Accountants’ roles and accounting-related technologies
Introduction
This chapter discusses how the roles of accountants in organisations have been and may continue to be affected by developments in information systems (IS), and accounting and integrated systems in particular. Our examination spans across both financial accountants’ and management accountants’/controllers’ roles (Gerdin et al., 2014), rebalancing the literature with greater attention to the latter. Many researchers characterised management accountants’ roles and their evolution and explanatory factors, with recent attention on the shift from being a “bean counter” to becoming a “business partner” (for example, Burns et al., 2014; Byrne and Pierce, 2007; Goretzki et al., 2013; Herbert and Seal, 2012; Järvenpää, 2001, 2007; Quinn, 2014), but considerably fewer have explicitly encompassed financial accounting related roles as well (Mouritsen, 1996).
However, the influence of these technological developments for accounting and accountants’ roles is not deterministic. Accountants’ roles go beyond mere accounting practices (Goretzki et al., 2013) and reflect overall contributions by accountants within particular organisational contexts. Actually carrying out a particular role depends on its recognition and acceptance by at least some actors, such as the expected beneficiaries of the underlying practices (Lambert and Pezet, 2011); in addition, roles are in a permanently contestable domain, including by other professionals aiming to carry out similar roles to enhance their organisational position (Burns et al., 2014). Therefore, understanding accountants’ roles requires framing the influence of technologies within the particular, complex socio-technical settings where these techniques are deployed.
This chapter is structured as follows. The first section briefly discusses several technologies, both traditional, contemporary or still only emerging, relevant for the accounting area. The second section briefly characterises the main roles taken by accountants and explores how each of these roles may be affected by the various technologies. The third section adopts a more nuanced perspective about accountants’ roles and the influence of technology, discussing how roles depend on multiple organisational factors, including other actors’ recognition, acceptance or competition, beyond strictly technological factors. A fourth section offers some concluding remarks.
An overview over accounting-related technologies
From stand-alone to pervasive: the widened scope of accounting technologies
Traditionally, IT architectures were based on multiple, decoupled systems. In both financial accounting and management accounting, best-of-breed solutions (promising superior performance in a restricted area, such as bookkeeping, consolidation, treasury or budgeting; see Leahy, 2004) or generic purpose solutions (for example, spreadsheets, particularly popular among management accountants in order to autonomously develop flexible analytical models) had little or no integration with operational systems. Manual data entry by accountants was time-consuming and error-prone. However, stand-alone systems have increasingly developed more or less automatic interfaces to exchange information, i.e. becoming increasingly coupled, or have been replaced by integrated systems, in particular by Enterprise Resource Planning (ERP) systems.
ERPs are now commonplace (Grabski et al., 2008) as organisation-wide, tightly coupled IS, not only among large organisations but increasingly also among smaller ones. Initially, ERPs had the ambition to be virtually the single system satisfying all IS needs, through their wide variety of functional modules. Data flows seamlessly within an organisation across its ERP’s multiple modules, promoting (and also requiring) single data entry and greater data quality. These effects expand when ERPs of business partners become connected to allow electronic transfers of transaction data between the ERPs. Since accounting activities typically occur at the end of business processes (Kanellou and Spathis, 2013), manual data entry in accounting becomes drastically reduced. Drilling down the data inside the ERP single database also enables analyses at different levels of aggregation. However, and although ERPs proved to be highly efficient transactional systems, their analytical capabilities were found relatively limited (Rom and Rhode, 2006; Scapens and Jazayeri, 2003). ERP vendors therefore gradually focused on making ERPs the major backbone of the IS architecture to which other systems can connect. One example concerns Customer Relationship Management (CRM) and Supplier Relationship Management (SRM) solutions, increasingly found either within the ERP or as best-of-breed solutions tightly attached to it. As another example, Data Warehouses and Data Marts storage systems and Business Intelligence (BI) and Strategic Enterprise Management (SEM) solutions are now already mature technologies to explore, flexibly and in-depth, the high volume of information stored in ERPs, as well as external information (Rom and Rhode, 2006).
The recent developments of cloud computing, Big Data and the Internet of Things have also been found relevant for accounting. Cloud computing emerged as an alternative to have applications and hardware in premises, drawing them from the cloud whenever required. In general, cloud computing reduces up-front costs, changes fixed costs into variable costs and is highly scalable. It promotes agility and cooperation regarding deploying or updating a single system and accessing and sharing data stored in the cloud. In accounting, cloud-based accounting solutions and collaborative work based on consistent information and systems may lead to a more adaptive finance function (CIMA, 2010), in particular for small and medium enterprises (Kristandl et al., 2015). Big Data technology seeks valuable patterns in huge, unstructured data from multiple origins, such as transactions, financial markets, social media and even images or videos. Big Data is characterised by the three Vs of high volume, velocity and variety, requiring new analytical approaches with high value potential (Bhimani and Willcocks, 2014). The Internet of Things has linked networks of computers, machines, objects and even animals and people, with unique identifiers and transferred data without human intervention. Connecting billions of devices increased, and will drastically continue to increase, available data even further, enabling new high value areas to deploy real-time analytics.
Finally, robotisation applied to services, including accounting, is still only an emerging technology, based on software programmable to execute human tasks. Even after ERP-based integration already eliminated many manual tasks, there are still repetitive, relatively low value-added tasks across different business applications requiring manual intervention. Based on Robotic Process Automation (RPA), software robots mimic human actions and automate those repetitive tasks via existing user interfaces; i.e. RPA “plugs-in” not-yet integrated processes. A process candidate for RPA has three characteristics: “The actions are consistent, with the same step being performed repeatedly; it is template driven, with data being entered into specific fields in a repetitive manner; it is rules-based, to allow decision flows to alter dynamically” (E&Y, 2016a, 4).1 E&Y (2016a) indicates benefits in productivity, cycle time and accuracy and compliance, reducing the need for employees to perform repetitive, high-volume and rule-based activities.
According to proponents (E&Y, 2016b; SAP, 2016), applying RPA to finance enables radical cost efficiencies and increased control, and it allows skilled resources to focus on value creation. While a more detailed analysis with regard to specific accounting areas is carried out later in this chapter, some (still mostly only anticipated) effects cut across the various areas and are now analysed. Alongside expected further reductions in accountants performing low value-added tasks, accountants with deep knowledge of business processes are still needed for very high value-added activities: first, to software initial configuration and on-going maintenance; second, to apply subjective insights and assessment required to deal with exceptions in automated processes and to perform higher-value processes; third, to perform advanced analysis and interpretation, review and approve reported information, and make complex decisions – although in the future cognitive RPA may also start performing basic analyses for more advanced assessment by experts (E&Y, 2016b); fourth, to ensure that valuable finance and practical process knowledge is retained in the organisation. In the next section, more specific expected consequences of RPA for each role are discussed.
Accountants’ roles and influences from accounting-related technologies
An overview and taxonomy of accountants’ roles
The literature focusing specifically on financial accounting has largely neglected the topic of accountants’ role, in a stark contrast with the management accounting and control literature, which frequently even expands its scope to include all areas of accounting. Controllers’ roles have long attracted attention, as in Simon et al.’s (1954) classifications of score keeping, attention directing and problem-solving, or Hopper’s (1980) classification of management accountants’ roles as scorekeeping and customer service. Recently, significant attention has been devoted to the transition from the traditional (and stereotypical) “scorekeeper”/“bean counter” to the “business partner” supporting managers with highly relevant insights based on close business intimacy, and on the advantages, problems and tensions of this transition (Burns et al., 2014; Byrne and Pierce, 2007; Goretzki et al., 2013; Järvenpää, 2001, 2007; Quinn, 2014, to indicate just a few).
We now draw upon four of Mouritsen’s (1996) categories of accountants’ roles of bookkeeping (including administrating), consulting, banking and controlling, a taxonomy chosen given Mouritsen’s clear characterisation of roles across both financial and management accounting. While some technologies are particularly relevant for only some accounting roles, other technologies potentially impact all roles. ERPs are the prime example of wider pervasiveness, due to their potential (or at least ambition) to fulfil all the needs of all users in an organisation (Dillard et al., 2005). The ensuing analysis will separately analyse the relevant technologies for each role (for a more technology-based approach, see Belfo and Trigo, 2013), although in practice these roles are likely to interact (Mouritsen, 1996) and even conflict (Burns et al., 2014; Hopper, 1980).
The bookkeeping (and administrating) role
The bookkeeping role concerns “maintaining financial recording systems focusing on record-keeping, development of the general ledger, the financial accounting reports and administrative and auditory controls” (Mouritsen, 1996, p. 288). It refers mostly to financial accounting’s traditional activities, from record-keeping to reporting, including administrative and auditory controls, typically beyond and detached from core organisational activities (Mouritsen, 1996), merely focused on the resulting financial transactions. We include in this category the role of administrating, focused on “administering customers and suppliers as debtors and creditors” (Mouritsen, 1996, p. 288), given similarities in how these two roles are affected by the analysed technologies.
The implementation of ERPs has had dramatic effects upon bookkeeping. Information flows seamlessly from the operational modules (for example, sales and distribution, production, human resources, etc.) to the financial accounting module, avoiding much low value-added work of bookkeeping manual data entry. Overall, ERPs’ efficiency in transaction processing, relevant for many high-volume, repetitive tasks of bookkeeping, was one of the ERPs first benefits to be recognised (for example, Booth et al., 2000). In fact, the two major benefits in accounting identified in Kanellou and Spathis’s (2013) survey are key to the bookkeeping area: efficiency in gathering data and generating results; less time to close accounts and issue financial statements.
Seamless, automated and real-time information flows with an ERP are not without their issues. As Quattrone and Hopper (2005) point out, transactions (as well as errors) made by non-accounting staff (such as a shop floor employee producing a shipping document or issuing a receipt) have immediate repercussions in financial accounting information. Spreading awareness and knowledge among non-accounting staff about their actions’ repercussions within the accounting area may be required. Indeed, the challenge increases in dimension and complexity when it becomes inter-organisational, as information about transactions between organisations starts being exchanged between their interconnected ERPs. Inter-organisational cooperation between the respective accounting (and other) departments becomes essential; for example, between key partners, a supplier may include a particular code in the documents it issues to assist the customer when recording the transaction. In addition, as not only accounting records but also controls increasingly become more real-time, ranging from management controls to internal and external auditing controls through continuous auditing, the challenges posed by this tight integration must be considered.
Financial consolidation activities also benefit from the adoption of an ERP, or at least a single accounting system, across the consolidating entities. In addition, both ERP vendors and best-of-breed vendors have developed consolidation solutions with interfaces capable of drawing and organising data from across most financial accounting solutions, eliminating much manual effort. Nevertheless, the complexity of consolidation still leaves many areas requiring intervention and judgement by skilled accountants involved in this role.
RPA has already started being deployed in bookkeeping activities, such as “general accounting (allocations and adjustments, journal entry processing, reconciliations, intercompany transactions and close) [and] Financial and external reporting” (E&Y, 2016b, p. 6). Therefore, RPA may further reduce bookkeeping accountants performing high-volume, repetitive, rule-based tasks, particularly in Shared Services Centres (E&Y, 2016b; SAP, 2016), recommending their shift towards the remaining value-added areas highlighted in the previous section: software configuration and maintenance, deal with exceptions and processes requiring subjective insights and assessment and make advanced analyses, interpretation and decisions.
As a conclusion, bookkeeping related IS, in particular ERPs and other connected IS, and RPA promote the evolution of the bookkeeping (and administrating) role in two opposite ways. First, towards reduction of low-value activities, in a process often depicted as the “death of the bean counter” within financial accounting, particularly in larger organisations. Second, the continuing need of high value-adding accountants for bookkeeping – albeit in smaller numbers – to configure and maintain software, solve exceptions in human/machine shared processes, and focus on providing business analysis and insights, in a greater engagement with the rest of the organisation and introducing a consulting role into the financial accounting domain.
The banking role
The banking role was related by Mouritsen (1996) with a focus on cash and currency management, in particular at a complex level, and with finance; however, in this study the banking role is restricted to treasury issues, more commonly considered as falling within the realm of accounting. Treasury activities involve tracking and managing information on account balances, transaction details and cash positions, executing fund transfers and short-term investments, and making cash flow forecasts. Like the bookkeeping role, the banking role is traditionally beyond and detached from core business activities, which are merely “a context for its work” (Mouritsen, 1996, p. 297).
ERP vendors have developed specific modules to deal with treasury and financial issues, and cash management in particular, seamlessly connected with the remaining ERP modules2, an increasingly popular alternative, versus interfacing best-of-breed solutions with the ERP. The ERPs’ efficiency in gathering data and generating results (Kanellou and Spathis, 2013) is also felt in the banking area, for example, reconciling operational and banking transactions.
Linking the organisation’s banking solution with the banks’ IS is now a standard feature in many organisations, even smaller ones, and it has virtually eliminated manual entry of financial transactions data. A recent survey from the main ERP vendor, SAP (2015), highlights that, when multiple systems are involved, gathering data across multiple bank accounts, entities and geographies still requires significant manual efforts, making group-wide cash assessment and management still difficult and time-consuming. Only a minority of the surveyed companies could instantly aggregate cash balances from global bank accounts (12%) or instantly prepare a consolidated cash forecast (8%), by using interactive self-service interfaces linking with the banks’ IS (although 26% and 20%, respectively, could perform those tasks within minutes). Most respondents indicated that treasury had to become not only faster in preparing and delivering cash reports and forecasts, but also better in delivering to managers more in-depth, forward-looking cash analyses – even using advanced forecasting to leverage Big Data in finance (for example, to manage exposure to markets’ financial risks). And, as already mentioned, treasury has been highlighted as an area where RPA can be most effectively deployed (E&Y, 2016b).
As a conclusion, in the banking-related accounting area, IS developments promote reducing manual tasks, more effective group-wide cash management and faster, comprehensive and more accurate cash reporting, forecasting and managing. Therefore, while a decreasing number of manual and low value-added activities are to remain relatively isolated from the rest of the organisation, these IS developments promote transforming the banking role from a detached back-office role (Mouritsen, 1996) to a provider of value-added insights closely involved with the business.
The controlling role
Mouritsen (1996) relates the controlling role with budgeting and budgetary control, recording the performance data and ensuring managers’ compliance with budgeted figures. These are the traditional activities within the management accounting and control area, and are typically (derogatorily) depicted in the literature as “scorekeeping” or “bean counting”. Some criticisms targeted at this role are related with the wider critique of the budgeting technique itself, in particular within the Beyond Budgeting approach (Hope and Fraser, 2003). However, keeping scores and monitoring performance is not specific to a particular management accounting and control technique, and spans from traditional cost accounting to contemporary techniques such as the Balanced Scorecard.
Cost accounting, budgeting and variance analysis have traditionally been carried out through spreadsheets, whose stand-alone nature tended to require significant manual work in gathering and entering data from multiple sources. Interfaces between spreadsheets and other systems, both accounting and non-accounting ones, were valuable whenever available, but sometimes data had to be manually gathered from physical devices. Data manipulation, calculations and reporting in spreadsheets tended to be complex and error prone (for example, Goretzki et al., 2013). Moreover, when these activities were carried out at a local level, visibility and comparability at a higher, corporate level were limited (Oliveira and Clegg, 2015). Calculation and reporting delays limited their managerial usefulness. Indeed, scorekeeping to feed data to contemporary tools like the Balanced Scorecard have also experienced similar data gathering difficulties, limiting their usefulness (Ribeiro, forthcoming). Clearly, technological constraints affected the scorekeeper role, focused on information production rather than on its analysis, underpinning the derogatory caricature of the (cost) accountant as “knowing the costs of everything and the value of nothing”.
Systems integration, and ERPs in particular, significantly changed cost accounting and budgeting procedures. The ERP costing module is able to directly retrieve the required diversified types of information from the ERP database; and, very recently, in the last couple of years, manual gathering data from physical devices (for example, consumption meters) has started being eliminated, as the Internet of Things connects and permanently gathers data from an increasing number of those devices. Improved data access within ERPs promotes measuring and controlling more than the cost and profitability of products (the traditional cost object). Detailed, integrated information about sales and distribution promotes more accurate and faster customer profitability analysis. For example, information about the products and customer locations involved in each sales transaction enables immediately estimating distribution costs, before the transportation invoice is received; and combining current period and longer-term historical data enables estimating sales quantity discounts (rappels), whose definitive value can only be calculated at the end of an agreed period. Integrated systems have also promoted less effort to gather data about actual performance for budgeting control, and tools including what-if models and scenario planning facilitated planning activities and hence budgets construction.
Early research about ERP effects in management accounting and control practices revealed only moderate effects (for example, Booth et al., 2000; Hyvönen, 2003; Granlund and Malmi, 2002), and two potential explanations were offered. A first explanation was inherently temporary and referred to a potential “time lag” effect: at the time of the studies, not enough time had elapsed since the ERP implementation for effects to materialise. A second explanation was more structural, arguing that although ERPs improved transactions processing efficiency and data quality, they were limited in supporting higher-value, flexible analyses. This limitation was addressed by both ERP and best-of-breed solutions vendors, through several developments: Data Warehouses or Data Marts (subsets of a Data Warehouse) to extract and consolidate data to enable deeper analyses; Business Intelligence (BI) solutions building information “cubes” to allow analysis in multiple perspectives; and Strategic Enterprise Management (SEM) solutions for the implementation of multiple advanced analytical techniques. Recent studies show how ERPs have indeed affected controllers’ roles, in particular over time and when supplemented by analytical systems (Goretzki et al., 2013; Herbert and Seal, 2012). Goretzki et al. (2013) show that, in a manufacturing firm, the ERP implementation provided a crucial information base with important impacts in control, although in that immediate period there was only a moderate roles change. Only years later, after subsequent developments, including the adoption of Business Intelligence portals to develop reporting and planning processes (among many other organisational changes, as discussed later), did a more substantial shift in roles occur, towards “controllers as business partners”.
Technological developments have also been changing the timing of the activities within the controlling role. Traditionally, controlling was done only periodically, with the peak of activities concentrated in a few days around the accounts closing date. With integrated systems automating the calculation of costs and variances, plant controllers may be able to control those figures on a more continuous basis (for example, through a daily analysis of produced batches) and greater depth. This enables them to provide managers with feedback which is not only more timely but also more insightful, given the enhanced capacity to explore data in the integrated system and to obtain still “fresh” operational explanations that enrich qualitative analyses of reported data (Oliveira, 2010).
However, control is not only within accountants’ domain, and the literature has identified a “hybridisation” phenomenon in management accounting and control (Caglio, 2003). Given greater data availability across the organisation through ERPs and accounting knowledge becoming more dispersed, some line managers became increasingly able to monitor their budgets and access and monitor the automatically calculated variances, and autonomously carry out in-depth flexible analyses of their business unit based on BI systems designed by controllers but dispensing with the controllers’ intervention on a daily basis (Goretzki et al., 2013; but cf. Granlund and Malmi, 2002). Therefore, the controlling role may become more diffused in organisations, across the accounting area and line management. Dechow and Mouritsen (2005) depict how an ERP system made control become a “collective affair” in a particular organisation, rather than remain exclusively in the department of accounting struggling with limited integration, contributing to the marginalisation of controllers. These two examples, based on very different technological contexts, reveal that controllers may face competition from other organisational actors becoming “hybrid accountants”. However, “hybridisation” in the opposite direction has led to a second type of “hybrid accountant”. These are technology-empowered accountants, with in-depth business knowledge, able to provide high-value insights on explaining and identifying business-critical root causes of good or bad past performance and insights on how to improve performance. These hybrid accountants have been integrated as business team members, in terms of their daily activities and their physical location (Burns et al., 2014; Goretzki et al., 2013), expanding the controlling role into the realm of the consulting role, analysed next.
The consulting role
In the consulting role, the accountant supports organisational activities through specialised, often ad hoc analyses, as an internal consultant, providing useful and relevant information to managers and involved in broad business matters (Mouritsen, 1996). Therefore, the consulting role is similar to the “business partner” role, amply discussed (and typically recommended) as an evolution from the bean counter stereotype in recent literature. While, as discussed above, consulting can also be based on financial accounting information analysis, the consulting role is most commonly associated with the management accounting area.
The consulting role also benefited from the greater and faster data availability enabled by ERPs, but it has been less negatively affected regarding headcount reduction since it is not based on the high-volume transactional activities taken over by ERPs. This consulting role has been particularly influenced by ERPs “organisational accounting” benefits (flexibility in information generation, applications integration, timely and reliable information for decision-making and improved quality of reports) (Kanellou and Spathis, 2013), in particular when leveraged by the developments combining Data Warehouses/Data Marts, BI and Strategic Enterprise Management solutions described above, to support flexible analyses of internal and external information, with greater depth and breath, and hence generate greater value-added insights.
Recent technological developments which distinctively affect this consulting role, more than any other role within accounting, concern Big Data and the Internet of Things. Exploring these new huge and increasing amounts of data opens up new possibilities to generate insights to assist managers, including from a financial perspective. For example, Bhimani and Willcocks (2014) highlight that consumers’ on-line track prior to purchases is extremely valuable information. Capturing that non-economic information, beyond the actual economic transactions that are the traditional realm of the accounting consulting role, “offer the potential of developing financial intelligence and shaping cost management as well as pricing and operational control decisions” (p. 475–476), boosting the potential to provide high-value insights.
This section provided an overview of how developments in IS have influenced, and may influence in the future, accountants’ roles of bookkeeping, banking, controlling and consulting. However, this overview gave limited consideration to the multiple contingencies, limitations, complexities and tensions highlighted in the literature about accountants’ roles. This more nuanced appreciation of accountants’ roles is the focus of the next section.
Changes in accountants’ roles: beyond technological determinism
Extensive literature has analysed financial and non-financial impacts of IS such as ERPs, CRM and SRM (for example, Hendricks et al., 2006; Nicolaou and Bhattacharya, 2006). For example, in the accounting area, Kanellou and Spathis’s (2013) survey identified a range of ERP benefits (“IT accounting benefits”, “Operational accounting benefits (time)” and “Organisational accounting benefits”), some of which were related in the previous section to particular accounting roles. However, this stream of “cause-and-effect” literature reveals that, in spite of overall positive effects (suggesting that the “time lag” effect proposed in initial studies may have already disappeared for many adopting organisations), there was substantial variation in obtained results; in addition, unsuccessful or incomplete implementations and lack of improvements were not infrequent. In fact, the literature on IS in general, and Accounting Information Systems (AIS) in particular, has long recognised that the effects of technology are not deterministic, including the multiple benefits of technology anticipated by vendors, consultants and implementing organisations (Oliveira and Ribeiro, forthcoming).
To better understand these varied outcomes, processual studies, based on social and behavioural approaches (Granlund, 2011) provide rich details on why and how IS are introduced in particular organisational contexts and how repercussions emerge and unfold. Both “successes” and “failures” were associated with idiosyncratic, on-going repercussions. For example, in Hassan and Mouakket (2016) mismatches between ERPs built-in (best) practices and some organisational practices in routine bookkeeping led to increased manual work and required making workarounds within the ERP to achieve ERP functioning without affecting the previously existing practices (see also Beaubien, 2012). In Ribeiro (2003), an implementation of an ERP and its management accounting functionalities was confronted with technical issues and, in particular, opposing power strategies which allowed some actors to successfully resist any relevant impact upon management accounting and control practices. In Dechow and Mouritsen (2005), structural technological inflexibility and implementation idiosyncrasies led to limited integration and visibility in financial control, hence promoting the prevalence of an operational view of control. In Oliveira and Clegg’s (2015) case, repercussions in control practices and structures of power could only be explained by considering the joint effects, in the entire organisational actor-network, of the introduction of an ERP and the creation of two organisational structures: a Shared Service Centre and a Corporate Centre.
These four cases, across roles such as bookkeeping and controlling, recommend caution when predicting effects of innovations in ERPs and AIS upon actual accounting practices. And since not even effects upon accounting practices can be anticipated with certainty, then clearly even greater caution must be taken when discussing “effects” upon accounting roles, given the institutionalised elements underpinning roles as normative phenomena (Goretzki et al., 2013).
Recent literature has been particularly attentive to the complex process of accountants’ role changes, in particular towards the business partner role (Goretzki et al., 2013). This shift has been shown to be complex and problematic. For example, Jack and Kholeif (2008) reported an only partially successful ERP implementation, which did not achieve full organisational integration and did not actually change the accounting systems and practices and the role of the management accountants. Among the multiple reasons for this outcome, the authors stress the importance of strategies of multiple stakeholders within the organisation (from different functional and hierarchical areas) and around the organisation (including funding agencies and the software vendor). There were different internal and external expectations over the roles of the management accountants, and instead of the more forward-looking and influential role ambitioned by some actors, the one which ultimately emerged “was returned to that of data custodian and information provider for others who controlled the organisation” (Jack and Kholeif, 2008, p. 43).
Detailed processual studies highlight that “natural business partnering” (emphasis added), as an interviewee in Järvenpää (2007) put it, is nothing but “natural” and straightforward. Achieving this outcome actually required the complex organisational change of removing the routine tasks to a Shared Service Centre, while leaving other controllers in business units; and the complexity involved is visible in the variety of the eight intervention tools deployed to develop business orientation in management accounting: structural interventions regarding decentralisation; AIS; innovations in accounting; human resources management; directing of personal attention; role modelling; formally “managing” values; storytelling (Järvenpää, 2007).
Recent micro-level studies have shed further light on how the outcomes of technical innovations depend on holistic strategies by organisational actors to have new or changed roles recognised and accepted by other organisational members. Lambert and Pezet (2011) highlight how the acceptance of a new consulting role depended on the perception and acceptance of the validity and relevance of the reported information, in their case organisation. The information produced was repeatedly cross-examined in monthly performance review meetings, in a process that only gradually established the recognition that the produced information was valid – and hence only gradually contributed towards establishing the management accountants’ role and the recognition of their central position within the organisation. In a similar vein, Goretzki et al. (2013) highlight how institutionalisation of a new business partner role in a case organisation required actors to conduct three interrelated kinds of purposive institutional work, through legitimising the new role, (re-)constructing role identities and leveraging upon broader level changes to support organisational-level desired changes. Overall, these micro-level studies show that while technical innovations are indispensable to achieve change in accountants’ roles, any actual role changes depend on the interrelated effects emerging from diverse actors’ strategies within particular organisational networks. Therefore, the effects of technologies upon roles are not deterministic, and the influences identified in the previous section between technologies and specific accountants’ roles should be recognised as merely high-level, general characterisations, rather than “cause-and-effect” relations.
Conclusion
This chapter aims at contributing to bridge the AIS and the accountants’ roles literatures. It explores how four accounting roles have been, and may continue to be, affected by developments in IS, and accounting and integrated systems in particular, while highlighting that such technological influences upon accountants’ roles are not deterministic but depend on case specificities, including organisational actors’ strategies.
The bookkeeping, the banking and the controlling roles seem to have been the most affected by the automation enabled by integration within ERPs and/or across systems, including inter-organisational ones. The reduction of the need of book keeping accountants due to this integration has been recently reinforced by the emergence of Robotic Process Automation, although high value-adding activities in the area of book keeping are still available in niche areas. Banking and controlling, while also pressured towards headcount reductions, emerge as areas with more opportunities to provide value through enhanced analytical capabilities. Supported by new technologies, hybridisation of the controlling role poses both threats and opportunities: threats, when managers undertake traditional control tasks and dispense accountants’ intervention; and opportunities, when controllers become increasingly advisors, cross over to the consulting role and eventually become members of the business teams. With regard to the consulting role, its traditional emphasis on ad hoc analyses enables greater potential to leverage on a large array of technologies, not only the already established ERPs, Data Warehouses/Data Marts, BI and SEM solutions, but also the recent developments of Big Data and the Internet of Things. Overall, while the low value-added activities of the bookkeeping, banking and controlling roles are likely to remain detached from core organisational activities, the remaining and even expanding higher-value activities in those roles, as well as in the consulting role, are related with a greater engagement with the rest of the organisation. Indeed, this chapter suggests that even though the “business partner” term may be more immediately related with the consulting role as described by Mouritsen (1996), it may also be found within the bookkeeping, banking and controlling roles when accountants become successfully engaged with providing relevant analytical insights for the business.
While highlighting drastic influences of these technologies in the various areas of accounting and accountants’ roles, this chapter also stresses that the previous broad brush conclusions are not deterministic, and that accountants’ roles evolve in highly contextually specific ways (Mouritsen, 1996). Changes in roles do not occur naturally and free from resistance; on the contrary, they are dependent of explicit strategies by organisational actors pursuing particular objectives, including through securing ambitioned key roles (Goretzki et al., 2013; Lambert and Pezet, 2011). Therefore, and while changes in roles are unlikely to be successful without suitable supporting technologies, accountants should have a clear perception of the intertwined technical, organisational and social challenges at stake in their particular settings; this wider awareness will be key to develop and deploy strategies to mobilise those technologies in order to successfully shape accountants’ roles.
Notes
1 An automated process in accounting is exemplified by Deloitte at https://youtu.be/lbJI3Ghe98c. A video from Ernst & Young (visualised by the author at the 3rd Meeting of Service Centres, Porto, 1 July 2016) depicts a software robot using and interfacing between different applications like a human actor. The robot first analysed a travel expense scan and identified and extracted the relevant data; then, it introduced the data in appropriate fields of an expense claims software; finally, it emailed a manager to request his/her approval.
2 As a detailed exemplification, see SAP’s cash management solution at https://youtu.be/TKjXI7I8hwo.
References
Beaubien, L. (2012). Technology, change, and management control: a temporal perspective. Accounting, Auditing & Accountability Journal, 26(1), 48–74.
Belfo, F. and Trigo, A. (2013). Accounting Information Systems: tradition and future directions, Procedia Technology, 9, 536–546.
Bhimani, A. and Willcocks, L. (2014). Digitisation, Big Data and the transformation of accounting information. Accounting and Business Research, 44(4), 469–490.
Booth, P., Matolcsy, Z. and Wieder, B. (2000). The impacts of Enterprise Resource Planning systems on accounting practice – the Australian experience. Australian Accounting Review, 10(3), 4–18.
Burns, J., Warren, L. and Oliveira, J. (2014). Business partnering: Is it all that good? Controlling & Management Review, 58(2), 36–41.
Byrne, S. and Pierce, B. (2007). Towards a more comprehensive understanding of the roles of management accountants. European Accounting Review, 16(3), 469–498.
Caglio, A. (2003). Enterprise Resource Planning systems and accountants: towards hybridization? European Accounting Review, 12(1), 123–153.
CIMA (2010). Cloud computing could lead to a more adaptive finance function. CIMA Insight E-Zine. www.cimaglobal.com/Thought-leadership/Newsletters/Insight-e-magazine/Insight-2010/Insight-December-2010/Cloud-computing-could-lead-to-more-adaptive-finance-function/.
Dechow, N. and Mouritsen, J. (2005). Enterprise Resource Planning systems, management control and the quest for integration. Accounting, Organisations and Society, 30(7–8), 691–733.
Dillard, J. F., Ruchala, L. and Yuthas, K. (2005). Enterprise Resource Planning systems: a physical manifestation of administrative evil. International Journal of Accounting Information Systems, 6(2), 107–127.
Ernst & Young (2016a). Robotic process automation: automations next frontier. https://webforms.ey.com/Publication/vwLUAssets/ey-robotic-process-automation/$FILE/ey-robotic-process-automation.pdf.
Ernst & Young (2016b). Robotic process automation in the finance function of the future. https://webforms.ey.com/Publication/vwLUAssets/EY-robotic-process-automation-in-the-finance-function-of-the-future/$FILE/EY-robotic-process-automation-in-the-finance-function-of-the-future.pdf.
Gerdin, J., Messner, M. and Mouritsen, J. (2014). On the significance of accounting for managerial work. Scandinavian Journal of Management, 30(4), 389–394.
Goretzki, L., Strauß, E. and Weber, J. (2013). An institutional perspective on the changes in management accountant’s professional role. Management Accounting Research, 23, 41–63.
Grabski, S., Leech, S. A. and Sangster, A. (2008). Management accountants: a profession dramatically changed by ERP systems. CIMA Research executive summary series, 4(5), 1–9.
Granlund, M. (2011). Extending AIS research to management accounting and control issues: a research note. International Journal of Accounting Information Systems, 12, 3–19.
Granlund, M. and Malmi, T. (2002). Moderate impact of ERPS on management accounting: a lag or permanent outcome? Management Accounting Research, 13(3), 299–321.
Hassan, M. K. and Mouakket, S. (2016). ERP and organisational change. International Journal of Organisational Analysis, 24(3), 487–515.
Hendricks, K. B., Singhal, V. R. and Stratman, J. K. (2006). The impact of enterprise systems on corporate performance: a study of ERP, SCM, and CRM system implementations. Journal of Operations Management, 25(1), 65–82.
Herbert, I. and Seal, W. (2012). Shared services as a new organisational form: some implications for management accounting. The British Accounting Review, 44, 83–97.
Hope, J. and Fraser, R. (2003). Beyond Budgeting: How Managers Can Break Free From the Annual Performance Trap. Boston, MA: Harvard Business School Press.
Hopper, T. (1980). Role conflicts of management accountants and their position within organisation structures. Accounting, Organisations and Society, 5(4), 401–411.
Hyvönen, T. (2003). Management accounting and information systems: ERP versus BoB. European Accounting Review, 12(1), 155–173.
Jack, L. and Kholeif, A. (2008). Enterprise Resource Planning and a contest to limit the role of management accountants: a strong structuration perspective. Accounting Forum, 32, 30–45.
Järvenpää, M. (2001). Connecting management accountants, changing roles, competencies and personalities into the wider managerial discussion. Publications of the Turku School of Economics and Business Administration, LTA 4/01, 431–458.
Järvenpää, M. (2007). Making business partners: a case study on how management accounting culture was changed. European Accounting Review, 16(1), 99–142.
Kanellou, A. and Spathis, C. (2013). Accounting benefits and satisfaction in an ERP environment. International Journal of Accounting Information Systems, 14, 209–234.
Kristandl, G., Quinn, M. and Strauß, E. (2015). Controlling und cloud computing – Wie die cloud den informationsfluss in KMU ändert. ZfKE – Zeitschrift für KMU und Entrepreneurship: 63, Controlling in und für KMU, 281–304.
Lambert, C. and Pezet, E. (2011). The making of the management accountant – becoming the producer of truthful knowledge. Accounting, Organisations and Society, 35, 10–30.
Leahy, T. (2004). Best-of-Breed Software. http://businessfinancemag.com/technology/best-breed-software.
Mouritsen, J. (1996). Five aspects of accounting departments work. Management Accounting Research, 7, 283–303.
Nicolaou, A. I. and Bhattacharya, S. (2006). Organisational performance effects of ERP systems usage: the impact of post-implementation changes. International Journal of Accounting Information Systems, 7(1), 18–35.
Oliveira, J. (2010). Power and Organisational Change: A Case Study. PhD Thesis, Dundee: University of Dundee.
Oliveira, J. and Clegg, S. (2015). Paradoxical puzzles of control and circuits of power. Qualitative Research in Accounting & Management, 12(4), 425–451.
Oliveira, J. and Ribeiro, J. (forthcoming). Sistemas Enterprise Resource Planning. In M. Major and R. Vieira (eds.) Contabilidade e Controlo de Gestão: Teoria, Metodologia e Prática – 2ª Edição. Lisbon: Escolar Editora.
Quattrone, P. and Hopper, T. (2005). A time–space odyssey: management control systems in two multinational organisations. Accounting, Organisations and Society, 30(7/8), 735–764.
Quinn, M. (2014). The elusive business partner controller. Controlling & Management Review, 58(2), 22–27.
Ribeiro, C. (forthcoming). The Uses (and Non-usage) of the Balanced Scorecard: The Case of EDP Produção. MSc dissertation, University of Porto School of Economics and Management, Porto, Portugal.
Ribeiro, J. (2003). Institutionalism, Power and Resistance to Management Accounting – A Case Study. PhD Thesis, University of Manchester, Manchester.
Rom, A. and Rhode, C. (2006). Enterprise Resource Planning systems, strategic enterprise management systems and management accounting – a Danish study. Journal of Enterprise Information Management, 19(1), 50–66.
SAP (2015). Next Generation Needs for Cash Management. http://go.sap.com/documents/2015/07/966ef4a4-357c-0010-82c7-eda71af511fa.html (upon registration).
SAP (2016). Digital Finance – Transforming Finance for the Digital Economy. http://go.sap.com/documents/2016/03/a4d16bd0-627c-0010-82c7-eda71af511fa.html (upon registration).
Scapens, R.W. and Jazayeri, M. (2003). ERP systems and management accounting change: opportunities or impacts? A research note. European Accounting Review, 12(1), 201–233.
Simon, H., Gwetzkow, H., Kozmetsky, G. and Tyndall, K. (1954). Centralization Versus Decentralization in Organising the Controllers Department. New York: The Controllship Foundation.