Appearing in In The Black magazine, April 2020
Every leader, manager and finance professional now understands the importance of being able to deal with disruption. The story of the past decade has been about one wave of technology-based disruption following another. The idea of disruption is not new – Clayton Christensen described and defined it in his seminal 1997 book The Innovator’s Dilemma – but the game is now moving up a notch. The transition of Artificial Intelligence from the pages of sci-movies and research labs into the business mainstream represents a new set of fundamental challenges, and many leaders in Australia do not seem ready to deal with them.
“AI has potential impacts similar to other forms of technology-based disruption but it also has additional characteristics that need to be considered separately,” says Dr Mathew Donald FCPA, an academic who consults widely on change management and business strategy. He is also the author of an important new book, Leading and Managing Change in the Age of Disruption and Artificial Intelligence*. “This includes the potential to affect a wide range of work. Managers will need to re-write job descriptions, procedures and responsibilities, while trying to build jobs that are satisfying for staff. They will have to recognise that many people remain wary about AI systems.”
Dr Donald’s experience is that the Australian business community is less prepared for the practical reality of AI than comparable countries. Dr Donald cites the UK, Ireland, India, the US and the EU as further along the AI transformation curve. Many Australian corporates – not all – believe that the rollout of AI is still some way off so have not included it on their risk registers.
AI systems such as ‘phone bots’ are already being used to handle simple interactions with clients but will eventually be able to take on higher-level activities. Dr Donald believes that the finance profession will use AI to review and improve transactional and management information, moving up the complexity ladder.
There is good evidence that some business sectors have already moved solidly into the robotic field. Professor Eduardo Nebot, Director of the Centre for Field Robotics at the University of Sydney, notes that robotic systems are already being used in the mining, stevedoring and agricultural industries. Driverless vehicles such as harvesters are being successfully used, and these robots are increasingly being linked to basic AI systems.
Dr Donald believes that AI will not be a ‘big bang’ but a series of waves that occur over time, first in areas where the work is repetitive and the decision principles are easy to determine. Then it will move into areas such as inventory control, stock locations and customer service. Eventually, virtually every area of a business will be affected in some way by AI.
“The most limiting factor for AI will be consumer acceptance, and it will only be adopted once it can be shown to be superior in function to the human equivalent, as well as reliable and safe,” says Dr Donald. “The transition, when it starts, will be fast. There is a real risk that it may happen too quickly for the ethical issues to be fully considered, understood and mitigated.”
For the accounting profession AI raises a host of challenges. Technology has already had a crucial impact on the traditional functions of recording and reconciliation, and AI is going to drive that even further. While many finance professionals now focus on data analysis and trend insight, these areas would appear to also be open to AI disruption. This is the case for accountants in both corporate roles and public practice.
“The capacity of AI systems to process huge amounts of data means that they can provide analysis, reports and new insights in faster time frames,” Dr Donald notes. “The potential for AI to integrate systems between organisations in new ways has already been demonstrated overseas. In Australia, B2B and B2C systems have been around for a while, especially in the space of warehousing, deliveries and orders. Data connectivity is increasing globally, as seen in the social media and marketing fields.”
Changing role for finance professionals
While there are significant problems there are also many new opportunities for finance professionals. The removal of the routine tasks will allow financial specialists to get closer to business decision-making, providing more of their expert opinions and advice. To take full advantage of this they may have to overhaul their business structures, procedures and skills base, so they can offer up-to-date advice in almost real time.
Dr Donald believes that this is an area where the profession should be taking the initiative in the immediate future, rather than allowing others to establish themselves as experts on the advisory element in AI. The key area of opportunity lies in the potential to provide guidance about the most suitable AI system and its implementation, as well as any bias and ethical issues. This will not necessarily require high-level technical knowledge but will be more about business and strategic advice.
As AI moves squarely into workplaces managers will likely be presented with the task of explaining to staff that their roles have changed or diminished, or even eliminated. Staff, especially those with lower levels of skills, will likely become worried about their future, and managers will have to stretch themselves to provide workplaces that people want to work in. On the other side of the coin, highly skilled people will become more valuable. These people may prefer to work from home, or under new arrangements and for higher pay – and they will be making such demands at the same time that the less skilled are being replaced by AI.
“Managing this period of transition is going to be a real challenge, a balancing act,” says Dr Donald. “And in the longer term there will be even more issues to address. Some employees may have to work for rather than with an AI system, and that is a big psychological shift. Managers will have to work much harder to attract and retain staff in this situation.”
He foresees a new period of re-learning for managers and leaders, so they have a conceptual knowledge of the technology and what it may deliver. The spread of 5G communication will assist also AI development. Faster communication speeds will underpin AI-integrated driverless urban vehicles, drones, and even power generation.
Professor Nebot agrees about the importance of 5G. “The game changer will be if 5G can provide the bandwidth and latencies required to move the computational power outside vehicles,” he says. “But there are a lot of challenges to address before we get to that.”
Dr Donald believes that many businesses are likely to soon be interested in AI-based automatic phone systems for customers or will consider drones, driverless cars or robots to do routine tasks. The challenge for the accountant is to provide the tools to determine if the proposals are worthwhile, and to understand the issues arising from the technology.
“Advisors need to be on top of the technical areas of AI while providing broader advice on issues like redundancy, upgrades, and system integration,” he says. “There are many potential new areas for finance specialists who are willing to get involved, but they need to start now.”
* Leading and Managing Change in the Age of Disruption and Artificial Intelligence, Mathew Donald, Emerald Publishing, 2019.