comparing the meat and vegetable dishes to higher-value advisory services that an increasing number of accountancy firms can take on.

While the adoption of new tools and capabilities would not be overnight, he was of the belief that the time taken for clients and accountancy firm to ramp up will be short, once they experience the benefits.

CASE STUDY 3

MYFINB: DEVELOPING NEW CAPABILITIES

MyFinB is a fintech company that uses its proprietary AI to convert data into natural language, and provide a predictive and prescriptive analysis of an economy, industry and a company’s financial well-being  

The rapid development of new capabilities in AI and machine learning are helping the accountancy sector accelerate into the future. As these technologies become more mainstream and available, smaller firms will also start to adopt them to challenge the bigger players.

A good example of this is MyFinB’s “RoboCFO” expert system. It takes data from different sources such as an annual report or a set of news articles, and compares these with patterns that it has learnt from other companies over time. The system then provides a detailed prognosis of the company’s financial health and identifies the possible areas of concern and improvement, while predicting the likely future scenarios. For example, the analysis might predict that a company might be facing insolvency if its debts are mounting at a rate that cannot be sustained without the injection of new revenue or capital, or a reduction in costs.

For accountancy firms, MyFinB’s analytics technology offers deep insights and financial advice that they can deliver to clients while preparing their regular financial reports. With these tools, which use an AI that “learns” based on the data that it is continuously fed, accountancy firms can help clients identify financial gaps, for example. The tools also look into the future by studying past and emerging trends. When it comes to predicting risks, the company sees a 95% accuracy in detecting financial defaults in a company, two years before it occurs, according to M. Nazri Muhd, Founder and Group Chief Executive Officer of MyFinB. He said the technology could level the playing field by giving accountancy firms new capabilities and the competitive edge to carry out more high-value jobs.

“The key is being anticipatory and forward looking, to predict issues before they come up, not after,” he explained.

CONCLUSION: WORKFORCE AUGMENTATION TO BE READY FOR SERVICES 4.0

Instead of continuing with business as usual, accountancy industry leaders say it is time to adopt new technologies such as automation, AI and even blockchain – the public ledger technology.

CA Trust’s Mr Tan sees the opportunity to transform the accountancy industry from one that reacts to a problem to one that predicts and finds solutions for it. This will be the model for a new stream of revenue, he believes.

Olam’s Mr Padmanabhan is of the view that a “continuous audit” is possible now with the automated tools in place, so accountants do not always have to work late during closing at month’s end. He is convinced, too, that the disruption brought about by automation will open new doors. The people who were on the horse carriages simply changed jobs by acquiring a new skill, he pointed out. “When cars were invented, people learnt to drive cars.”

The third article of this series will discuss the latest government initiatives to help companies in their digitalisation journey. It will be published in this IS Chartered Accountant Journal, September 2019.


This article was written by Info-communications Media Development Authority, Institute of Singapore Chartered Accountants and Singapore Accountancy Commission.