Test bank for Digital Transformation in Accounting By Richard Busulwa and Nina Evans

analysts, security analysts, web developers, systems administrators, software product man- agers, and IT managers.

3. Is Information Systems a part of IT or is IT a part of information systems? Does it matter which is a part of which?

IT is part (or a subset) of information systems. Yes, it matters as it can lead to misunderstandings, trivialization of the importance of one or all terms, and feelings of overwhelm for some stakeholders outside of the IT or IS profession (at times even within the IT/IS professions). It is these misunderstandings of the slippery and overlapping terms that often drives some accountants to trivialize, or only see a part of, the importance and value of information systems and digital technologies to business operations and strategy. In turn, this leads them to misunderstand their role in IS and digital technology issues and therefore sideline them, or to see such issues as ones that can be relegated to the IT/IS/Technology function. This misunderstanding and the resultant attitudes and actions can be a risk to both managers’ careers and the fates of their organizations.

IT, Information Systems, and Digital Technologies 4. What is the best metaphor you can think of to explain the interrelationship between digital technologies and information systems?

Lots of different metaphors can be used here. E.g.: -digital technologies are like a catalyst for information systems -digital technologies are like jigsaw pieces in an information system -digital technologies are like components of a computer -digital technologies are like building components of an IS building -digital technologies are like athletes on an IS team

5. Are digital technologies a part of IT or is IT a part of digital technologies?

Digital technologie scan be a part of IT and IT can be a part of digital technologies.

The term “digital technologies” refers to combinations of information (or data), computing (or computation), communication, and connectivity technologies. Digital technologies include all types of electronic hardware and software that use information in the form of binary code (information represented by strings of 0's and 1's). Digital technologies include electronic tools, systems, devices, personal computers, calculators, traffic light controllers, mobile telephones, satellite

technology, high-definition television, the internet and other networks, software applications, email, mobile apps etc.

6. What is the role of digital technologies in information systems?

Used the right way, information systems can become very pow- erful strategic weapons capable of conferring often insurmountable strategic advantages. The right digital technologies can supercharge this strategic power of information systems by drastically enhancing how efficiently and effectively such information systems function. For example, the right combination of digital technologies can speed up the rate at which data flows between hardware, software, networks, business processes, and people, making it near instant. The right combination of digital technologies can transform all of an organization’s infrastructure (buildings, machinery, furniture, cars, stationery, etc.) into smart things capable of collecting data, communicating data, and acting on data insights, and doing all of these things autonomously. The right combination of digital technologies can enable an organization’s employees to work from anywhere in the world, to collaborate with any of the organization’s infrastructure and other physical things, and to serve large numbers of customers globally in real time, irrespective of their location. The right combination of digital technologies can enhance the efficiency and effectiveness of interactions between people, technology, and processes. These examples only scratch the surface of the power of digital technologies to supercharge the strategic power of information systems.

7. What are five different types of digital technologies?

Digital technologies include electronic tools, systems, devices, personal computers, calculators, traffic light controllers, mobile telephones, satellite technology, highdefinition television, the inter- net and other networks, software applications, email, and mobile apps.

They also include emerging digital technologies such as the internet of things, blockchain, LPWAN, LEO satellites, 8. Assuming that an organization is not already using the digital technologies you identified in question 7, how could using them improve each component of an information system?

Answers will vary depending on the specific digital technologies chosen. Below is a suggested solution for one digital technology (the internet of things)

Information System Component Hardware

Software

Data

Network

People

Processes

Improvement / Positive Impact IoT can enable bringing all IS hardware online so that real-time monitoring and preventative maintenance of IS hardware can occur to minimise disruptions in IS functioning.

IoT enables software to play a significantly expanded role in IS. For example, instead of the activities software can perform being limited to a specific device (e.g. a computer), these activities can be expanded to every internet enabled thing (e.g. other software, all online hardware, connected buildings, connected devices etc.).

This enables software to coordinate / facilitate the performance of almost all activities people and machines are able to perform.

The IoT significantly expands the availability of data and the ability to route data to different parts of an IS. This can profoundly change the efficiency and effectiveness of decision making throughout the IS. The IoT can significantly improve network efficiency and effectiveness through real-time monitoring and preventative maintenance of network hardware and software.

The IoT can enhance the efficiency and effectiveness of people within IS. For example, by enabling them to realtime decision-making information.

The IoT can profoundly improve efficiency and effectiveness of processes. For example, through realtime monitoring of activities within IS, through automation of activities within IS, and through expanded integration of activities within IS.

9. Assuming that an organization is not already using the digital technologies you identified above, how could using them improve the functioning of its information systems? (e.g. how would using them impact efficiency, effectiveness, strategic position?)

Depending on the digital technologies identified, examples of improvements in IS functioning due to use of digital technologies includes:

- Speeding up the rate at which data flows between hardware, software, networks, business processes, and people, making it near instant.

- Transforming all of an organization’s infrastructure (buildings, machinery, furniture, cars, stationery, etc.) into smart things capable of collecting data, communicating data, and acting on data insights, and doing all of these things autonomously.

-Enabling an organization’s employees to work from anywhere in the world, to collaborate with any of the organization’s infrastructure and other physical things, and to serve large numbers of customers globally in real time, irrespective of their location.

-Enhancing the efficiency and effectiveness of interactions between people, technology, and processes Strategic Information Systems 10. What are strategic information systems? How can they transform the strategic positioning of an organization? (identify 5 ways they can transform it) Strategic information systems are information systems that can significantly transform the strategic position of an organization in its external environment. Such transformation can be in the form of breakthroughs in efficiency, differentiation, innovation, adaptability, or agility. Efficiency breakthroughs include dramatically speeding up or enabling cost leadership in processes such as product and service delivery processes, customer engagement and support processes, and strategy execution processes. Adaptability refers to an organization’s ability to adapt its operations to surprising events in its external environment (financial crises, pandemics, disruptive competition). Agility refers to an organization’s capacity for flexibility and speed in sensing and responding to external changes.

11. Identify two organizations that are exemplar users of information systems as powerful strategic weapons Lots of exemplar organisations. For example, Amazon, Google, Microsoft, Netflix, Apple, Disney, Caterpillar 12. What is the role of accountants in the efficient and effective functioning of information systems?

As trusted advisors and business partners, accountants can play critical roles in optimising the design, implementation, operation, maintenance, and optimization of

information systems. For example, they play critical IS roles such as systems analysts, systems designers, systems auditors, systems users, power users of particular digital technologies within information systems, data managers, data analytics experts, cybersecurity risk analysts or managers, digital ethics analysts or risk managers, and many more. The extent to which accountants possess the right knowledge, skills, and abilities to fulfil and effectively carry out relevant roles can enhance or inhibit the efficiency and effectiveness of information systems.

13. What is the role of accounting / finance managers in the efficient and effective functioning of information systems?

Ensuring the effective design, implementation, operation, maintenance, and optimization of information systems is not just the responsibility of the IT/IS or similar function, but it is a shared responsibility of all leaders / managers – including accounting and finance leaders / managers. To deliver on this responsibility, accounting and finance leaders / managers can ensure that the right digital technologies are used, that the right operational and strategic processes are in place, that these processes leverage digital technologies for optimal efficiency and effectiveness, that the right job roles exist with the right capabilities to ensure information systems function optimally, that the right strategic partnerships are in place to optimize the strategic value of IS, and that employees within the accounting / finance function and throughout the organization continuously upgrade their technology skills and keep up with digital technologies.

14. Identify 5 actions that accountants can take to improve the effectiveness and efficiency of information systems at their organization There are almost an unlimited number of actions that accountants can take including cultivating and keeping their accounting related digital technology and information systems competencies up to date, cultivating and keeping their strategic technology competencies up to date, effectively fulfilling one or more critical information systems roles (e.g., business analyst, systems analyst, systems administrator, systems auditor), effectively reporting on the status of information systems efficiency and effectiveness, effectively reporting on information systems efficiency and effectiveness improvement opportunities, building highly collaborative relationships with technology and procurement teams / functions, and building sufficiently deep technical knowledge of key software systems and technologies critical to their organisations’ strategy and operations.

15. Identify 5 actions that accounting and finance managers can take to improve the effectiveness and efficiency of information systems at their organization Accounting and finance managers can ensure that the right digital technologies are used by accounting / finance teams, that the right operational and strategic processes are in place to ensure efficient and effective use of digital technologies by accounting and finance teams as well as the wider organisation, that the accounting team plays a leadership role in ensuring organization - wide processes leverage digital technologies for optimal efficiency and effectiveness, that the accounting team effectively partners with managers and leaders throughout the organization to ensure the right job roles exist with the right capabilities to ensure information systems function optimally, that the accounting team partners with leaders and managers within the technology and procurement functions to ensure the right strategic partnerships are in place to optimize the strategic value of IS, and that accounting and finance team effectively supports managers to ensure that employees throughout the organization continuously upgrade their technology skills and keep up with digital technologies.

Chapter 3: Digital Technology Advancements and Digital Disruption: Game Changing Opportunities and Existential Threats Digital Technology Advancements and Digital Disruption 1. What is the difference between the terms digital disruption, disruptive technology, and disruptive innovation?

The term disruption refers to preventing something (e.g., routines, processes, events) from continuing as usual, or as expected. Put another way, it refers to interrupting the normal course of action, or throwing the status quo into disorder.

Digital disruption refers to digital technology-induced disruption. A disruptive

technology is a technology that significantly changes or disrupts the behaviours, routines, processes of consumers, organisations, industries and or societies. The term disruptive innovation describes how a new product / service (e.g., a digital technology product) initially takes root through simple / cheaper or more accessible applications at the bottom of a market (e.g., use of Netflix mail / online video rental) before moving upmarket to displace established products / services and competitors (e.g. Netflix displacing video rental companies like Blockbuster).

2. How do digital technology advancements cause disruption?

The introduction of new digital technologies or breakthroughs in existing digital technologies enables the use of these digital technologies to do things differently or more efficiently and effectively. This prevents business routines / processes / events from continuing as usual, or as expected for organisations that want to remain competitive. For example, the introduction of online search engines and GPS meant

that businesses that wanted to remain competitive had to reconfigure their routines / processes away from use of physical map books and encyclopedias to use of search engines and GPS.

3. What are the three types of disruption caused by the introduction of new digital technologies or breakthroughs in existing ones?

The three types of disruption driven by the introduction of new digital technologies or breakthroughs in existing ones are: disruption of consumer or customer expectations and behaviors, disruption of the competitive landscape and bases of competition, and disruption of available data.

4. What are the different ways digital disruption manifests itself in an organization’s financial performance?

Some examples of the different ways digital disruption can manifest itself in financial performance include declining revenue, falling product / service prices, diminished availability of product / service input suppliers, loss of talented staff / growth in staff turnover, challenges accessing funding, declining gross margins, and diminishing ability to pay bills as they fall due.

5. Which digital technology advancement has had the most disruptive impact on the accounting profession in the last 10 years?

A range of technologies and impacts can be discussed here. For example, the mobile and cloud computing technologies (e.g., these have enabled cloud accounting), the internet and internet of things (e.g. these have enabled process automation and process intelligence), data management / data analytics / data science technologies (e.g. these have enabled sophisticated analytics capabilities, sophisticated visualization and engagement capabilities), XBRL related technologies

(e.g. these have enabled smarter, more detailed, and more engaging reporting), and more.

6. Which digital technology trend is likely to have the most disruptive impact on the accounting profession in the next 10 years?

A range of digital technologies can be discussed here including Big Data / Data Analytics / Data science technologies, cognitive computing / artificial intelligence / RPA (e.g. enable more and more things and processes to become smart and autonomous), Internet of things / Internet of everything (e.g. enable more and more things and processes to be connected almost all of the time), blockchain / distributed ledger technologies (e.g. smart contracts, immutable records), and network connectivity technologies (e.g. these technologies can impact the extent, and speed of IoT and IoE pervasiveness within organization processes).

Digital Disruption: Game changing Opportunities and Existential Threats 7. What are the three common types of game changing opportunities that can be seized by leveraging digital technology advancements?

The first type of game changing opportunity is leveraging digital technologies to introduce new or significantly enhanced products and services that meet or that exceed customer expectations. The second type of game changing opportunity available to proactive organizations is leveraging digital technologies to bypass intermediaries and interact directly with consumers, to enhance collaboration and coordination between strategic partners in the value chain, or to create and manage an ecosystem-based business model. The third type of game changing opportunity available to organizations is leveraging digital technologies to improve their adaptability, agility and ambidexterity. We defined adaptability in the previous chapter as the ability to reconfigure routines, processes and practices to suit the demands of unexpected internal and external changes.

8. What is the difference between adaptability, agility and ambidexterity?

Adaptability is the ability to reconfigure routines, processes, and practices to suit the demands of unexpected internal and external changes. Agility is the capacity for flexibility and speed in sensing and responding to external changes. In contrast to adaptability and agility, ambidexterity is concerned with having processes to ensure existing process efficiency in parallel with processes to undertake exploratory activities so as to discover new products and services.

9. How can an organization use digital technologies to enhance its adaptability?

Adaptability is ability to reconfigure routines, processes and practices to suit the demands of unexpected internal and external changes. Organisations can leverage digital technologies to put in place routines / processes / practices that are most adaptable to external change. For example, leveraging digital technologies to become a digital business and an artificial intelligence business can enable organisations to have digitalised and intelligent processes able to effectively anticipate or sense pending changes before competitors, to respond to the changes faster than competitors, and to capitalise on the gains from knowing first and responding first to improve future adaptability.

10. How can an organization use digital technologies to enhance its agility?

Agility as the capacity for flexibility and speed in sensing and responding to external changes. Companies like Google, Amazon, and Intel have leveraged sophisticated data analytics as well as their Google Ventures and Intel Capital arms, to improve their ability to spot pending disruptive events and technologies, and to be in a position to respond to those disruptive events and technologies fast. This has enabled them to be able to continuously adapt and thrive in high technology industries characterized by an extraordinary rate of change, unpredictability, growing convergence and a never-ending assault on technology standards.

11. How can an organization use digital technologies to enhance its ambidexterity?

Ambidexterity is concerned with having processes to ensure existing process efficiency in parallel with processes to undertake exploratory activities so as to discover new products and services. For example, for a long time, Intel has operated strategic and operational processes to enable both efficiency and exploratory activities. Efficiency activities have enabled Intel to maximize revenue and profitability from its existing products and processes. At the same time, exploratory activities have enabled Intel to discover the next breakthrough products prior to the decline of their existing core products. Organisations can leverage digital technologies to more efficiently and effectively facilitate and manage both efficiency and exploration processes. For example, through digital innovation, digital customer service, digital risk management, digital business strategy, digital leadership, digital governance).

Implications for Accountants

12. What is the role of accountants in guarding against digital disruption at their organizations?

Accelerating digital technology advancements will continue to raise customer expectations and change customer behaviors, to introduce new competitors and raise the capabilities of existing competitors and to change the bases of competition.

To remain professionally relevant and ensure their organizations’ continued existence, accountants must keep up with evolving digital technologies, find ways to leverage them to speed up efficiency and effectiveness of accounting value creation, and continuously find ways to more effectively partner with leaders and managers to ensure the organisation continues to satisfy changing customer expectations, to counter changes in competitor capabilities, and to adapt to unexpected changes in the external environments. Accounts can do this through specialist accounting roles such as the co-pilot, the navigator, the process and control expert, the digital and technology enabler, the data navigator, the digital playmaker, the business transformer, and the sustainability trailblazer.

13. In an entry level role, what can an accounting graduate do to contribute to the adaptability, agility and ambidexterity of their organization?

The responses here are only limited by one’s imagination and proactiveness.

Examples of things entry level accountant can do include: - They can educate themselves about adaptability, agility and ambidexterity so they

can understand and effectively support strategic leaders’ adaptability, agility, and ambidexterity efforts.

-They can educate themselves about different digital technologies and continue to make sense of evolving digital technologies.

-They can explore how different digital technologies can be used within day-to-day workflows / processes at their organisation.

-They can seek the support of their line managers and strategic leaders to experiment with the introduction of different digital technologies at their organisations.

-They can also seek out digital leadership competency development opportunities (e.g., opportunities to lead digital projects within and outside their organisation).

-They can experiment with contemporary and emerging accounting technology tools

in order to become expert users of these tools within accounting teams.

Chapter 4: Digital Business, the Digital Business Imperative, and Digital Business Transformation Digital Business 1. What is the difference between the terms digital transformation and digital business transformation?

The term digital transformation is broadly used to refer to digitization (e.g. converting information into digital format), digitalization (leveraging digital data to facilitating / improving processes), and leveraging digital technologies to redesign processes. It is often used to discuss digital changes to a single process, activity or event, or to a collection of processes / activities / events. Given these diverse uses, it’s meaning is ambiguous.

In contrast to digital transformation, the digital business transformation has a more clear and specific meaning. Digital business transformation refers to the change process involved in becoming a digital business. This change process involves: • structural changes (e.g. business units, leadership roles, reporting relationships), • cultural changes (e.g. enabling beliefs, attitudes, and behaviours), • Capability / Competency changes (e.g. digital technology skills, digital business skills, accelerated change methods), and • Digital infrastructure changes (e.g. technology infrastructure / architecture, digital technology tools) 2. What is the difference between the terms digital business and digital business transformation?

Digital business is the use of digital technologies to facilitate business models and processes and to offer digital or digitally enhanced products / services.

Research firms Forrester puts it another way by proposing that digital business is

the use of digital assets and ecosystems to continually improve customer outcomes while, at the same time, continuously increasing operational agility.

And research firm Gartner puts it yet another way by proposing that digital business is the creation of new business designs by blurring the digital and physical worlds.

3. Which of the definitions of digital business transformation provided above makes the most sense to you? Why? Response to this will vary from individual to individual. To the authors, “…the definition of digital business transformation as the change process involved in becoming a digital business” makes the most sense as it recognizes that digital business transformation is not just about technologies (e.g. technology infrastructure / architecture, digital technology tools), but also involves structural changes (e.g. business units, leadership roles, reporting relationships), cultural changes (e.g. enabling beliefs, attitudes, and behaviours), and workforce capability / competency changes (e.g. digital technology skills, digital business skills, accelerated change methods).

4. What does the common assertion that “digital transformation is not about technology” mean?

It means that digital business is not just about changes to the digital technologies used (e.g. technology infrastructure / architecture, digital technology tools). It is

also about changes to an organization’s strategy (e.g. business models, bases of competition, strategy execution, adaptability and agility), changes to its structure (e.g. organization hierarchy, business functions, roles and responsibilities), changes to its processes (e.g. operational, functional and strategic processes), changes to its workforce at all levels (e.g. hiring and retention choices, roles and responsibilities, hire and cultivate appropriate competencies, attitudes and behaviors), and changes to its culture (e.g. collective attitudes and behaviors)

5. Are any businesses you know of fully digital businesses? If not, what can make them fully digital businesses?

It’s difficult to say what “fully digital” means as digital business capability or digital business maturity is an evolving continuum. On one end are digital natives like Google, Amazon, Microsoft and Apple, who are very advanced in their digital business capabilities and functioning – and can be considered the closest approximation to “fully digital”. On the other end of the continuum are businesses either turning a blind eye to advancing digital disruption or realizing the need for change but moving glacially to digitize, let alone digitalize most of their processes. An organization can be anywhere along this continuum. However, the final goalposts are constantly shifting with advancements in digital technologies.

6. Once an organization becomes a digital business, does it have any need for digital transformation?

The digital business maturity goal posts (i.e., optimal digital business capability or digital business maturity future states) are constantly changing and changing at a faster and faster rate, we contend that digital business transformation is a constant and never-ending practice. This is not to say that digital business transformation cannot be undertaken at different paces over time; for example, dynamically balancing between significant / rapid digital business transformation efforts less significant / slower / more incremental but continuous transformation

efforts.

7. What is meant by the assertion that digital business is “...a change process or a journey”?

This assertion refers to the view of digital business as a journey or process of change (i.e., considers what activities a business should undertake, and in what sequence, in order to become a digital business, to realize the promise of digital

business, or to avert the dangers of not becoming a digital business). Such discussed required changes have included digitalizing stakeholder interactions/communications, business processes, business functions, and business models (i.e., turning them into more digital ones), and then connecting and integrating them internally and externally, and with digitalized things internal and external to the organization. Digital business change activities have also included enhancing the sensing (e.g. using sensors), computational capacity (e.g. computation speed, sophistication), connectivity (e.g. connection speed, strength, distance, reliability), intelligence (e.g. using data analytics, data science, artificial intelligence), autonomy (e.g. applications and things that can sense, make decisions, and take corresponding action independently, without human intervention), and scalability of business models/processes/technology platforms (e.g. being able to serve many more customers around the world quickly and at acceptable cost and risk). More recently, digital business change activities have also included activities such as enhancing customer engagement across a range of platforms and channels (e.g. desktop, mobile, social, video, IoT, video), and building digital strategy and digital innovation capabilities to be able to better sense, adapt to, and capitalize on new customer expectations and preferences.

8. What is meant by the assertion that digital business is “... a future state”?

The view of digital business as a future state considers how an organization should function once it becomes a digital business, and what characteristics or

capabilities it should have in order to function this way. Such characteristics and capabilities discussed to date include having a frictionless operating system (e.g. one that delivers easy communication/inter- action/engagement and collaboration across the value chain and between internal and external stakeholders);12 having a competitive digital platform strategy13,14 (e.g. one that enables rapid value delivery, enables other stakeholders’ technologies or platforms to integrate/interact with the digital platform in a simple “plug and play” manner,

enables easy self-service access to data insights, enables stakeholders to run value creation improve- ment experiments safely, and ensures consistent/dependable customer experience); and designing products and customer experiences based on value as defined by the customer (e.g. leveraging technology to be where customers are, to do things with them, to walk in their shoes, and to understand their preferences and habits). The characteristics and capabilities of a digital business include intelligence-driven decision making or weaponization of data for competitive advantage (e.g., collecting, storing, cleaning, curating, featurizing, modeling, productionalizing, and leveraging to support operational and strategic execution). An increasingly discussed characteristic or capability of digital businesses is combining technical excellence and an engineering culture that gets things done/delivered (e.g., upgrading engineering skills and capabilities to world-class level and cultivating an engineering culture that enables engineering to be more integrated into the business).

9. What are the top 4 benefits of being a digital business? Why are they more important than other benefits?

What are considered the top four benefits can vary from person to person.

Examples of top benefits people might identify include:

- From a customer perspective, they expand their ability to engage with their customers, understand them, have an expanded understanding of their needs

and preferences, offer them better value, and be able to enter other markets to acquire new customers.

-From a product perspective, digital businesses are better able to identify and act on new product / service / value delivery opportunities or to digitally enhance existing products / services.

-From an operations perspective, digital businesses can realize efficiency and effectiveness breakthroughs that non - digital businesses can’t dream of (e.g., a

non - digital business couldn’t dream of the speed - to - market, employee productivity, process efficiency or asset utilization of, say, Amazon or Google).

-From a strategy perspective, digital businesses are able to employ novel, highly agile and highly scalable business models (e.g., marketplaces, ecosystem platforms), are able to unbundle offerings to offer customization / remove nonvalue adding aspects of a product (e.g., so customers can buy the one song they like for $2 instead of a whole album they won’t listen to for $30), and are able to unconstrain supply (e.g., have access to all suppliers rather just a few).

-From a decision-making perspective, digital businesses are able to access massive amounts of data from within and outside of the firm, they are able to optimally manage and use this data to make better and faster decisions (e.g., through access to real time insights). In doing so, they weaponize data and make it a strong competitive capability.

-From a technology infrastructure perspective, digital businesses are able to assemble and integrate hardware, things, networks, software and platforms to enable them to function optimally as a digital business.

-From a people perspective, digital businesses have enough people in the organization with the right digital mindsets (attitudes and behaviours) and skills (e.g., digital technology, digital business and communication / influence skills) to effect a digital business culture (collective appreciation of the importance and urgency of becoming a digital business).

The Digital Business Imperative

10. What is the digital business imperative?

The digital business imperative is a four-pronged ultimatum for businesses. The first such ultimatum is to guard against and have the capacity to adapt to disruption (e.g. like Intel, Disney, and Caterpillar) or face certain death. The second is to become a digital business, and realize the promise of digital business, or become sidelined by competitors who do so (ultimately leading to

certain death). The third is to continuously and sufficiently upgrade and leverage digital business capabilities to become the disruptor, or still risk disruption from companies with superior digital business capabilities. This is in spite of being a digital business. Finally, even though businesses may initiate efforts to guard against disruption, to build their capacity to adapt to disruption, to become digital businesses, and to leverage their digital business capabilities in order to become a disruptor, if they can’t do it fast enough (relative to the speed of technology changes and or the speed of existing competitors and new entrants), they may still risk disruption and death.

11. People often talk about digital business imperative and digital transformation imperative. Are these the same or different?

The terms digital business imperative, digital transformation imperative, and digital imperative are often interchangeably used to interchangeably to refer to the digital business imperative.

Digital Business Transformation 12. What are some challenges and risks of digital business transformation?

In general, such all-encompassing change and transformation efforts like digital business transformation have a low success rate. McKinsey points out that the success rate of digital transformation efforts is about 16%. Digital business

transformation risks can refer to the potential negative impacts of unsuccessful digital transformation efforts (e.g. financial risks due to resources consumed in transformation efforts, talent risks from key staff departing failing innitiatives, cybersecurity risks from incomplete or ill-conceived technology changes). Digital business transformation risks and challenges can also refer to potential causes of failure in digital transformation efforts. Examples of these include unspoken disagreement among senior managers about the goals and approach to digital

transformation, organizations not having the supporting digital capabilities to support the transformation (e.g. appropriately skilled people, technology infrastructure), lack of a clear strategy and CEO sponsorship of it, falling into the “let's wait and see” trap, not understanding what needs to change and how to go about it, challenges getting the right technology and or the right talent to operate it, employee resistance to change or efforts to undermine the change, obsession with technology tools that don’t meaningfully improve customer value, not changing fast enough, challenges sourcing top talent (e.g. technology leaders, digital strategists, designers, DevOps engineers, data scientists, artificial intelligence specialists etc.) and not dealing with employee’s fears of being replaced.

13. What is the success rate for transformation efforts in general? What is the success rate for digital transformation efforts? Why is the success rate for digital transformation efforts much worse?

In general, all-encompassing change and transformation efforts like digital business transformation have a low success rate, with management consultancy firm McKinsey estimating this success rate at about 30%. This means up to 70% of such change and transformation efforts fail to deliver. McKinsey further points out that the success rate of digital transformation efforts is even lower, at about 16%. This is in addition to the challenges of undertaking structural changes (e.g., business units, leadership roles, reporting relationships), cultural changes (e.g., enabling beliefs, attitudes, and behaviors), capability / competency changes

(e.g., digital technology skills, digital business skills, accelerated change methods), digital infrastructure changes (e.g., technology infrastructure / architecture, digital technology tools) are notoriously difficult (e.g., beset by a constant assault on technology standards, integration and interoperability challenges, security and privacy challenges).

14. What are two important implications of digital business and digital business transformation accountants?

One important implication is that accountants can play a critical business partnering, information provision, risk management, and assurance roles in digital business transformation and digital business. For example, they can ensure that the best decisions are made based on relevant and credible data, they can ensure that smart investments in enabling technologies and digital tools are made, they can ensure that safe business model changes and process redesigns occur, and they can ensure that the growing transformation (or lack of transformation) risks are managed effectively. This is part of their emerging roles as co-pilots (e.g. change facilitators and strategy execution facilitators), navigators (e.g. strategic foresight, agility, and sustainable profitability enablers), brand protectors (e.g. risk managers and stewards), storytellers (e.g. helping managers understand the story behind the data), trusted professionals (e.g. ensuring ethical and responsible risk-taking), process control experts (e.g.

supporting effective process and workflow redesign), and digital business and digital technology enablers (e.g. enabling digital technology adoption and digital business transformation). Given this vital position they occupy and the roles they can play, they are critical to the success of digital transformation efforts. A second implication is that through their actions (or lack of action) they can significantly enhance the chance of success or significantly derail the chances of success of digital business transformation efforts.

15. What are 5 things accountants can do to maximize their organizations’ odds of succeeding at digital transformation?

To maximize their organizations’ odds of succeeding at digital business transformation, accountants can develop their digital business / digital transformation competencies and then leverage these competencies to support organization digital business transformation efforts.

To develop these competencies, accountants can undertake ongoing groundwork to understand and keep up with digital technologies (e.g. cloud, IoT, Ai, blockchain, robotics, drones, LPWAN, LEO satellites, etc.), to understand and keep up with digital business and digital transformation (e.g. digital business characteristics, digital business strategy, digital business models, digital innovation practices, successful digital transformation approaches and practices, digital transformation leadership roles and responsibilities, etc.), and to understand relevant accelerated change and transformation methodologies (e.g. agile, lean, change management). They can then build digital technology, digital business, and digital transformation competencies (e.g., deep and broad technical technology and data skills, strategic technology skills, digital leadership skills, strategic thinking skills, cross functional leadership and change management skills, etc.). Further, they can build informal networks vertically and across the organization that are important for accelerating strategy execution and change / transformation efforts.

Having done the ongoing groundwork to develop the aforementioned digital technology, digital business, and digital transformation capabilities, accountants can then leverage these competencies to accelerate and improve the odds of success for digital transformation efforts. For example, they can use their digital transformation and digital business knowledge and skills to support managers to cultivate the digital business and digital transformation competencies of their direct reports; and of other people across the organization. They can support managers to shape appropriate digital business and digital transformation attitudes and behaviors, thus helping nurture the digital culture to support digital business transformation efforts. They can support managers to ensure the hiring of direct reports and other employees with appropriate digital business and digital transformation attitudes and skills. They can leverage their digital business and digital transformation knowledge / skills to take on and successfully carry out one or more key digital transformation leadership roles (e.g., chief digital officer, project / program manager, operating model lead, customer engagement lead, digital product manager, ethics compliance lead, UX designer, change and transformation specialist, digital risk manager, etc.). Or they can support such leaders to ensure they successfully fulfil those roles. They can leverage their informal networks to accelerate implementation of transformation initiatives, and to encourage functional and frontline staff to understand and accept transformation-related changes. Finally, they can leverage their technology and data skills to work hand in hand with technologists, operational and functional leaders, and senior executives to accelerate transformation efforts while limiting the associated risks.

Chapter 5: Digital Disruption and Digital Transformation of Accounting 1. How do digital technology advancements indirectly disrupt accounting work?

Digital technology advancements indirectly disrupt accounting work through the digital disruption of organizations. I.e., digital disruption of organizations results in greater or different expectations of organization leaders and managers, which in turn results in them having greater or different expectations accountants. Effectively adapting to digital disruption and competing as a digital business requires organizations to undertake digital business transformation (i.e., to reconfigure their infrastructure, strategic processes, business models and operational processes). But doing so is challenging and comes with significant risks. Accounting stakeholders (e.g., management teams, governance teams, regulators, communities) expect accountants to play a greater role in helping them navigate these challenges, and in effectively managing the risks associated with digital business transformation. This requires accounting practice to change in line with these expectations or to risk losing relevance.

2. What are the different ways digital technology advancements directly disrupt accounting work?

Digital technology advancements directly disrupt accounting practice occurs through: ▪

Disruption of data available to accountants and others within or outside the organization

▪

Disruption of tools used to perform accounting work

▪

Disruption of the type of value accountants are able to create

▪

Disruption of the optimal ways to perform accounting work

▪

Disruption of the competencies required to perform accounting work

3. What are the different ways digital technology advancements disrupt the accounting value proposition?

The accounting value proposition refers to the capacity of accounting to provide accurate, relevant, reliable, timely, and useful information to suit the conscious and unconscious information needs of a range of decision makers. The accounting value proposition is typically delivered through the accounting functions of financial accounting, management accounting, audit, tax, AIS, and business partnering / advisory. Digital technology advancements disrupt the accounting value proposition in a range of ways, for example: ▪ ▪

They influence or change accounting stakeholders’ perceptions of the value of the accounting value proposition, and the roles of accountants in this value proposition They influence or change accountants’ ability to fully deliver on the accounting value proposition or aspects of it (e.g., by constantly shifting accounting stakeholders’ information needs and expectations of accountants).

▪

They introduce new challenges for realizing the accounting value proposition.

For example, growing risk exposures as well as growing data volume, velocity, and variety create information assurance challenges for accountants.

▪

They change accountants’ value creation capacity (i.e., digital technology tools can equip accountants with the ability to create more and better value for accounting stakeholders. But accountants lacking the skills to use them may find themselves having reduced value creation capacity).

▪

They disrupt what processes accountants need to perform within accounting functions and how these need to be performed.

4. What are the different ways digital technology advancements disrupt the management accounting function?

Digital technology advancements disrupt management accounting in four key ways:

(1) They disrupt the information needs and expectations of management accounting stakeholders.

E.g. Stakeholders need information about digital disruption opportunities and threats, effective digital business model designs, effective digital business process configurations, digital transformation effectiveness, digital risk exposures, and effectiveness of digital business capabilities such as digital stakeholder engagement, digital customer service, digital innovation, and organizational agility.

Accountants expected to play a greater role in these expanded information needs.

(2) They disrupt management accountants’ data analysis activities.

E.g. by expanding the data available to management accountants (i.e. volume, variety, velocity of data), the methods available / required to analyze data. (e.g. data science and machine learning methods), and the tools available / required to manage and analyze data (e.g. data management tools like Oracle Data Management Suite, data analytics tools like R programming language, and data mining tools like RapidMiner).

(3) They disrupt the way management accountants present and communicate information.

E.g. by introducing new information presentation and communication tools (e.g. data visualization tools, data translation tools, data transfer tools). These tools increasingly enable anywhere, anytime, real-time, automated, customizable and omnichannel communication / presentation of information.

(4) They disrupt the tools used for management accounting work

E.g. responsiveness to stakeholder information needs, greater ability of stakeholders to interact with data provided by management accountants, and greater customization of information provided by management accountants to the digital channel / device / sensory preferences of stakeholders

5. What are the different ways digital technology advancements disrupt the tax function?

Digital technology advancements disrupt tax accounting in three key ways:

(1) They disrupt the tools used for tax accounting work.

E.g. By introducing new or enhanced tools that enable tax function activities to be carried out much more efficiently and effectively.

E.g. data analytics tools can be used to carry out tax payable calculations, to perform tax account reconciliations, and to perform income tax reviews much faster than a human can. Predictive analytics and data visualization tools can be used in tax planning to automatically show tax payable under different scenarios and thus highlight optimal tax strategies. And machine learning tools can be used to identify non-compliant or fraudulent tax information prior to submission to authorities

(2) They disrupt tax compliance processes As regulators leverage digital technologies to improve the efficiency and effectiveness of their compliance enforcement activities, they end up redesigning / reconfiguring compliance processes E.g. The SAF-T (Standard Audit File for Tax), an attachment to the corporate income tax return, is increasingly being adopted by tax authorities in many countries as a way of allowing them to automatically perform advanced data analytics on an organization’s tax data in case of a tax audit.

(3) They disrupt tax accounting stakeholder expectations Given the availability of sophisticated digital technology tools, tax accountants’ stakeholders increasingly expect more E.g. They they expect tax accountants to be able to anticipate tax law changes and their implications for tax payable (e.g. by mining web content or tax law-related datasets and spotting emerging tax law issues and proposed legislation), to identify compliant / optimal / sustainable tax strategies, to leverage real-time internal and

external data to shape realization of tax policies / plans / strategies, and to perform tax function activities much more efficiently and effectively

6. What are the different ways digital technology advancements disrupt the audit function?

Digital technology advancements disrupt auditing in six key ways:

(1) They disrupt data available to auditors E.g. by by enabling access to new data (e.g. big data, IoT data, search engine data, social media data), as well as better access to existing data (e.g. enabling automated analysis of text data within legal contracts or of email conversations and video recordings).

Auditors can leverage this expanded internal and external data to improve their analysis and testing activities, and therefore the issues / risks they are able to discover and the level of assurance they are able to provide

(2) They disrupt the methods and tools that can be used to carry out auditing activities E.g. they introduce more sophisticated and powerful methods and tools E.g. They introduce robotic process automation and intelligent automation tools that can be used to automate structured and routine auditing tasks (e.g. collecting data, filling in planning worksheets, sending follow reminders to relevant stakeholders to forward required information, simulating the actual

execution of tasks for observation, doing physical inventory checks using drones / IoT devices / AI algorithms). And process mining tools can be used to analyze business processes for internal control effectiveness (e.g. analyzing event logs to check for segregation of duties, sequencing of events, personnel involved, and any event omissions).

(3) They disrupt the audit process and corresponding audit activities

E.g. by changing the roles and activities auditors have to perform and how they perform them E.g. one way they do this is by taking over certain auditing activities and doing them better (e.g. with robotic process automation taking over structured, routine, and repetitive tasks) – thus enabling auditors to focus on move value added roles and activities.

(4) They disrupt the risk landscape within and outside of an organization E.g. They do this by introducing new or more severe cybersecurity, information privacy, and digital ethics risks Thus, they make it more challenging for auditors to assess the risks of material misstatement. For example, how do auditors assess the risk that financial statements are incorrect due to hacking, or due to bias in AI models used by the organization, or due to unethical collection and use of data by the organization?

(5) They require auditors to audit new digital technology tools and / or their use within organizations.

E.g. internal auditors may have to audit high-stakes AI decision models and tools for errors or bias

(6) They expand assurance possibilities E.g. By leveraging time freed up by digital technologies taking over necessary but low value-added tasks, as well as leveraging the expanded power of digital technology tools, auditors can focus on higher value-added tasks and create

more impactful value E.g. auditors can better prepare organizations’ stakeholders to spot and prevent emerging risks (e.g. by giving them access to and teaching them how to use the same digital technology tools used by auditors or providing them with chatbots to help deal with risk-related issues)45. Auditors can establish real-time automated and continuous risk detection, alert, and correction accountability systems

7. What are the different ways digital technology advancements disrupt the AIS function?

Digital technology advancements disrupt AIS in four key ways:

(1) They disrupt data availability and stakeholder expectations.

Since far more internal and external data is available and / or able to be captured, there is the opportunity, and stakeholder expectation, that this data is able to be used in accounting roles, activities, and outputs (e.g. via accounting information systems applications such as data visualization tools, and via data stores and data lakes accessible by accounting information systems).

(2) They disrupt the number and types of internal and external applications and tools that require integration with AIS I.e. they dramatically increase the number and types of systems and applications and tools needing to integrate.

Examples of these applications and tools may include mobile apps, data science apps, timesheet apps, executive and operational dashboard apps, IoT apps, and AI apps. The expansion in the number of hardware and software tools needing to interface with accounting information systems expands the AIS function’s involvement in organization-wide systems integration, data management, and systems architecture activities.

(3) They disrupt the exposure of AIS to digital risks The expanding and increasingly dynamic risk landscape expands the importance of the AIS team’s responsibility and requirement to ensure that cybersecurity, information privacy, and digital ethics risks associated with AIS are identified, mitigated through effective controls, and their negative impacts minimized

(4) They disrupt the need for adaptability and agility of AIS.

Owing to more frequent and larger scale digitally-driven as well as non-digital disruptions (e.g. the GFC, Covid-19), organizations need to be able to rapidly reconfigure their processes to adapt to disruptions

This requires information systems that can rapidly be scaled, integrated, made available in different settings (e.g. at work, at home, globally, online, offline), reconfigured to fit different architectures, and more. Since AIS are no exception to this, the AIS function needs to ensure that AIS choices evolve with digital technology advancements to optimize their adaptability and agility.

8. What are the different ways digital technology advancements disrupt business partnering and advisory function of accounting?

Digital technology advancements disrupt business partnering / advisory in four key ways:

(1) They disrupt the nature of the challenges faced by managers and leaders E.g. Owing to digital transformation and digital business imperatives, the key challenges for managers relate to effectively undertaking digital business transformation, building and optimizing digital business capabilities, and effectively competing as a digital business.

Thus managers and leaders expect more of support from accountants The business partnering / advisory function can expand its value creation by supporting managers to see and understand opportunities and risks, helping

them to source and use the right digital technologies and tools, helping them understand the risk and implications of different IS architectures, helping them understand how they can safely be both fast and adaptive, helping them automate and optimize business processes, helping them identify and control cybersecurity and digital ethics risks, and helping them sustain and optimize digital capabilities

(2) They disrupt the data and tools available to business partnering / advisory teams E.g. business partnering and advisory teams can leverage greater access to internal data, greater volumes of big data, and sophisticated digital technology tools to offer data-driven support (e.g. combining big data, search engine data, and internal data to provide effective strategic sensing dashboards that provide early warnings of emerging strategic risks and opportunities).

The expansion of data availability and data analytics tools also enables business partnering / advisory teams to help leaders and managers understand what data is available and how to make the most of it.

(3) They disrupt the analysis techniques and implementation frameworks used by business partnering and advisory teams They do this by amplifying the number, speed, and scope of disruptions. Thus requiring organisations to change, transform, execute faster and faster.

This need for speed in change, transformation, and strategy execution efforts requires accelerated change and transformation techniques and methodologies.

Examples of these methodologies and techniques include design thinking, agile innovation, lean thinking, sense making, and agile strategy execution.

(4) They introduce new business partnering and advisory collaborators or competitors E.g. internal and external data scientists, futurists, specific methodology service providers, and AI algorithms. As a result, to remain relevant, business partnering and advisory teams need to maintain their practices and the resultant value

creation at a competitive level.

9. How can digital technologies transform financial reporting from static information provision to active engagement?

digital technology advancements disrupt the usability and engagement of financial statements. For example, we discussed earlier the benefits of XBRL-based reports for

expanding the amount of information that can be provided. XBRL-based reports also enhance the usability of reports by enabling report users to interact with the reports (e.g. to drill down, roll up, slice and dice, and benchmark reported information or to transfer that information to different accounting applications or different data visualization applications). In doing so, they shift financial reporting from static reports to active engagement tools.

10. What is a future fit accountant according to the International Federation of Accountants (IFAC)?

Acknowledging that the nature of organizational work and the nature of accounting work was rapidly evolving due to digital technology advancements, in combination with other disruptive trends, IFAC tapped into the experiences of business and finance leaders on its Professional Accountants Business Committee, as well as those of key accounting stakeholders (e.g., boards, CEOs, executive and operating management teams), to identify the key accounting roles required for the next decade. The seven “future-fit” roles identified by IFAC included the co-pilot, the navigator, the brand protector, the storyteller, the trusted professional, the process and control expert, and the digital technology enabler. Future fit accountants are accountants with who cultivate the right knowledge, skills, and abilities to enable them to effectively perform one or more of these roles.

11. Identify four changed accounting roles and activities as a result of digital technology advancements.

Owing to digital technology advancements, traditional accounting roles like financial reporting, auditing and assurance, tax compliance / assurance, and business advisory have been disrupted and transformed so as to require accountants to perform new or enhanced activities, to use new or enhanced tools for carrying out those activities, and to perform accounting activities more efficiently and effectively. In addition, a range of new or enhanced accounting roles have emerged, including the co-pilot, the navigator,

the brand protector, the storyteller, the trusted professional, the process and control expert, and the digital technology enabler.

12. Explain what outcomes each of IFAC's seven future fit accounting roles focus on delivering (i.e. the Co-Pilot, the Navigator, the Brand Protector, the Storyteller, the Trusted Professional, the Process and Control Expert, the Digital and Technology Enabler).

The Co-pilot - focuses on accelerating change facilitation / strategy execution

The Navigator - focuses on optimizing strategic foresight / agility / sustained profitability

The Brand Protector - focuses on optimising risk management and brand stewardship

The Storyteller - focuses on optimizing communication / engagement

The trusted professional - focuses on optimizing ethics and responsible risk taking

The process and control expert - focuses on optimizing process/workflow redesign

The digital technology enabler - focuses on enabling digital business transformation and the building of digital capabilities

13. How do digital technology advancements disrupt data availability? How does the

disruption of data availability create competitive threats and relevance risks for the accounting profession?

Digital technology advancements enable significant increases in the nature and volume of data available to organizations, to their customers, and to their competitors. From a customer perspective, customers have push button access to almost all available offerings, prices, deals and discounts, reviews and ratings,

media coverage and much more. They also have push button access to information about what experience and value organizations should be able to offer. This ready accessibility to information places significant power in the hands of customers and pushes organizations to provide competitive value and experiences that live up to expectations. If they don’t, they risk falling to the bottom of the competitive heap and risk negative online brand reviews that may compound the situation.

Similarly, digital technology advancements enable competitors to collect an unprecedented level of information on customer demographics, customer preferences, customer experiences, customer moods and emotions, customer journeys, customer aspirations, customer wealth, customer spending patterns, customer social and professional networks, and more. Competitors can leverage data analytics and artificial intelligence technologies to weaponize this data. That is, use it in such a way as to drive optimal strategic and operational decisions about business and revenue model design and about how to best create differentiated customer value. For example, AirBnB has built a massive data set on travel characteristics (e.g. guests, destinations, hosts, accommodation sites, travel durations, online behaviors, satisfaction levels, host interactions and more). It leverages this massive dataset as a formidable strategic weapon its industry (e.g. to drive cost leadership, differentiation, product / service innovation, pricing, accommodation site availability, host management, guest management etc.).

The explosion and continuing exponential growth in data volume and variety provides the opportunity to significantly improve the breadth, completeness,

reliability, and usefulness of information provided for decision making. But this requires accountants to: -

Understand different types of data and the value of these data to organisations be able to integrate disparate datasets in order to draw out deeper and more meaningful insights

-

Be able to analyze the different types of data (e.g., structured data, unstructured data, machine data, video and image data)

-

Be able to leverage all this data for real - time prescriptive and predictive insights

-

Be able to communicate insights from such voluminous and diverse data sets to a variety of stakeholders (e.g., discussing it, visualizing it, making it engaging, making it interactive, making it customizable).

The explosion and continuing exponential growth in data creates new and expanded threats for accountants including: -

Expanded and everchanging stakeholder expectations that are more challenging for accountants to meet

-

A greater ability of accounting stakeholders to cross check / audit information provided by accountants (e.g. they have access to the same data and sophisticated analytics tools). Thus a greater pressures for accountants to ensure the information they provide can stand up to scrutiny, both in appearance and in substance.

-

The introduction of competitors in the information provision and trusted advisor role (e.g. data scientists, data analytics experts, data management experts, external data analytics entities, autonomous data analytics algorithms)

Accountants not able to live up to changed and changing stakeholder expectations, not able to create differentiated value from that created by new competitors in the information provision role, and not able to still efficiently and effectively deliver on the core accounting value proposition risk losing relevance within organizations.

14. Identify 3 or more approaches accountants and accounting leaders have taken to

adapt to digital disruption Accountant’s responses to digital disruption have evolved over time from ignoring digital disruption, relegating it to IT/ IS/ technology teams, to underestimating its potential impacts or their potential roles in it, to finally seeing its full implications and engaging in digital transformation efforts. Accreditation, professional body, advocacy, and thought leadership entities like IFAC, the IMA, CPA Canada, the

ASEAN Federation of Accountants (AFA), the Association for Financial Professionals (AFP), and the big 4 accounting firms started by leading consultations and discussions to explore key digital technology advancements, their disruptive impacts, and the resultant implications for the accounting value proposition. They then moved to exploring how accounting functions, roles, and processes needed change in response to digital disruption. More recently, they have been exploring how accountants’ competencies needed to evolve in order for accountants to play critical leadership and support roles in their organization’s digital business transformation.

15. Do you believe accountants and the accounting profession have been successful at adapting to digital disruption, undertaking digital business transformation, and operating in digital business settings?

This is an opinion response, so responses can vary. Students may discuss issues such as: ▪

Where accountants are in their knowledge of digital business transformation and the digital business / digital transformation related competencies relative to other professions or relative to other employees within the organization

▪

Whether the profession’s accreditation, professional body, advocacy, and thought leadership entities have done enough to prepare accountants for digital business transformation

▪

Whether educational institutions have done enough to prepare accountants for digital business transformation

▪

Whether accountants are in a position to actually close the gap between current and required digital technology, digital transformation, and digital business competencies.

16. Is there or can there be an end to digital technology advancements?

Digital technology advancements are not only anticipated to continue, but anticipated do so exponentially.

17. Is there or can there be an end to digital business transformation?

The digital business maturity goal posts (i.e., optimal digital business capabilities or optimal digital business maturity future states) are constantly changing and doing so at a faster and faster rate. Thus, we contend that digital business transformation needs to be a constant and never-ending practice. This is not to say that digital business transformation cannot be undertaken at different paces over time; for example, dynamically balancing between significant / rapid digital business transformation efforts and less significant / slower / more incremental but continuous transformation efforts.

Chapter 6: Impact of Digital Disruption and Digital Transformation on Accountants 1. How do digital technology advancements disrupt accounting work?

Digital technology advancements indirectly disrupt accounting work through the digital disruption of organizations. I.e., digital disruption of organizations results in greater or different expectations of organization leaders and managers, which in turn results in them having greater or different expectations accountants. Effectively adapting to digital disruption and competing as a digital business requires organizations to undertake digital business transformation (i.e., to reconfigure their infrastructure, strategic processes, business models and operational processes). But doing so is challenging and comes with significant risks. Accounting stakeholders (e.g., management teams, governance teams, regulators, communities) expect accountants to play a greater role in helping them navigate these challenges, and in effectively managing the risks associated with digital business transformation. This requires accounting practice to change in line with these expectations or to risk losing relevance.

Digital technology advancements directly disrupt accounting practice occurs through: ▪

Disruption of data available to accountants and others within or outside the organization

▪

Disruption of tools used to perform accounting work

▪

Disruption of the type of value accountants are able to create

▪

Disruption of the optimal ways to perform accounting work

▪

Disruption of the competencies required to perform accounting work

2. Why isn’t a good IT / IS department sufficient, i.e., why do accountants have to develop digital transformation / digital business competencies on top of everything else they have to learn?

Accountants need to play critical roles in digital transformation and digital business (e.g. as co-pilots, navigators, digital and technology enablers, process control and redesign experts, brand protectors, trusted professionals). To effectively play these roles, accountants need corresponding competencies (e.g. competencies such as knowledge of digital transformation and digital business capabilities, data management / data analytics / data science skills, proficiency with relevant change and transformation methodologies / techniques). As a result, digital transformation and digital business competencies cannot just be relegated to the IT/IS function.

3. How do digital technology / digital transformation / digital business competencies enhance the performance of all other accounting roles and activities?

Almost all accounting functions / roles / activities are being digitally disrupted and transformed or are being increasingly carried out using new digital technology tools (e.g. cloud accounting platforms, artificial intelligence tools, data management / data analytics / data science algorithms). Because of this, digital technology / digital transformation / and digital business competencies equip or prepare accountants to be able to effectively work in digitally transformed organizations and functions; and to be able to perform digitally transformed roles and activities. Thus digital technology / digital transformation / digital business competencies enhance the performance of all other

accounting roles and activities. For example, they enhance the efficiency and effectiveness with which both financial and management accounting related roles and activities can be performed.

4. Could an accountant work at a mature digital business like Google or Amazon without digital technology / digital transformation / digital business competencies?

This is an opinion question. But students may make arguments such as: ▪

Yes, if the accountant is doing a very specialist / narrow accounting role that does not require use of sophisticated digital technology tools or using data from across functions / systems / stakeholders.

▪

Yes, if the accountant can learn or be taught these competencies at Google

▪

Yes, but sooner or later they would find themselves constrained by what they aren’t able to do or overwhelmed by the role

▪

No, the lack of digital technology, digital transformation, and digital business competencies would severely limit their performance

▪

No, the accounting function and accounting roles at a digital business like Google would be digitally transformed and require digital technology and digital business competencies to be able to be carried out effectively

▪

It depends on the specific accounting role they are performing, and the extent to which digital technology / digital transformation / digital business competencies are critical to that role.

5. Could an accountant lead the finance function at a mature digital business like Google or Amazon without digital technology / digital transformation / digital business competencies?

This is an opinion question. Students may make arguments such as:

▪

No, the lack of digital technology / digital transformation / digital business competencies would be a serious impediment to their ability to lead. This could be approximated to a manager who knows nothing about accounting leading the accounting function. Perhaps they could get by but would most likely not be highly effective.

▪

Yes, if their accounting and leadership competencies were so great that hiring managers and other stakeholders tolerated their lack of digital technology / digital transformation / digital business competencies. If the manager was aware of how important these skills were, perhaps they could hire an assistant manager and direct reports with particularly strong competencies in these areas.

6. Which IFAC future-fit accounting roles and ACCA future career zones best fit with your current accounting work aspirations or intentions?

This is an opinion question. Students may reflect on questions such as: ▪

Which type of accounting work do I like to do? What roles best align with that work?

▪

Which roles can I see myself cultivating the types of competencies that would be required to succeed in that role?

▪

What are some examples of specific job titles that would align with these roles?

▪

When in their career stage is an accountant likely to be able to perform each particular type of role?

7. Which three IFAC future-fit accounting roles require the greatest breadth and depth of digital technology competencies?

Students may make arguments such as:

▪

The digital and technology enabler – since enabling digital business transformation and the building of digital capabilities would likely require great breadth and depth of digital technology competencies.

▪

The process and control expert – Optimizing process / workflow redesign would require knowledge of process integration, automation, intelligence, and autonomy possibilities and practices. This would in turn require broad and deep digital technology knowledge and skills

▪

The navigator or the co-pilot – these have to foresee the potential of different digital technologies, of different digital business transformation approaches, and of different digital business capabilities and operating models. They then have to be able to leverage these. This requires broad and deep digital technology knowledge and skills.

8. Which two IFAC future-fit accounting roles require the strongest strategic digital technology competencies?

Students may make arguments such as: ▪

The navigator or the co-pilot – these have to foresee the potential of different digital technologies, of different digital business transformation approaches, and of different digital business capabilities and operating models. They then have to be able to leverage these. This requires strong strategic digital technology knowledge and skills.

▪

The digital and technology enabler – since enabling digital business transformation and the building of digital capabilities would likely require strong strategic digital technology competencies.

▪

The process and control expert – Optimizing process / workflow redesign would require knowledge of process integration, automation, intelligence, and autonomy possibilities and practices. This would in turn require strong strategic technology knowledge and skills

9. Which two IFAC future-fit accounting roles require the strongest technical digital technology competencies?

Students may make arguments such as: ▪

The process and control expert – Optimizing process / workflow redesign would require knowledge of process integration, automation, intelligence, and autonomy

possibilities and practices. This would in turn strong technical technology knowledge and skills ▪

The digital and technology enabler – since enabling digital business transformation and the building of digital capabilities would likely require strong technical technology

▪

The trusted professional – optimizing cybersecurity, digital ethics, and sustainability risk management is likely to require strong technical knowledge of digital technologies like artificial intelligence, require strong knowledge of how different digital technologies work and the risk exposures within them, and require strong technical knowledge of cybersecurity practices.

10. Which IFAC future-fit accounting role requires the strongest accelerated change and transformation and accelerated innovation competencies?

Students may make arguments such as: ▪

The co-pilot – The primary focus of this role is facilitation of change and strategy execution. Thus, it would draw on accelerated change / transformation and accelerated innovation competencies extensively.

▪

The digital and technology enabler – Enabling digital business transformation and the building of digital business capabilities would require setting the organization up for fast and effective change as well as fast and effective innovation. Thus, this would draw on accelerated change / transformation and accelerated innovation competencies extensively.

▪

The process and control expert – Rapidly redesigning business processes, especially cross functional, multi-stakeholder, interorganizational, crossecosystem processes would require effective change and innovation practices.

Thus, this role would draw on accelerated change / transformation and accelerated innovation competencies extensively.

11. What is the relationship between new or enhanced accounting roles and new or enhanced competencies required of accountants?

Effectively performing new or enhanced accounting roles requires cultivating new or enhanced accounting competencies. For example, effectively performing the digital and technology enabler role requires corresponding new or enhanced accounting competencies (such as knowledge of how different digital technologies work and their value to organizations, knowledge of digital business capabilities, knowledge of effective digital transformation practices, knowledge of accelerated change and transformation practices etc.)

12. Why is the technology learning competency so important to development of technical and strategic digital technology competencies?

The gap between the technical and strategic digital technology competencies accountants possess and those they need is steep and growing exponentially. As a result, they need to maximise their learning efficiency and effectiveness. The technology learning competency enables accountants to maximise their learning efficiency and effectives (e.g. through use of optimal strategies, practices, tools).

13. Could an accountant lead cross-functional teams at a mature digital business like Google or Amazon without digital technology / digital transformation / digital business competencies?

Students may make arguments such as: ▪

No, as they would struggle to build the necessary credibility to effectively lead those teams. It would be like an someone without accounting knowledge / skills

leading the accounting and finance function.

▪

Yes, if they possess an exemplar blend of leadership skills and accounting skills that can overcome their digital technology / digital transformation / digital business skill shortcomings. Or if the success of the project critically depends on accounting knowledge / skills that only they possess. But they would have to be aware of their shortcomings and hire people with relevant digital skills in key roles to make up for those shortcomings.

14. Could an accountant review a business case and provide recommendations regarding the introduction of virtual assistants, customer service robots, and cobots without having knowledge / skills / abilities in artificial intelligence?

Students may make arguments such as: ▪

No, they would misunderstand key risks and financial implications associated with these proposals. And so their recommendations would not be particularly meaningful or they could even be dangerous if followed.

▪

Yes, assuming they took advice from the right experts about the potential financial and non – financial risks associated with those products (e.g. spoke with virtual assistant, customer service robots, and cobots experts). They could then factor those risks into identification of potential financial implications and therefore into their recommendations. But they may have to know what they don’t know in order to seek out those experts.

Chapter 7: Role of Accountants in Digital Business Transformation Strategy and Digital Business Strategy, Digital Innovation, Digital Learning, Adaptability and Agility Digital Transformation Strategy and Digital Business Strategy 1. How is digital business strategy different from traditional strategy?

Digital business strategy is strategy formed and realized by leveraging digital resources to achieve breakthroughs in efficiency, differentiation, adaptability and agility. It fuses together the domains of information systems and business strategy so that, rather than being positioned below business strategy, or being a component of business strategy (like traditional IT strategy), digital business strategy becomes business strategy itself. This is because digital technology advancements continue to rapidly fuse together people, processes, technologies, networks and things within and outside organizations (or blurred the boundaries between them) to such a degree, that conceiving strategy separately is increasingly becoming counterproductive. When digital business strategy becomes the business strategy itself, it is able to be a strategic dynamic capability that enables organizations to dynamically configure and orchestrate

diverse digital assets to respond to and shape changes in marketplaces

Digital business strategy differs from traditional business strategy in that it focuses on leveraging digital resources to achieve strategy aims (achieving breakthroughs in efficiency, differentiation, adaptability and agility).

2. What is the relationship between accounting roles and managerial roles?

Accountants can play critical business partnering and information provision / assurance roles that can supercharge managers’ and leaders’ roles (e.g.

Managers’ digital transformation and digital business strategy roles).

3. Which accounting role in digital business strategy is the most critical to building and maintaining that capability? Why?

Students may argue for one or more of the following: ▪

The digital and technology enabler – The focus of this role is enabling digital business transformation and the building of digital business capabilities. Thus it is the most critical. Without digital business transformation, it is difficult to have digital business strategy capability.

▪

The copilot – this role is critical for enabling the change and execution necessary to establish and maintain digital business strategy capability.

▪

The navigator – this role is critical for determining the need for, future value, and approach to building and sustaining digital business strategy capability.

▪

The process and control expert – this role is critical to redesigning and managing the strategy making process so that digital business strategy capability becomes organization strategy capability.

4. Which digital business strategy-related accounting competency is likely to have

the greatest positive impact on an accountant’s career?

Students may argue for one or more of the following: ▪

Technical digital technology competencies (e.g. technical knowledge of how different digital technologies work and how to use them in accounting work).

These can enable an accountant to do their work more efficiently and effectively

and thus have greater promotion opportunities both within and outside of the accounting function.

▪

Accounting function specific technology competencies (e.g. proficiency with accounting specific digital technologies and tools such as XBRL, data visualization tools, data mining tools). These can enable an accountant to do their work more efficiently and effectively and thus have greater promotion opportunities within the accounting function.

▪

Strategic DT competencies (e.g. knowledge of digital business strategy, digital innovation). These can enable an accountant to work closely with strategic leaders and thus expose them to greater promotion prospects across the broad organization.

▪

Accelerated change and accelerated innovation competencies (e.g. accelerators, hackathons, design thinking). These can enable an accountant to work in rapidly growing organizations like Google or Amazon in their early days and thus propel their career in line with that rapid growth.

▪

Technology learning competencies – these enable more and broader technology competencies to be learned and thus maximize an accountant’s efficiency and effectiveness – thus their promotion prospects.

Digital Innovation 5. How is digital innovation different from traditional innovation?

Innovation refers to the introduction and application of new products, processes

and ideals that have a significant and positive net impact on organization performance. This definition of innovation refers to both the process or practice of innovating and the outcomes of the innovation process.

Digital technology advancements, digital transformation, and digital business change or expand the nature of innovation as well as the potential impact of innovation. That is, they change or expand how innovation can be done (i.e.,

innovation processes / practices), the nature of innovation outcomes (i.e., new products / processes / value created), and the impact of innovation outcomes (e.g., enabling near instant global scalability to billions of consumers). This new or expanded way that innovation can occur, the types of new products /services / value creations that can occur, and the speed / scope of their impact is what is referred to as digital innovation.

Digital innovation has been formally defined by researchers as both the new products / services / business processes / models and other forms of stakeholder value created through the use of digital technologies and the process of using digital technologies to create (and subsequently change) these new products / services / business processes / models and other forms of stakeholder value

6. Which accounting role in digital innovation is the most critical to building and maintaining that capability? Why?

Students may argue for one or more of the following: ▪

The digital and technology enabler – The focus of this role is enabling digital business transformation and the building of digital business capabilities. Thus it is most critical to building and sustaining digital innovation capability.

▪

The navigator – Through this role, accountants may make clear the importance of digital innovation to strategic agility and sustained profitability. Thus enabling sufficient investments in digital innovation capability building and sustenance.

▪

The process and control expert – Through effective process configuration / redesign, accountants may be able to support the building and sustaining of digital innovation capability and, thus, the unleashing of digital innovation.

Digital Leaning 7. How is digital learning different from traditional learning?

Digital learning is employee learning that leverages digital technologies in the learning process, learning content, and or learning outcomes. It differs from traditional learning in that the nature / characteristics of the learning process is significantly transformed, the learning context is significantly transformed, the

teaching methodologies are significantly transformed, the learning participants are expanded, and the learning systems and tools are significantly transformed.

For example, the nature and characteristics of digital learning include it being much more online, interactive, multidiscipline, multiplatform, multi-device, portable, user centered / personalized, self-directed, gamified, always on anywhere /anytime/real time, immersive, social etc. These differ from the nature and characteristics of traditional learning.

8. Which accounting role in digital learning is the most critical to building and maintaining that capability? Why?

Students may argue for one or more of the following: ▪

The digital and technology enabler – The focus of this role is enabling digital business transformation and the building of digital business capabilities. Thus it is most critical to building and sustaining digital learning capability.

▪

The navigator – Through this role, accountants may make clear the importance of digital learning to strategic agility and sustained profitability. Thus enabling sufficient investments in digital learning capability building and sustenance.

▪

The process and control expert – Through effective process configuration / redesign, accountants may be able to support the building and sustaining of digital learning capability and, thus, the unleashing of exemplar learning organizations.

9. Which digital learning competency of accountants is likely to have the greatest positive impact on an accountant’s career?

Knowledge of contemporary digital learning practices and platforms as well as understanding practices associated with digital leadership of digital learning.

Other 10. Which of the capabilities discussed in this chapter is the most important to succeeding at digital transformation and digital business?

We would contend that digital business transformation capability is the most important, given our earlier assertion that it is the never-ending practice of becoming and effectively competing as a digital business.

Chapter 8: Role of Accountants in digital customer engagement, digital stakeholder engagement, and digital customer experience Digital Customer Engagement

1. How is digital customer engagement different from traditional customer engagement?

Customer engagement refers to both the process and effect of creating deep connections with customers that drive purchase decisions, interaction, participation and advocacy. Digital customer engagement is the use of digital technologies and tools in the processes / practices and effect of creating deep connections with customers that drive purchase decisions, interaction, participation and advocacy. It deals with all the ways current and prospective customers can and do interact in relation to an organization, brand, or product across digital channels, platforms, devices and connected or smart things. It differs from traditional customer engagement that have not focused on leveraging digital technologies and tools to achieve customer engagement objectives.

Digital customer engagement has rapidly evolved to include a rich repertoire of engagement strategies / approaches and specific engagement practices.

Examples of these include digitally managed loyalty programs (e.g. web based or mobile app frequent flyer programs), online brand communities (discussion board / chat style interactions with other customers / prospective customers or with the organization, consumers solving other consumers’ problems, consumers giving other consumers advice / tips), digital customer engagement platforms (e.g.

Zendesk, Freshdesk, HubSpot, Salesforce, Mailchimp), customer co-creation (product co-creation, product improvement feedback, product testing), brand

websites (, consumer generated brand stories, consumer engagement on social media (e.g. liking, commenting, sharing, posting, calling up product photographs, hash tagging), consumer reviews (e.g. search engine reviews, review platform reviews, social media reviews), brand - consumer interactions (e.g. liking a brand on Facebook, following a brand on Twitter), purchase funnel practices, brand fan pages, mobile interactions (e.g. SMS interactions), Live Chat platforms, mobile marketing, consumer generated advertising (e.g. consumer generated brand videos), consumer buzz (generate content by sharing personal experiences, provide online feedback, express sentiments), email marketing, Customers' Online Brand Related Practices or COBRAs, consumption community participation, consumer initiated mobile marketing and consumer advocates (remote voluntary work for the organization, act as multiplier of brand messages, accept invitations to company related events, speaking up for the brand at events) 2. Which accounting role in digital customer engagement is the most critical to building and

maintaining that capability? Why?

Students may argue for one or more of the following: ▪

The digital and technology enabler – The focus of this role is enabling digital business transformation and the building of digital business capabilities. Thus it is most critical to building and sustaining digital customer engagement capability.

▪

The navigator – Through this role, accountants may make clear the importance

of digital customer engagement to strategic agility and sustained profitability.

Thus, enabling sufficient investments in digital customer engagement capability building and sustenance.

▪

The process and control expert – Through effective process configuration / redesign, accountants may be able to support the building and sustaining of digital customer engagement capability.

▪

The storyteller – thorough effective communication / engagement about digital customer engagement capability status, progress, and outcomes, accountants can optimally support the building, sustaining, and realization of value from this capability.

3. Which accounting related digital customer engagement competency is likely to have the greatest positive impact on an accountant’s career?

Having working knowledge of contemporary digital customer engagement practices and of digital technologies and tools relevant to digital customer engagement is likely to have the greatest positive impact. For example, such knowledge may enable an accounting to play a critical role in building of that capability and in realization of value from that capability. As a result, that accountant may be favored for future initiatives to build or maximize value derived from digital business capabilities. In turn, they may be favored for finance function leadership, cross functional leadership, or industry / profession

leadership roles.

Digital Stakeholder Engagement 4. How is digital stakeholder engagement different from traditional stakeholder engagement?

Stakeholder engagement refers to the practices of effectively communicating and transacting with an organization’s different stakeholders in order to safeguard its

existence, its legitimacy, and the opportunities available to it (e.g., stakeholders such as employees, suppliers and partners, government and regulatory institutions, competitors, and different local and international communities).

In contrast, digital stakeholder engagement refers to the leveraging of digital technologies and tools to maximize the practice and outputs of stakeholder engagement. Digital technologies and tools can dramatically improve the cost,

speed, scale/reach, transparency, measurability, and effectiveness of stakeholder engagement efforts.

5. Which accounting role in digital stakeholder engagement is the most critical to building and maintaining that capability? Why?

Students may argue for one or more of the following:

▪

The digital and technology enabler – The focus of this role is enabling digital business transformation and the building of digital business capabilities. Thus it is most critical to building and sustaining digital stakeholder engagement capability.

▪

The navigator – Through this role, accountants may make clear the importance of digital customer engagement to strategic agility and sustained profitability.

Thus, enabling sufficient investments in digital stakeholder engagement capability building and sustenance.

▪

The process and control expert – Through effective process configuration /

redesign, accountants may be able to support the building and sustaining of digital stakeholder engagement capability.

▪

The storyteller – thorough effective communication / engagement about digital stakeholder engagement capability status, progress, and outcomes, accountants can optimally support the building, sustaining, and realization of value from this capability.

Digital Customer Experience 6. How is digital customer experience different from traditional customer experience?

Customer experience refers to the quality of all of a customer’s encounters with an organization’s products, services, and brand. Improvements in the quality of these encounters is linked to benefits such as improved customer acquisition, improved customer loyalty, improved revenue growth, and improved profitability.

Digital technology advancements continue to disrupt customer experience expectations and customer experience management. The drivers of this change include more and more customer encounters with organization’s products / services / brand are shifting to digital channels, a proliferation in digital channels (e.g. different search engines, different social media platforms, different payment platforms, different website management platforms, different computing and mobile devices, different mobile apps, different virtual / augmented / mixed reality platforms, different IoT platforms, different online video platforms, different television platforms etc.), and significant differences in customer interaction requirements across channels. Irrespective of the digital channels they choose, or their location and timing, customers want access to organizations’ services and products in the most convenient way possible. They are put off by having to repeat themselves from one channel to another or from one customer representative to another. They hate process and visual inconsistency across channels, as well as having to perform actions that waste their time. And they are far less patient on digital channels than they are in traditional channels (e.g., a study found that waiting 10 seconds for a page to load can result in half of customers terminating their encounter).

Digital customer experience refers to the quality of all of a customer’s encounters with an organization’s products, services, and brand across all digital channels, touchpoints, and contact moments. It also refers to the process of optimizing these encounters (e.g., having the right technology / platform / application infrastructure, having the right processes and people, and having the right

policies). By having the right supporting technologies, the right platforms / applications, the right management processes, and the right people, organizations can ensure they are available and effectively serve customers in their preferred channels, at their preferred times, in their preferred locations, and in ways that respect their time (i.e., save them all possible effort, rather than externalizing more effort to them due to the organization’s shortcomings)

7. Which accounting role in digital customer experience is the most critical to building and maintaining that capability? Why?

Students may argue for one or more of the following: ▪

The digital and technology enabler – The focus of this role is enabling digital business transformation and the building of digital business capabilities. Thus, it is most critical to building and sustaining digital customer experience

management capability.

▪

The navigator – Through this role, accountants may make clear the importance of digital customer experience management capability to strategic agility and sustained profitability. Thus, enabling sufficient investments in digital customer experience management capability building and sustenance.

▪

The process and control expert – Through effective process configuration / redesign, accountants may be able to support the building and sustaining of digital customer experience management capability.

▪

The storyteller – thorough effective communication / engagement about digital customer experience management capability status, progress, and outcomes, accountants can optimally support the building, sustaining, and realization of value from this capability.

8. Which accounting related digital customer experience competency is likely to have the greatest positive impact on an accountant’s career?

Having working knowledge of contemporary digital customer experience practices and of digital technologies and tools relevant to digital customer experience is likely to have the greatest positive impact. For example, such knowledge may enable an accounting to play a critical role in building of that capability and in realization of value from that capability. As a result, that accountant may be favored for future initiatives to build or maximize value derived from digital business capabilities. In turn, they may be favored for finance

function leadership, cross functional leadership, or industry / profession leadership roles.

9. Which of the capabilities discussed in this chapter is the most important to succeeding at digital transformation and digital business?

We contend that digital customer experience would be the most critical to succeeding at digital business transformation and digital business. Given the growing shift to digital channels for finding competing offerings, evaluating competing offerings, purchasing / paying, and reviewing offerings, digital customer experience is critical. Digital customer engagement and digital stakeholder are of little consequence if organisations can’t provide customers with great experiences when they interact with brands through customers’ preferred channels.

Chapter 9: Role of Accountants in enterprise architecture, technology sourcing, data analytics, and data management Enterprise Architecture 1. What is the difference between enterprise architecture, IT architecture, and technology architecture?

Enterprise architecture (EA) refers to the design or configuration of the different elements/assets of an organization (e.g., hardware, software, networks, business processes, information systems, information, data) and the resultant levels of efficiency, effectiveness, and longevity they enable an organization to have in the pursuit of its mission within its external environment. For example, one particular design or configuration may lead to mediocre levels of efficiency and effectiveness in the pursuit of the organization’s mission (e.g., perhaps due to having a random collection of disparate hardware, software, networks, business processes, and information/data that don’t work well together – thus constraining connectivity, communication, collaboration, and customer experience).

Gartner provides this definition of IT architecture: “IT architecture is a series of principles, guidelines or rules used by an enterprise to direct the process of acquiring, building, modifying and interfacing IT resources throughout the enterprise. These resources can include equipment, software, communications, development methodologies, modeling tools and organizational structures.”

Technology infrastructure has been defined by IGI global as “…the infrastructure required to support applications, operations, and reporting requirements” and as

“…a framework for building an enterprise including networking, hardware, operating systems, database management systems, and application development standards”.

Technology architecture is part of IT architecture, and both technology architecture and IT architecture are part of enterprise architecture.

2. What role does enterprise architecture play in digital business capability?

Enterprise architecture is a critical component of digital business capability, and can thought of as the platform on which digital business is able to occur.

Enterprise architecture is described as being layered (i.e. having business architecture, information architecture, information systems architecture, data architecture, and delivery architecture layers), as spanning the entire organization (i.e. vertically up and down the hierarchy and horizontally across business functions), as both conceptual and physical (i.e. being a visual or written logical representations or being the actual elements/assets), as iterative (i.e. built or evolving over time through iterative additions/improvements), and as both current and forward looking (i.e. that EA designs or configurations deal with both current and future business needs). According to practitioners and researchers, good enterprise architecture should enable both current and future strategy (e.g. operational effectiveness, business transformation), be proactive (i.e. anticipate and prepare for the future needs of the business),speed up

processes (e.g. digitize, integrate, and automate key processes), enable adaptability (e.g. through plug and play digital assets that can be adapted to different internal and external systems/technologies/processes), ensure availability and accessibility of high-quality data across the enterprise to drive decision making (e.g. cleaning, standardizing, sharing, presenting data), and instantiate the organization’s digital business model.

As these descriptions of enterprise architecture and what constitutes good enterprise architecture show, enterprise architecture underpins all other digital business capabilities.

3. Which accounting role in enterprise architecture management is the most critical to building and maintaining that capability? Why?

Students may argue for one or more of the following: ▪

The digital and technology enabler – The focus of this role is enabling digital business transformation and the building of digital business capabilities. Thus it is most critical to building and sustaining enterprise architecture management capability.

▪

The navigator – Through this role, accountants may make clear the importance of enterprise architecture to strategic agility and sustained profitability. Thus, enabling sufficient investments in enterprise architecture management capability building and sustenance.

▪

The process and control expert – Through effective process configuration / redesign, accountants may be able to support the building and sustaining of enterprise architecture management capability.

▪

The storyteller – thorough effective communication / engagement about enterprise architecture management capability status, progress, and outcomes, accountants can optimally support the building, sustaining, and realization of value from this capability.

4. Which accounting related enterprise architecture management competency is likely to have the greatest positive impact on an accountant’s career?

We contend that having a working understanding of enterprise architecture and enterprise architecture management functioning and best practices would have the greatest positive impact. For example, such knowledge may enable an

accounting to play a critical role in building of that capability and in realization of value from that capability. As a result, that accountant may be favored for future initiatives to build or maximize value derived from digital business capabilities. In turn, they may be favored for finance function leadership, cross functional leadership, or industry / profession leadership roles.

Technology Sourcing

5. What is the difference between technology sourcing and technology procurement?

Technology sourcing capability refers to the effectiveness of an organization’s processes/ practices for finding, choosing, and procuring technology resources required for its current and desired enterprise architectures. Digital technology advancements and digital disruption have expanded the focus of technology sourcing from cost minimization and risk mitigation to driving innovation, revenue

growth, customer retention, speed, adaptability, and agility.13 Through finding, choosing, and partnering with the right vendors, and through getting contracts right and managing the relationships appropriately, organizations can reap rewards such as having superior hardware/software/networks relative to competitors, undertaking product co-creation with vendors, vendor-induced migration to state-of-the-art practices, vendor originated to new technologies and new customers, and so forth. Through finding, choosing, and adopting breakthrough technologies and products, an organization can speed up

realization of their desired enterprise architectures or exceed what they thought possible from enterprise architecture.

Although the terms technology sourcing and procurement are often interchangeably used. Procurement is most accurately seen as encompasses all the activities involved in purchasing products / services for the organization. And

sourcing is most accurately seen as a part of procurement that focuses on finding and vetting suppliers of technology products.

6. Which accounting role in technology sourcing is the most critical to building and sustaining that capability? Why?

Students may argue for one or more of the following: ▪

The digital and technology enabler – The focus of this role is enabling digital business transformation and the building of digital business capabilities. Thus it is most critical to building and sustaining technology sourcing capability.

▪

The navigator – Through this role, accountants may make clear the importance of technology sourcing to strategic agility and sustained profitability. Thus, enabling sufficient investments in technology sourcing capability building and sustenance.

▪

The process and control expert – Through effective process configuration / redesign, accountants may be able to support the building and sustaining of technology sourcing capability.

▪

The storyteller – thorough effective communication / engagement about technology sourcing capability status, progress, and outcomes, accountants can optimally support the building, sustaining, and realization of value from this capability.

Data Management and Data Analytics 7. What is the difference between data management and data analytics?

Data management is concerned with how to collect, validate, store, use, and dispose of data in the most efficient, effective, and secure way possible.

In contrast, data analytics (also referred to just as “Analytics”) is an umbrella term referring to any form of analysis of data to uncover trends, patterns or anomalies or simply to measure performance. It also includes interpretation, presentation, and communication of discovered patterns to improve decision making. Data analytics or analytics can also refer to one or more approaches, methodologies, and tools used to achieve the objectives of data analytics.

8. Which is more important, data management or data analytics? Why?

Both are important. Effective data management is a critical foundation for data analytics. E.g., if we can’t get, store, and access relevant, reliable, and secure data, then even the best data analytics may be of little value, if not dangerous.

Similarly, we can get, store, and access relevant, reliable, and secure data but without analytics, we may not understand its value – let alone be able to extract that value.

9. Which accounting related data management and data analytics competency is likely to have the greatest positive impact on an accountant’s career?

Students may identify one or more of the following competencies: ▪

Having a solid understanding of data management, data analytics, and data science (e.g., their objectives, functioning, methodologies/ tools, challenges, state-of-the-art practice, key terminology).

▪

Having a working understanding of data management, data analytics, and data science artifacts and tools.

▪

Having an understanding of the operational and strategic implications of data management, data analytics, and data science artifacts (e.g., artifacts such as data sets, ETL code, visualizations, AI models, code libraries, APIs).

▪

Having strong technical skills in accounting specific data management and data analytics tools, methods, and practices.

Other 10. Which of the capabilities discussed in this chapter is the most important to succeeding at digital transformation and digital business?

We see all of them as being critical. If we had the ability to choose two capabilities, we would go with enterprise architecture and technology sourcing.

But if only one could be chosen, we would choose technology sourcing. An effective technology sourcing capability can bring in enterprise architecture as a service, data management as a service, and data analytics / data science as a service. Thus enabling an organization to have world class capabilities in these areas.

Chapter 10: Role of accountants in cybersecurity, information privacy, and digital ethics Cybersecurity 1. What is the difference between cybersecurity, IT security, and ICT security?

Cybersecurity refers to the state of or processes for protecting anything in the cyber realm (e.g., devices, software, things, networks, information) and recovering from cyberattacks.

The terms IT security and ICT security are sometimes interchangeably used to refer to cybersecurity, even though these terms refer to specific subsets of cybersecurity.

For example, IT security, ICT security, and computer security tend to focus more narrowly on protecting computers, networks, and data – but what about the exploding diversity in IoT “things” and ecosystems?

2. What is the difference between cybersecurity management and cybersecurity?

Cybersecurity refers to the state of or processes for protecting anything in the cyber realm (e.g., devices, software, things, networks, information) and recovering from cyberattacks. Whereas cybersecurity management refers to the processes and practices of planning, implementing, maintaining, and continuously upgrading an organization’s cybersecurity capability.

Information Privacy and Digital Ethics 3. What is the difference between privacy and information privacy?

Privacy refers to the ability of an individual or a group to exclude themselves or information about themselves, and to only release this information when they choose. Information privacy refers to an individual’s interest and/or ability to control, or at least significantly influence, the handling of data about themselves. Although the concept of privacy existed before the advent of digital technologies, the use of digital technologies results in significant privacy threats due to the amount and nature of information digital technologies enable access to and challenges preventing or revoking access to it. Information privacy is an aspect of privacy that deals with some of these information access, storage, use, and disposal issues.

Information privacy includes personal communication privacy, personal behavior privacy, and personal data privacy.25 The handling of data refers to issues including

what data is collected and how, the primary use of the data (the purpose for which the data is originally collected), the secondary use of the data (other data uses in addition to the primary purpose), any unauthorized secondary use, what analysis is done on the data, what improper access is it exposed to, what errors are in it, and how long the data will be kept for (e.g. does this impinge on a person’s “right to be forgotten”).

4. What is the relationship between information privacy and digital ethics?

Information privacy refers to an individual’s interest and/or ability to control, or at least significantly influence, the handling of data about themselves. Information privacy includes personal communication privacy, personal behavior privacy, and personal data privacy. The handling of data refers to issues including what data is collected and how, the primary use of the data (the purpose for which the data is originally collected), the secondary use of the data (other data uses in addition to the primary purpose), any unauthorized secondary use, what analysis is done on the data, what improper access is it exposed to, what errors are in it, and how long the data will be kept for (e.g. does this impinge on a person’s “right to be forgotten”).

Information privacy is part of digital ethics. But in addition to information privacy and cybersecurity (which highly visible and commonly discussed issues), there are a range of other technology-related ethical threats that are generally collated under the umbrella of digital ethics. Digital ethics considers the ethicality of the existing and potential impacts of digital technologies on political, social, economic, environmental, and legal dynamics and entities. For example, it considers and builds discussions of issues such as ethics of surveillance (e.g., when and what information can be given to the state), digital monopolies (growing concentration of power in large technology companies), uses of and regulation of artificial intelligence, automation and roboticsdriven unemployment, and disparities between tech-savvy and non-tech-savvy people.

5. What is the relationship between cybersecurity, information privacy, and digital ethics?

Information privacy refers to an individual’s interest and/or ability to control, or at least significantly influence, the handling of data about themselves. Information privacy is an important part of digital ethics.

Cybersecurity, which focuses on safeguarding data, is critical to digital ethics in general and information privacy in particular. It is possible for an organization to have security (e.g., protect data from unauthorized access / use) without consumer / stakeholder privacy (e.g., by having a policy whereby anyone within the organization can get authorized access). But it is near impossible to have privacy without security (since unauthorized people can easily get access to the data). Thus, it is near impossible to have digital ethics without good security.

6. What are the top three digital ethics issues at the moment?

The top three could include a range of issues such as the ones below: -Ethics of surveillance (e.g., when and what information can be given to the state) -Digital monopolies (growing concentration of power in large technology companies), -Uses of and regulation of artificial intelligence -Automation and robotics-driven unemployment -Disparities between tech-savvy and non-tech-savvy people -Transparency in how data is held/where it is held/who has access to it -Discrimination embedded in algorithms and big data -Environmental impacts of digital technology-related waste 7. Which is most important: cybersecurity, information privacy, or digital ethics?

All are critical to an organization. As we noted earlier, it is possible for an organization to have security (e.g., protect data from unauthorized access / use) without information privacy and or digital ethics (e.g., by having a policy whereby anyone within the organization can get authorized access). But it is near impossible to have information privacy and or digital ethics without security (since unauthorized people can easily get access to the data). Thus, if only one could be chosen, then we propose cybersecurity.

8. Which accounting role in information privacy and digital ethics is most important to an organization’s information privacy and digital ethics capability?

Students may argue for one or more of the following: ▪

The trusted professional – A key focus of this role is ethical and responsible risk taking. Thus, it is most critical to building and sustaining information privacy and digital ethics capability.

▪

The brand protector – A key focus of this role is risk management. Thus, it would be critical to ensuring a capability to safeguard the organization against information privacy and digital ethics risks.

▪

The digital and technology enabler – The focus of this role is enabling digital business transformation and the building of digital business capabilities. Thus, it is most critical to building and sustaining information privacy and digital ethics capability.

▪

The process and control expert – Through effective process configuration / redesign, accountants may be able to support the building and sustaining of information privacy and digital ethics capability.

▪

The storyteller – thorough effective communication / engagement about information privacy and digital ethics capability status, progress, and outcomes, accountants can optimally support the building, sustaining, and realization of value from this capability.

▪

The navigator – Through this role, accountants may make clear the importance of information privacy and digital ethics to strategic agility and sustained profitability. Thus, enabling sufficient investments in information privacy and digital ethics capability building and sustenance.

9. Which accounting related cybersecurity management competency is likely to have the greatest positive impact on an accountant’s career?

We see being able to advise and support managers to ensure effective information privacy and digital ethics practices/procedures/systems are in place, as having the potential for the greatest positive impact. By ensuring the right practices / procedures / systems in place, an accountant can ensure that risk exposures are identified, safeguarded against, and their impact on the organization minimized. This is likely to make an accountant a valuable trusted advisor and business partner at all levels of the organization (e.g. from frontline management and middle management, to executive team and board level). In turn, with this value would come a range of positive career benefits.

10. Which of the capabilities discussed in this chapter is the most important to succeeding at digital transformation and digital business?

While all are critical, the other capabilities discussed are not possible without cybersecurity. Thus, we see it as being the most critical.

Chapter 11: Role of accountants in digital leadership, accelerated change and transformation, digital risk management, and digital governance Digital Leadership 1. What is the difference between traditional leadership, e-leadership, and digital leadership?

Digital disruption, digital transformation, and digital business present unique leadership challenges (e.g., the need for fast decision making and execution, the need to make rapid shifts in organization culture, the need to transform the workforce into a flexible and dis- tributed workplace, the need for significant efficiency breakthroughs, the need to manage virtual workforces). These unique challenges require new leadership roles and/or adaptations of traditional leadership roles and activities.

Digital leadership refers to the new or adapted roles/activities required of leaders to effectively lead digital transformation and digital business. And it refers to the augmentation of traditional leadership roles/activities with these new or adapted

digital related roles and activities. It also refers to the effect of effectively carrying out these roles and activities to lead in a digital environment.

Digital Risk Management and Digital Governance 2. What is the difference between risk management and digital risk management?

Risk management is concerned with how effectively an organization detects, guards against, responds to, and recovers from risk exposures or events. Governance is concerned with how effectively an organization is led, controlled, and the people operating it are held to account for the efficient, effective, and responsible pursuit of

the organization’s mission.

Digital risk management and digital governance refer to the management of the unique risk and governance issues associated with digital technologies/digital business and digital business transformation. It also refers to the leveraging of digital technologies to maximize the efficiency and effectiveness of risk management and governance functions.

3. What is the relationship between risk management and governance?

Effective risk management is a critical part of effective governance. That is, part of good governance is ensuring the organization is optimally protected from risks that could undermine its ability to effectively pursue its mission and or undermine its long-term survival. This is essentially the focus of risk management.

4. What is the relationship between information privacy and digital ethics?

Information privacy refers to an individual’s interest and/or ability to control, or at least significantly influence, the handling of data about themselves.24 Information privacy includes personal communication privacy, personal behavior privacy, and personal data privacy. The handling of data refers to issues including what data is collected and how, the primary use of the data (the purpose for which the data is originally collected), the secondary use of the data (other data uses in addition to the

primary purpose), any unauthorized secondary use, what analysis is done on the data, what improper access is it exposed to, what errors are in it, and how long the data will be kept for (e.g. does this impinge on a person’s “right to be forgotten”).

Information privacy is part of digital ethics. But in addition to information privacy and cybersecurity (which highly visible and commonly discussed issues), there are a range of other technology-related ethical threats that are generally collated under the umbrella of digital ethics. Digital ethics considers the ethicality of the existing and potential impacts of digital technologies on political, social, economic, environmental, and legal dynamics and entities. For example, it considers and builds discussions of issues such as ethics of surveillance (e.g., when and what information can be given to the state), digital monopolies (growing concentration of power in large technology companies), uses of and regulation of artificial intelligence, automation and roboticsdriven unemployment, and disparities between tech-savvy and non-tech-savvy people.

5. What is the difference between change and transformation? How do accelerated change and accelerated transformation differ?

In an organization context, change refers to the need individuals and teams to do things differently from how they have previously been done; and it also refers to the act of changing or the outcomes of this act. It is sometimes used interchangeably with change management, which refers to the processes / practices for bringing about efficient and effective change.

The term transformation refers to a particular type of change that is major and all – encompassing (e.g., requiring major changes to every part of the organization such as people, structures, processes, infrastructure, products / services). Its major and all-encompassing nature makes it highly risky, and prone to failure – especially if attempted over too short a timeframe and or without sufficient resources and buy-in.

6. What are the three most dangerous risk exposures for organizations at the moment?

We contend that the following three risks are the most dangerous risk exposures for organizations: ▪

Digital technology risk (risk of not being able to keep up with digital technology advancements and needing to undertake risk fraught transformations to adapt to digital disruption)

▪

Ethical risk (risk of an employee at any level of the organization undertaking an action that violates consumer expectations or social norms to such a degree that the organization’s legitimacy or social license to operate is threatened. E.g., this could be due to not safeguarding against a security breach, being irresponsible with sensitive consumer information, publicly expressing opinions that are ethically offensive)

▪

Environmental dynamism / complexity risk (in addition to digital disruption risk, an organization can just as easily find itself disrupted by changes in political, economic, environmental, social, legal and other issues due to a constantly and rapidly changing external environment).

7. If you were a hacker or cybercriminal, which risk surface or attack point would you find best to attack and why?

There are a rapidly expanding number of new IoT devices/platforms/networks integrating with an organization’s IS infrastructure. The effectiveness of the security

and privacy safeguards of many of these new IoT devices/platforms/networks is still in its infancy. And many organizations don’t have sophisticated security teams or the resources to monitor them effectively 24/7. This makes any number of them promising attack points.

8. What are three ways digital technologies are being leveraged to enhance digital risk management?

A range of examples can be identified. For example:

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Leveraging robotic process automation for accelerated identity and access management

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Leveraging natural language generation to automate regulatory reporting

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Leveraging chatbots to improve understanding of policies and compliance requirements

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Leveraging computer vision to spot anomalies

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Leveraging virtual/augmented/mixed reality to simulate crisis management situations

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Lever- aging machine learning to spot policy and ethics violations

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Leveraging algorithms for continuous monitoring of credit reports/court sanctions lists/search engine data in order limit third party risk exposures

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Leveraging blockchain-enabled proof-of-provenance to ensure verification of the origin/safety/authenticity of products

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Leveraging predictive analytics to anticipate and intervene in risky behaviors before the fact

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Leveraging digital twins (virtual replicas of physical objects) to anticipate and mitigate risk impacts

9. Which accounting role in digital risk management and governance is most important

to an organization’s risk management and governance effectiveness?

Students may argue for one or more of the following: ▪

The digital and technology enabler – The focus of this role is enabling digital business transformation and the building of digital business capabilities. Thus it is

most critical to building and sustaining digital risk management and governance capability.

▪

The navigator – Through this role, accountants may make clear the importance of digital risk management and governance to strategic agility and sustained profitability. Thus, enabling sufficient investments in digital risk management and governance capability building and sustenance.

▪

The process and control expert – Through effective process configuration / redesign, accountants may be able to support the building and sustaining of digital risk management and governance capability.

▪

The storyteller – thorough effective communication / engagement about digital risk management and governance capability status, progress, and outcomes, accountants can optimally support the building, sustaining, and realization of value from this capability.

10. Which accounting related risk management and governance competency is likely to have the greatest positive impact on an accountant’s career?

Having a sound understanding of contemporary digital risk management and governance practices and of security, privacy, and other digital ethics threats associated with each type of digital technology is likely to have the greatest positive impact. For example, such knowledge may enable an accounting to play a critical role in building of that capability and in realization of value from that capability. As a result, that accountant may be favored for future initiatives to build or maximize value derived from digital business capabilities. In turn, they

may be favored for finance function leadership, cross functional leadership, or industry / profession leadership roles.

11. Which of the capabilities discussed in this chapter is the most important to succeeding at digital transformation and digital business?

Each of these capabilities is critically important. Weakness in any one of them can seriously undermine the immediate and long term survival of an organisation.

Chapter 12: Keeping up with digital technology advancements 1. What is accelerated learning?

The term accelerated learning refers to learning that occurs at a much more rapid rate than what would be considered normal.

2. What is learning efficiency?

Learning efficiency refers to a learner’s rate of learning and retention. It can also be thought of as a combination of degree of difficulty of what is being learned, the accuracy of learning, and the quantity of learning that takes place per unit of time. Or, put another way, it is the amount and quality of learning that occurs per unit of time, assuming what is being learned is the same.

3. What is the difference between accelerated learning and learning efficiency?

Learning efficiency is concerned with learner’s rate of learning and retention, and accelerated learning is concerned with how to speed up this rate of learning and retention. But the two terms are often used interchangeably.

4. What three personal characteristics drive learning efficiency?

The three personal characteristics are: -Perceived need to learn a topic -An understanding / appreciation of the challenges involved in learning that topic -Tolerance for ambiguity (tendency to perceive ambiguous situations as tolerable or even desirable).

5. What are the top four drivers of learning efficiency?

The top four drivers are:

-Perceived need to learn a topic -An understanding / appreciation of the challenges involved in learning that topic -Tolerance for ambiguity (tendency to perceive ambiguous situations as tolerable or even desirable).

-Learning from experts outside the organization or within the organization.

6. What is the role of digital technologies in learning efficiency?

The right digital technologies can catalyze learning efficiency and provide an unfair advantage. For example, to catalyze learning, users can:

-leverage learning platforms for benefits such as curation and serving up of content, personalized learning recommendations, behavioral nudges, learning analytics, device

flexibility)

-embrace omnichannel learning so learning can take place in a variety of environments, on a variety of platforms and devices, and at a variety of times.

-leverage social media for the latest insights on almost any topic

-Configure your Search Engines, Social Media, and Email Subscriptions to automatically serve up the right content at the right time and in the right place to maximize learning

-leverage the right information management tools to avoid information overload

7. How do digital technologies enhance learning efficiency?

Digital technologies can efficiently and effectively facilitate learning processes, facilitate efficient and effective information storage and retrieval, facilitating access to experts,

personalizing learning, enabling learning analytics to drive learning improvement, and much more. They essentially make learning a digital competency capable of being highly automated, highly efficient, highly scalable, highly portable, and highly analytics based.

8. What is the relationship between digital technologies, learning efficiency, and an accountant’s ability to keep up with digital technologies?

Digital technologies can be leveraged to maximize learning efficiency and

effectiveness and, thus, enable accountants’ rate of learning to keep up with or to stay ahead of digital technology advancements.