Have you ever thought about a day in the life of an accountant? Every day they wake up in the morning dreading their day at the office, the huge number of payments they must process, the mass of emails they have to send and receive for approval, and so on. The only break in their monotonous day is the occasional typo or error that requires them to spend an hour correcting. Accountants spend years studying financial analysis, forecasting, and budgeting, but end up doing the simplest, most menial tasks that add very little value. Both the company and the employee would benefit if their skills could be better utilized to focus on more important tasks, such as strategizing for the company's financial future. Is there a solution to this problem? What is RPA and can it be their saving grace?
It is a well-known fact that the ultimate goal of any business is survival. Companies have adapted to many changes in their business environment over the years. But it is technology that seems to have provided the most impactful tipping points, enabling the emergence of companies that have changed the way business is done, or even the way consumers behave. According to the Automation Anywhere, one of the leading American companies developing RPA software, “Robotic Process Automation (RPA) is software technology that’s easy for anyone to use to automate digital tasks. With RPA, software users create software robots, or “bots”, that can learn, mimic, and then execute rules-based business processes. RPA software bots can interact with any application or system the same way people do—except that RPA bots can operate around the clock, nonstop, much faster and with 100% reliability and precision.”
Over the last few years, RPA (Robotic Process Automation), AI (Artificial Intelligence) and ML (Machine Learning) have emerged as game-changers in the field of accounting and finance. A study by Global Newswire indicates that the global RPA market is forecast to grow more than 13 billion USD by 2030. The monotonous, repetitive, and standardised tasks are left to the RPA while employees focus on value added tasks that improve the productivity and growth of the business.
The question we are trying to answer is whether RPA is capable of transforming the accounting and finance industry. Will robots replace accountants? What new skills do we as finance professionals need to develop to keep up with the changing times? In order to assess the potential impact of a technology, it is essential to understand what it can do and, more importantly, what it cannot do.
The applications of RPA are enormous. Many companies have already adopted RPA by automating their manufacturing and assembly processes, but now the back-office processes like accounting and finance have realized the impact of this technology and are adopting it to automate various processes like procure to pay, record to report, order to cash, etc. There are several benefits of using RPA in accounting processes and these can be listed as below:
• Improves accuracy: According to Gartner research, human error within the finance function produces, on average, 25,000 hours of avoidable rework at a cost of $878,000. Any work performed by humans are prone to errors that can be minimised with the help of RPA. In 2012, an American company called Groupon's losses increased from $42.7 million to $62.9 million due to a small accounting error. RPA helps maintain data accuracy while performing multiple ledger entries in significantly less time.
• Improves productivity: There are two ways in which RPA can boost productivity. One is the efficiency in which basic processes are performed in the organisation. Machines unlike humans can work 24/7. With the time saved using RPA, employees can use their skills to do other tasks like data analysis and decision making.
• Cost effective: Although the initial investment in RPA may seem costly, the future benefits in time and cost savings are noteworthy. Deloitte’s Global RPA survey states that it has contributed to cost reduction by 59%.
While the advantages seem attractive, it is important to make a fair assessment of the drawbacks of implementing RPA and the ways to overcome it. One of the major concerns of companies adopting RPA is the potential job losses as more and more tasks become automatised. In 2016, Deloitte estimated that 861,000 public sector jobs will be lost to automation by 2030 saving £17 billion off the public sector payments in 2030. However, it is essential to consider the new job opportunities that will be created due to automation. This would necessitate accountants to develop new skill sets including but not limited to STEM (Science, Technology, Engineering, Mathematics), business knowledge, data visualisation and communication. Another factor to consider is the failure rate of RPA projects, which is estimated at 30-50%. When RPA is implemented without a clear understanding of the process. As a rule-based system, it may not be ideal for processes that have many exceptions and variations. There is also a risk of over-reliance on RPA, which could lead to a lack of innovation or complacency among employees.
While there are some concerns, the benefits far outweigh the disadvantages and RPA is here to stay. With the advent of RPA, the possibilities of achieving efficiency in the accounting and finance sector are endless. The future of RPA lies in multiplying the current productivity gain by leveraging the benefits of AI and ML. “Imagine RPA being the arms and legs of a bot and artificial intelligence is the brains. AI gets more intelligent over time by assessing the data that RPA can provide. Instead of just completing a programmed action, RPA, with the help of AI, would be able to determine what action to take based on the data.”, says Bernard Marr, in his blog. He is a world-renowned influencer and thought leader in the field of business and technology. We can already observe the impact of RPA in various companies through the results of cost reduction, increased productivity, and their decision to take a data driven approach to their business.
At Audencia, the MSc Data Management for Corporate Finance course covers various topics like RPA as part of the course content of Digital Transformation. In fact, we can clearly summarise the importance of this topic for future finance professionals in the words of one of our Associate Professors, Dr Redouane EL AMRANI. He says, “This is a knowledge gap. You [accountants] cannot keep doing your job the way it used to be done in the past. Everything is automated, smart, and augmented. So, you have to increase your expertise to show companies that you are capable of dealing with all these issues.”
As part of the DMCF course, students get an opportunity to study academic papers related to RPA, blockchain, AI and ML and their impact in the world of accounting and finance. It provides students with the necessary means to prepare for developments in the world of accounting and finance. Many subjects are also taught by professionals who currently use various data analysis and data visualization tools in their daily work. This gives you an insight into the real world and equips you with the current technologies used in the market.
Recently, the current class of DMCF students visited the Carrefour office in Mondeville. Here, employees from various departments such as Order to Cash, Procure to Pay, and Lean Management presented to the students how RPA is used in their processes. Field trips like this give us the opportunity to ask questions directly to the people who not only use RPA in their daily work, but also develop it. It taught us the importance of the communication between the business process team and the IT team. This is crucial because the IT team develops the tool based on the requirements of the business team. And as finance students, the DMF course helps us gain technical knowledge that helps us improve communication with the IT team. This additional skill makes the DMF students stand out from the rest of the finance professionals. More importantly, it doesn't limit them to finding jobs in traditional finance roles and opens doors to a wide range of opportunities.