The Boston Consulting Group (BCG) predicts that by 2025, up to a quarter of jobs will be replaced by either smart software or robots. There are numerous articles being written, nowadays, on the plight of several professions — lawyers, financial advisors, accountants, etc., because of robo-lawyers, robo-advisors, and robo-accountants. A robo-accountant is NOT necessarily a robot with arms and legs from a science fiction movie; and, in the context of finance & accounting (F&A), the term can be ascribed to software that performs F&A processes.

The genesis of robo-accountants stems from the digital transformation (digitization) that occurred in The Office of Finance, of modern organizations, as a result of journal entries, T-accounts, etc., on paper-based accounting records being replaced.

What is a Robo-Accountant?

Robo-accountants comprise of software that are being used by companies to perform the whole gamut of F&A processes. Robo-accountants typically comprise:

A. The finance module of an Enterprise Resource Planning (ERP) system. An example of such an ERP module is: SAP's Finance module. World class ERP finance modules offer mid-size or larger companies an unparalleled means of tackling the nuts and bolts of accounting. An ERP's Finance module, for example, handles processes such as — verifying the journal entries and sub-ledger tie outs during the accounting cycle.

B. Purpose-built Corporate Performance Management (CPM) tools that are utilized for an enterprise's planning, budgeting, forecasting, financial consolidation, analytics, financial/management reporting, and scorecards. An example of a best of breed tool in this category is: IBM COGNOS TM1. The tool comprises of a web-based architecture, multiple user interfaces (Microsoft Excel, web, mobile, desktop) and offers a robust solution that is flexible for the needs of almost every industry vertical.

C. Enhanced Finance Controls & Automation (EFCA) software that assist companies decrease the time and resources required to execute the month-end close process and automate the "last mile of finance."

Recently, I came across an article in the Wall Street Journal that stated that the median number of full-time employees in the finance department at large companies had decreased by 40%, from levels in 2004. Being able to do debits, credits, and other back office functions does not suffice for F&A professionals anymore, as ERPs and finance automation software can do 99% of that, and assist companies close their books faster. No more overwrought accountants at month-end trying to close the books as a result of error-prone manual processes that F&A professionals have become inured to.

Robo- Accountants have engendered a myriad of benefits for The Office of Finance. These benefits can be divided into, mainly, two categories: (1) Processes (2) People

1. Processes: Robo-accountants have markedly improved an organization's finance & accounting processes in the following ways:

• Reduction in manual F&A processes and increased efficiency. The elimination of spreadsheet based activities during the financial close (month-end, quarter-end, year-end) process and post close process; while automating activities like account reconciliations. As a result, productivity in The Office of Finance has been enhanced allowing F&A professionals to spend more time on important forensic accounting research & documentation.
• Visibility. Senior management is, now, able to receive full visibility into the status of the financial close process with real time analytics.
• Collaboration. Effective collaboration between teams across geographical boundaries and departments for the purpose of forecasting, budgeting, and planning activities.
• Circumvent reputational risk. Multinational organizations have the level of tax transparency that regulators, nowadays, require for companies with operations in multiple jurisdictions. Organizations with operations in multiple countries can have their enterprise value eroded and reputations besmirched by failing to provide tax information that comply with the standards stipulated by tax authorities.
• Accuracy. Elimination of compliance risks, improved controls, optimized F&A processes that engender a high degree of balance sheet veracity and data integrity.
• Timeliness. Reduction in the number of days it takes to close the books at month-end — as a result, timelier month-end financial reporting to internal and external stakeholders.
• Reduction in Forecast error. Increased forecasting accuracy as a result of the ability to leverage the driver-based functionality of world class CPM solutions. For performance management processes, purpose-built systems allow companies — either by business unit or geographical location to modify business drivers based on business model or market conditions. For publicly traded companies, The Office Of Finance is able to guide the rarefied realms of Wall Street towards estimates that match "street expectations."

2. People: Robo-Accountants have impacted the human capital that compose The Office of Finance, positively, in the following ways:

• Employee engagement. F&A personnel possess the tools they require to do their jobs effectively. Based on the behest of senior executives to make faster decisions in a business environment fraught with manifold risks, The Office of Finance is now able to close the books faster, conclude budgeting cycles sooner, and deliver ad-hoc analytics with breathtaking speed. F&A professionals who notice their work move the needle in their organizations are likely to be more engaged.
• Optimum physical health for personnel. Prevention of F&A professionals being underutilized during non-peak periods, and overloaded during peak periods —which leads to burned-out F&A personnel. 
• Access to information. Executives now have self-service access to financial information, and its underlying non-financial data in real-time.
• Professional development.  As a result of smart software, F&A professionals have more time to develop their skills in areas such a predictive analytics, statistical modeling (regression, correlation analysis, etc.). High-performing professionals are able to develop and hone a multifarious F&A skillset that satisfies their omnivorous minds and contributes to their professional development.

Skeptics would posit that robo-accountants and smart software are taking the jobs of top-notch F&A talent. This is a valid argument. In my next post, I will delve deeper into the contributions that F&A professionals can still make to the performance of their organizations, amid the automation and digitization frenzy that has swept the world economy. In fact, a Mckinsey study puts automation in the top three priorities of the C-Suite.