Downloadable! Copyright © 2020 Elsevier B.V. or its licensors or contributors. This makes working in a team very easy. We use the term ‘controller’ rather than the equivalent ‘management accountant’ in this editorial. Realoptionen als Controlling-Instrument: Das Beispiel pharmazeutischer Forschung und Entwicklung, Wiesbaden. Utz Schäffer. To view a copy of this licence, visit & Verbeeten, F. Digitalization in management accounting and control: an editorial. Acccessed 26 Mar 2020. Bhimani & Willcocks, 2014; Quattrone, 2016; Arnaboldi, Busco, & Cuganesan, 2017a, b; Appelbaum et al., 2017), with some case studies (Arnaboldi, Azzone, & Sidorova, 2017a, b) and empirical analyses (Labro et al., 2019; Oesterreich et al., 2019). Management Accounting Research,31, 118–122. Summing up, we believe that the digitalization of management accounting and control has substantial potential to transform our research field, and that the articles in this issue provide an interesting avenue to start the dialogue. Such a strategy takes advantage of digital technologies—it provides direction, enabling executives to lead digital initiatives, gauge their progress, and then redirect those efforts as needed (Ross et al., 2017). Internal service providers tend to be deprioritized, resulting in the finance function being a relative latecomer as far as digital transformation is concerned. International Journal of Accounting Information Systems,25, 29–44. The British Accounting Review,51(6), 100833. First of all, we know from numerous studies that processes of fundamental change take time—at least when the changes are to be sustainable and more substantial than merely scratching the surface (Frey & Osborne, 2017). Creating and maintaining such ‘a single source of truth’ is a core responsibility of controllers that is, however, increasingly challenged by data scientists and other functions like IT. (2016). Digitalization in accounting continues to advance - steadily but slowly. In all three examples, sustainable change in the finance function is therefore a long process that cannot be measured in months or a few years. From the editors—Big data and management. Technology and the internet have changed the face of everything, right from brick and mortar to online shopping, up to online banking. Arnaboldi, M., Busco, C., & Cuganesan, S. (2017a). To be successful, digitalisation needs to be based on trust in data and the underlying systems, processes and controls. INSURANCE !! surveyed achieve an … How are companies dealing with data governance? The AI Revolution Has Begun. Schäffer, U., & Weber, J. Digitalization has the potential to disrupt the management accounting domain. The challenges are manifold and so are the opportunities for research: What are effective digital reporting designs, process, structures, and governance systems? Der Controller verliert die Kontrolle. and Accounting in Asia/India CA Anil Bhandari CA. However, anecdotal as well as more substantive empirical evidence seems to show that CEOs tend to prioritize areas that directly add to corporate value creation, such as marketing and supply chain. We have selected five articles for this special issue: Alnoor Bhimani starts with an overview of digital data and management accounting—why we need to rethink research methods. Possible research questions in this area include: To what extent do digitalized business models require different approaches in strategy implementation and control? Moll, J., & Yigitbasioglu, O. Most of the papers are largely conceptual (e.g. Digitalization enables various new forms of cooperation between companies, suppliers, customers, and employees, leading to new product and service offerings. Controlling im Wandel—Die Veränderung eines Berufsbilds im Spiegel der zweiten WHU-Zukunftsstudie. Der Controller ist tot, es lebe das Controlling. George, G., Haas, M., & Pentland, A. Vijay Kumar Institute of Chartered Accountants of India M P Vijay Kumar 09-06-2017 1. In the companies they surveyed, data scientists typically worked in IT and operations and only 22% of companies that employ data scientists did so in the controlling function. The findings also indicate relatively little interaction between controllers and data scientists, regardless of whether the latter work in controlling or elsewhere. And there is a problem whether this business model experimentation affects for the management accounting practices to improve in future due to digitalization. New technologies, information streams, roles and relationships in this eco-system reinforce the need to build trust, and pose risks. It could serve as a research agenda and stimulus for future studies, which is why we conclude each area with potential research questions. On the other hand, when your accounting processes go digital, you’re talking about digitalization. Not surprisingly, Schäffer and Weber (2016) found empirical evidence that CFOs and controllers in Germany increasingly expect the finance function in their company to change. Article  Similarly, respondents’ prognoses in 2014 regarding the prevalence of the business partner concept in 2019 also appear to be unrealistic given the values in 2017. Much of this value will come in the form of operational effectiveness, increased productivity, faster decision-making, and enhanced safety. Some companies have already introduced data analytics and automated forecasting technologies, using (or combining) time series techniques, machine/deep learning, and/or simulation. Within the domain of staff management, accountants play a great role in handling their payroll system. (2018b). How should a digitalized finance function be structured by means of processes, responsibilities, and IT resources? Schäffer, U., & Matlachowsky, P. (2008). On a personal level, an enhanced expertise in technology and analytics might be required; at the same time, business acumen, analytical thinking, and other traditional competencies should not diminish (or may even become more important; cf. For example, Pritsch (2000) showed that it took at least 25 years—an entire generation—for the NPV method to become widespread (cf. Schäffer, U., & Weber, J. As such, it has affected all kinds of business activities, including business models and supply chains, as well as support functions such as human resources and accounting. Google Scholar. Let’s study the subject matter further: A quick look at the stats. Toward the development of a big data analytics capability. Big data: the management revolution. (2017). Digitalization will radically change controlling as we know it. Although quite a few papers have been published in this area since then and authors such as Moll and Yigitbasioglu (2019) as well as Rikhardsson and Yigitbasiglu (2018) have provided overviews of the literature, we still observe that digitalization is only about to enter the scholarly debate. This essay places current fascinations with the digital revolution into the historical and cultural contexts that have intertwined with the evolution of management accounting as a practice involved in the production of knowledge for decision-making. And the effect of digitalization on management accounting practices. CFO or chairperson of the management board. Technological Forecasting and Social Change,114, 254–280. We thank all contributors, reviewers, and especially the managing editor of the Journal of Management Control, Prof. Dr. Thomas Günther, for supporting this special issue. Management accounting goes digital: will the move make it wiser? Another important challenge for the finance function is therefore to develop expertise in big data and analytics. The main priority for most finance departments is still to pave the way for digital change, for example, by harmonizing basic systems and standardizing workflows. Harvard Business Review,90(2012), 60–66. MCA,6, 16–23. According to the World Economic Forum, digitalization in the mining, minerals, and metals industries has the potential to deliver over $425bn in shareholder, customer and environmental value by 2025. Schäffer, U., & Weber, J. So why does it take so long for the postulated transformation of the controlling function to get underway? Many of the implications on digitalized accounting will have direct impact on strategies, actions and processes. (1985). Digitalisation in accounting is a management issue. Accessed 26 March 2020. As the ‘economic conscience’ of the organization, controllers should be aware of the (long-term) viability of an organization, and therefore its digital strategy. - Currently, information acquired through digital technology is co-mingled with companies' strategy and inevitably affects management accounting (Bhimani, 2006). Kolthof et al., 2017b; Schäffer & Brueckner 2019). It may not only affect the digital landscape of the organization and the associated business models, but also management accounting and control practices as well as the role of the controller. All the group members can chat, clear their doubts, and update their work, all in one place. Predictive analytics and the changing manufacturing employment relationship: Plant level evidence from census data. Two thirds of the respondents perceive deficits in terms of data quality and accessibility. Rollenspezifische Kompetenzprofile für das Controlling der Zukunft. Digitalization has the potential to disrupt the management accounting domain. ), as there are many ‘digitalization topics’ that may have a different impact on the finance function. Controlling—Zeitschrift für erfolgsorientierte Unternehmenssteuerung,27(3), 185–191. At the same time, digitalization is a challenge for incumbent companies, as it requires them to reflect on their current strategy and to explore new business opportunities. ), Behavioral Controlling: Anniversary Volume in Honor of Jürgen Weber, 179–190, Wiesbaden. Gartner glossary. Gupta, M., & George, J. In addition, traditional capital budgeting or investment control approaches might be inadequate in the context of exponential growth fueled by digital products, platform strategies, and network economies. De gevolgen van technologie voor de financiële functie: een analyse op verschillende niveaus. Accounting profession is traditional profession and accounting rules and principles have been established and are the same for many years. Despite the practical relevance of digitalization, academic research in this area was limited at the time we proposed this special issue. Arnaboldi, M., Azzone, G., & Sidorova, Y. Digitalisierung ante portas—Die Veränderung im Spiegel der dritten WHU-Zukunftssstudie. Deloitte. (2017). Relevant and reliable data from a trustworthy, secure database should be the foundation of every decision. Available at SSRN 3300927. Möller, K., Schäffer, U. The controlling profession in the digital age: Understanding the impact of digitisation on the controller’s job roles, skills and competences. In the finance function, digitalization has resulted in the automation and robotization of routine processes, the introduction of business intelligence, and the application of data analytics. volume 31, pages1–8(2020)Cite this article. MCA,3, 36–42. The next two articles focus on the effects of digitalization on core controlling processes: budgeting and reporting. (2016). The overwhelming majority of the companies . Kolthof, E., Steenwijk, E., & Verbeeten, F. (2017a). Also published in English as: Schäffer, U., & Weber, J. (2017b). This editorial discusses these developments by introducing the concept of digitalization and describing its impact on the field of management accounting and control. What are relevant context factors for a digitalization strategy and controlling it? As digitalization somehow affects all the business aspects of a company nowadays, it has also created new challenges and possibilities for company management and management control. University of St. Gallen, St. Gallen, Switzerland, WHU - Otto Beisheim School of Management, Vallendar, Germany, University of Amsterdam, Amsterdam, The Netherlands, You can also search for this author in Similarly, in the Netherlands Kolthof et al. Accounting, Auditing & Accountability Journal,30(4), 821–849. McKinsey. Accounting has already taken major steps towards digitization. Digitalization is affecting our daily lives as well as the role of controllers.Footnote 1. Accounting, Auditing & Accountability Journal,30(4), 762–776. Schäffer, U., & Brueckner, L. (2019). International Journal of Accounting Information Systems,29, 37–58. Zeitschrift für Planung und Unternehmenssteuerung,19(3), 207–232. How can drivers for planning, forecasting, and simulation be identified, used, categorized, analyzed, and optimized? Pritsch, 2000). Then we enlarge the perspective on the overall control system in two articles with a more holistic approach: Thorsten Knauer, Nicole Nikiforow and Sebastian Wagener deal with information systems, but on a more abstract level, by analyzing determinants of information system quality and data quality. Key challenges include identifying and adequately applying appropriate techniques and drivers, and—even more importantly—the right combination of ‘(wo)man and machine’ in the application process. They conducted three studies on the future of controlling (2012, 2015, and 2018a). The future of employment: How susceptible are jobs to computerisation? The field still appears dominated by consultants and practice pioneers (e.g. Accessed 26 Mar 2020. This content has mainly been fueled by discussions with practitioners in the field, but also developed from conversations with fellow academics at conferences, seminars, and other encounters. Strategic Finance,81(5), 20–22. Appelbaum, D., Kogan, A., Vasarhelyi, M., & Yan, Z. How to develop a great digital strategy. What are preconditions for self-controlling and self-reporting solutions? Software can quickly access source data and apply tax calculation rules. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. Indeed, the WHU digitalization pulse check of Schäffer and Weber informs us that only slightly more than half (56%) of digital steering committees include members from the finance function. (2020). The views expressed are those of the presenter and, therefore, do not necessarily represent the views of either the Council or any Committee(s)/ Board(s) of the Council of the Institute of Chartered Accountants of India (ICAI). ), Behavioral Controlling: Anniversary Volume in Honor of Jürgen Weber, 159–168, Wiesbaden. Controlling—Zeitschrift für erfolgsorientierte Unternehmenssteuerung, 27 (1), 42–48. A relatively large portion of German companies therefore appear to address digitalization topics without directly involving the finance function. (2019). However, most controllers are not inherently competent in this area., DOI:, Over 10 million scientific documents at your fingertips, Not logged in Information & Management,53(8), 1049–1064. In: Gilbert, J., Pobst, B., Schmitz-Dräger, R. Digital transformations in accounting also help in group management. In the last couple of years, scholars, consultants, and practitioners have postulated a fundamental transformation of the finance function due to digitalization and increasing globalization (cf. Controller Magazin, (3), 52–53. In addition, only 12% of respondents consider their company’s financial investment in the digitalization of controlling to be sufficient. In U. Schäffer (Ed. Accounting & Business Research,44(4), 469–490. Bhimani, A., & Willcocks, L. (2014). On an organizational level, the finance function will likely face a reduction in size (in the number of full-time equivalents; see Frey & Osborne, 2017; Schäffer 2017). Schäffer, U., & Weber, J. The digital transformation of accounting and finance has already begun. Findings. Kolthof, E., Steenwijk, E., & Verbeeten, F. (2017b). What are effective strategies for competence building, transfer, and governance? In outlining similarities and differences in the production of management accounting information from aural to digital cultures, it argues that while the effects of the digital revolution on management accounting and decision-making are still unclear, these effects surely (and hopefully) will not deliver the dream of perfect information and rational decision-making as one may be lead to believe by the growth of data-driven organizations and societies. However, globalization of business, stronger regulations and numerous technological solutions and innovations are not bypassing the accounting profession either. Zünd, A. The topic deserves a careful definition (what exactly are we talking about? Most finance functions in large companies are not as advanced in their digitalization efforts as the commonplace c-suite rhetoric and the high expectation of change might suggest. Especially in the light of structural breaks (such as the coronavirus/Covid-19 crisis) it seems to become evident that a combination of human judgment and business acumen with the extensive use of data and technology are key. 7. Controlling & Management Review, 60 (6), 8–17. This should however not restrict the effectiveness and impact of the function. That has many implications. Also published in English as: Schäffer, U., & Weber, J. Controllers not only need to develop and adapt new KPIs, but also flexible steering approaches (e.g. Part of Springer Nature. Counting more, counting less: The new role of management accountants. Where and how does digitalization affect the finance function? DOCTORAL CANDIDATE POSITION IN DIGITALIZATION OF MANAGEMENT CONTROL. Historically, the finance and accounting teams have been early adopters of technological tools because they already rely on high-level IT to optimize business processes and interactions. Henzler, H. (1974). Open Access funding provided by Projekt DEAL. In the aforementioned WHU digitalization pulse check, Schäffer and Weber found that only a few companies employ data scientists in the finance department. Clearly, changes in finance function practices fall short of what has been suggested in earlier years. Accounting digitalization offers accountants an advantage by offering live information while handling payroll and financial forecasting of the company. We noticed a large gap between theory and practice: academic papers hardly discussed the effects of digitalization on the finance function, while in our meetings with practitioners this was generally the only topic on the agenda. Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. Frankfurter Allgemeine Zeitung, 16, March 26. PubMed Google Scholar. The risk of digitalization for accountants is due to the increasing application of affordable commercial software that automates the workflow processes of the monthly, quarterly and fiscal year-end accounting close. According to Schäffer and Weber (2018a), the adaptation processes in both instances require more time than the controllers in their three studies on the future of controlling originally expected. Business analytics is used intensively in only a fraction of controller functions—5% of respondents reported intensive use. It may not only affect the digital landscape of the organization and the associated business models, but also management accounting and control practices as well as the role of the controller. Impact of business analytics and enterprise systems on managerial accounting. Which behavioral biases can be mitigated or can arise with the use of digital technologies? (2018). The authors consistently found that actual implementation is still in its infancy: 50% of the controllers surveyed indicated that their company has no digitalization strategy for controlling, while 30% reported the presence of only a preliminary strategy and a mere 6% of companies reported a relatively mature digitalization strategy in controlling. The digitalization will require company cultures, which are digitalization friendly. This may have implications for the overall status of the finance function and for its role in digital transformation. © 2020 Springer Nature Switzerland AG. The Nordic PhD program in Management Accounting organizes the … Similarly, we use the term ‘finance function’ rather than ‘management accounting and control function’ or ‘accounting and finance function.’. AUDITING PROCESS BECOMES CONSIDERABLY EASIER ScienceDirect ® is a registered trademark of Elsevier B.V. ScienceDirect ® is a registered trademark of Elsevier B.V. Management accounting goes digital: Will the move make it wiser? © 2016 Elsevier Ltd. All rights reserved. It may not only affect the digital landscape of the organization and the associated business models, but also management accounting and control practices as well as the role of the controller. In the WHU digitalization pulse check, Schäffer and Weber (2018b) find that only 50% of chief data officers in large German companies report to the chief financial officer (CFO) or (in one case) the head of controlling. Given the challenges mentioned above, the finance function as well as individual controllers may need to develop new competencies. Siegel, G. (1999). However, many controllers still seem reluctant to act as business partners and the concept is far from being intern internalized by the majority of controllers in the field. This is reflected in the third WHU study on the future of controlling as well as a further study Schäffer and Weber conducted, namely the first WHU digital pulse check (Schäffer & Weber, 2018b). Der Controller-Bereich (Controllership): Randbemerkungen zur Institutionalisierung der Controller-Funktion. Advancements in Artificial Intelligence (AI), Data Science, Data Analysis, and Robotics have helped in bringing many important developments in the field of Medical Sciences, Financial Departments and Applications, Research, and many more. This is where accounting software like QuickBooks comes in. International Journal of Accounting Information Systems, 35(C), 100432. Rikhardsson, P., & Yigitbasioglu, O. According to respondents, controllers and data scientists work closely together in only 17% of companies in the sample of the WHU digitalization pulse check (Schäffer & Weber, 2018b). (2012). (2019). Der Januskopf muss weg. Many practitioners indicated that the potential impact on management accounting practices and the finance function was huge, with several companies having special transformation departments (for example in marketing, human resources, and finance) to guide the digital transition. (2017a) found that robotic process automation (RPA) is used in transaction processing for less than 50% of the activities. We build upon the literature on digitalization in management accounting and draw upon the pragmatic constructivist methodology to understand how digitalization takes place at the individual actors' level in accounting practice. Possible research questions include: Which competencies are required in a more digitalized context? Possible research questions include: What will be the impact of specific digital techniques on particular finance function processes? : Plant level evidence from census data function practices fall short of what has suggested. Social media: the new role of internet-related technologies in shaping the work of accountants new... A course in digitalization and accounting, Accountability, social media: new... Effective strategies for competence building, transfer, and optimized major steps towards digitization ’ and changing... Not logged in - matter further: a quick look at the time proposed. Accountability Journal,30 ( 4 ), Behavioral controlling: Anniversary Volume in Honor of Jürgen Weber 159–168. Software like QuickBooks comes in just as much as the companies themselves and accounting rules and have. Respondents reported intensive use for CFO ’ s financial investment in the pursuit of digitalization and accounting, &! 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