Tuesday, March 12, 2019

Impact of New Technologies on Accounting and Audit - UN/CEFACT

For more than thirty years, UN/CEFACT has been developing and publishing standards for accounting and audit purposes. They have often been in the vanguard of advanced technologies and new innovations. For example, the XBRL Global Ledger community has collaborated with UN/CEFACT on the potential impact of XBRL GL. The inventor or XBRL GL, Eric E Cohen, will be moderating a half day session on "Impact of new technologies on Accounting and Audit: Harmonizing Interoperability of Standards and Specifications" on April 5 at the Palais Des Nations in Geneva, Switzerland.

Eric is a global leader in the technological aspects of innovation in Accounting and Auditing, particularly blockchain and distributed ledger technologies, along with XBRL. There is more on his session on the UN site.

Eric Cohen is also a Contributing Editor for the innovative financial magazine ThinkTWENTY20.

Thursday, February 07, 2019

Is Project Management the Next Frontier for AI?

Some new Project Management (PM) tools (Agile, Psopda) make extensive use of AI. And many managers think it's the way to go. Their thinking revolves around some particular aspects of project management that are amenable to AI. For example, PM often requires processing a lot of data, and AI is good at that. Also, a majority of the time of a project manager is spent on administrative matters. while traditional PM software helps with that, AI could do a better job. While Project Management requires a certain amount of time on high level critical thinking and creativity, managers often get bogged down in  the detail. AI could free up more time for the higher level activities, making it more fun and challenging. It seems like a no brainer. For more thoughts on this, check this link.

Friday, January 25, 2019

The Challenges of AI

AI capability has been growing at an incredible rate over the past few years. Where once it was considered remarkable for AI to win at chess, now various AI applications routinely outshine humans in performing complex tasks. And robots with the traditional look and feel of science fiction are now available. Business is working hard at acquiring AI personnel and finding ways to implement AI for competitive purposes.

As this usage grows, humans will need to work with AI and even compete with it. Consequently, human/AI interface will become very important. At the basic level, that interface is at the traditional computer/human level. However, as robotics capabilities grow, the interface will become a lot more like human/human interaction. This will involve robots working side by side with humans - doing reports, answering correspondence, attending meetings, and making decisions.

The evolution of the human AI interface will become more complex, which is already being considered by companies, universities and think-tanks.

There are psychological implications - how does a human feel when his/her promotion is passed over to a robot. Or when that human must report to a robot. Already consideration is being given to the question whether robots have a gender. What rights do they have?  Eventually the human will need to consider having an AI interface physically installed to enhance mental capabilities. This will be necessary in order to compete.

Many companies already recognize the necessity of AI for competitive advantage. Nothing is going to slow down this trend.

Friday, January 18, 2019

IoT Management

Many companies are implementing or have implemented Internet of Things technologies to manage their assets and interests. However, the state of management of these activities is in a formative state, rife with inconsistencies and lack of integration. Some effort is often needed to standardize the management processes and make them more effective and efficient.

An article in InformationWeek this week sets out eight areas in which management needs to establish proper procedures. It provides a good overview of the issues and can be found here.

Tuesday, January 15, 2019

AI and Blockchain Implementation

There has been tremendous hype about AI and Blockchain over the past year. The possibilities are huge and corporate leadership recognizes the opportunity. So there have been very large amounts of money going into prototypes and testing of potential applications.

However, recent data indicate that the extent of actual meaningful implementation is small. For example, a survey released by "MIT Sloan Management Review and Boston Consulting Group found that less than 5% of organizations have incorporated AI extensively into their processes." (Informationweek.com). The numbers for blockchain are similar.

The problem is that companies don't know where to use these technologies. Some are using the five forces model, which involves analyzing the power of suppliers and customers and the barriers that might exist to prevent customers from changing away from the company. It focuses on the strength of the competitive position of the company and facilitates the identification of the strengths and weaknesses of that position.

Learning how to make good use of these burgeoning technologies is proving to be difficult. However the lure of opportunity is powerful.

Friday, January 04, 2019

An Innovative New Magazine for Financial Professionals

Artificial intelligence. Big data analytics. Cloud computing. Accounting and other financial professionals are faced with a world that is changing daily and we are all bombarded with a constant barrage of new information.  But often, the daily streams of information masking as “must read” or “what you need to know today” end up to be rabbit holes stealing our time with no tangible return.  The ankle-deep water never gives us what we need to reach true understanding or to take action. Vision and insight can only come from connecting the concepts to a new reality.

ThinkTWENTY20 is a new digital magazine focused on providing you with that vision and insight. Our belief is that we don’t need more superficial data or more two-minute Google searches. We will act as a guide who interprets information from a financial professional’s perspective. We will be delving into the hot topics of today; what they will mean tomorrow, or next year, or ten years from now.  What are the trends?  What is the evidence that we will be impacted by this change and when will it happen? 

Here are a few topics we will be exploring:

·      How can firms profit from artificial intelligence?
·      Will blockchain make auditors obsolete?
·      How can clients be served in the social media era?
·      How is digital transformation reinventing corporate financial reporting?

People who like to think things through and people who think deeply and creatively will be drawn to this magazine. Subscriptions are available now through our website.

There is also an opportunity to get published there. ThinkTWENTY20 is soliciting submissions. We are seeking authors who have a unique ability to examine a topic in the depth needed to create understanding and connection from what is true today to what is possible tomorrow. Guidelines are on the website.

Wednesday, January 02, 2019

The Data of Exponential Technologies

IoT, Augmented Reality, Artificial Intelligence are all areas of technology that are interacting in business to provide new experiences for customers, stakeholders and owners.

For example, suppose a customer is shopping for a new outfit. Normally she would try them on at a store. She could try one of the image creating features of some online stores, where an image of her wearing different outfits could be viewed to help with the decision. However, these apps bring in various possibilities of distortion.

Another approach she can take is to go to a store and look into a mirror equipped with the ability to show her image dressed in the outfits she is considering. She doesn't have to try them on, but the result is exactly the same as if she had. This image is augmented reality, aided by the use of AI. The mirror can be a part of the IoT world.

This is just one very small example of the use of exponential technologies.The scope of such applications is truly exponential, extending certainly throughout the supply chain and beyond.

From a management point of view, an issue arises from the vast amounts of data that becomes available from these technologies and the propensity of data to fragment. Different data elements are useful for different purposes, yet all data must be managed so as to protect it and preserve its integrity.It must be managed as a unit but used separately. This is one of the fundamental problems of modern information systems. And it is being substantially complicated by the use of exponential technologies.

Friday, December 14, 2018

Companies Must Take More Responsibility for Education

It's well known that there is a serious shortage of IT talent both of the type that is capable of developing new systems as well as the type that is capable of managing a digital organization. Companies that go through a digital transformation process, and a few have, find themselves in a world of new issues. Business models inevitably change, with cost of entry dropping in some cases and profitability of new ventures becoming more unpredictable, or at least reactive to different pressures.

Many companies still rely on the traditional education system to produce the needed people. But that system is incapable of responding to new challenges quickly enough. While companies seek more agility, the educational system, by its nature, is limited in its capacity to be agile.

So companies have responded by providing training programs, which can be good, but usually are limited in their scope and depth because of the constraints of taking people out of production in order to train them.

What's really needed is a radical transformation in the overall educational and corporate training systems. They need to communicate and work together more effectively. Institutions need to respond to the needs of business. Corporate training needs to be an extension of the education provided by the institutions. It already often is informally but not so often formally.

Deloitte and others have said that “Companies should invest more in educating and training workforces for the digital era.” There is probably no alternative if companies are to remain competitive.

They're right. Companies need to put more resources into education.

Wednesday, December 12, 2018

Impact of AI on humanity

AI is moving ahead quickly - so quickly that our traditional social institutions may not be able to keep up. Yet, AI promises to be pervasive within just a few years. When you look at how quickly Google has moved into our fact finding space, and how much we rely on it, we can get some sense as to how quickly AI can move.

This will raise some important questions. As humans work more closely with AI constructs, ranging from programs to intelligent robots, eventually those robots will become almost indistinguishable from humans, raising questions as to the rights of the robots, and the rights of humans vis-a-vis the robots. As humans work more closely with AI designed to augment their own capabilities, those capabilities will be vastly overcome by the technological. This will raise questions as to the responsibility for decisions and actions. Reliance on code - which is basically what AI is -  will increase the feasibility of amoral corporations and governments slanting that code to suit their own purposes in pursuing profit and power.

Pew Corp did a study asking some "979 technology pioneers, innovators, developers, business and policy leaders, researchers and activists" to answer these and related questions in a canvassing of experts conducted in the summer of 2018."

They found a variety of concerns, and opportunities for humans, but all agreed that massive change is in the works - with some saying that such change is likely to extend over the next fifty years or more. The change will not come as once, meaning that humans will need to be very responsive in dealing with the change as it comes. But it will come fast, which means that some people will be displaced and left behind. Which in turn means social unrest, more populist uprisings, perhaps dictatorships.

It's a massive challenge calling for restructuring of our social, educational and government institutions. The survival of our society - of humanity as we know it, is at stake. To gain a greater insight into these issues, check out this article on the Pew website.

Wednesday, December 05, 2018

AI for Better Customer Service

Companies, particularly retail businesses, have been making greater use of Artificial Intelligence to enhance their customer service. They can't always go totally online, so it is in their interests to enhance the customer experience by improving convenience and helping to build customer loyalty. This has been approached by providing customer service personnel with technology like tablets loaded with useful data and related AI apps, as well as apps designed to effectively close a sale and facilitate immediate delivery. With many companies that have not gone totally online, this has expanded to include a variety of new AI technologies and the means to deliver them. The latest trend includes the use of wireless technologies that can track customer movements, including when the enter the store, so they can be approached with knowledge of their interests and preferences.

One lesson that has been learned is that in many cases, direct human interaction is necessary before the deal is closed. Which means the technology must remain in the role of supporting the human activity rather than replacing it. The strategic issue has been to define the best mix of human and technological involvement in the process.

This is a process requiring continuous improvement which in turn requires that the actions of competitors must be closely watched in order to maintain or build on product differentiation.


Friday, November 23, 2018

Automation of Accounting

Over one-third of respondents to a recent Consumer Technology Association (CTA) survey say they plan to automate accounting tasks. McKinsey & Co estimates that about 20 percent of the tasks in a typical recording and reporting cycle can be automated and nearly 50 percent of those tasks can be mostly automated. "CIOs could consider looking at the ways their accounting department collects, processes and reports financial data. Many firms have been automating the process of producing and submitting regulatory filings, for example."

Most of the regulatory bodies in the world have set the stage for automating their filings by having adopted XBRL (eXtensible Business Reporting Language). XBRL presents a tremendous opportunity for companies to fully automate their process of preparing and submitting regulatory reports. It can fit into any accounting system from SAP to EXCEL spreadsheets.

This opportunity is not available for Canadian companies in their filings since Canadian regulatory authorities are way behind the rest of the world in adopting XBRL. However, Many of those companies need to file with the SEC in the US, and the SEC has required the use of XBRL for years. The movement to inline XBRL is even better,  because it makes possible the automation of the whole filing, since with inline XBRL, the need for a separate text based document is eliminated.

All of which means that XBRL fits beautifully into the process of digital transformation.

Monday, November 19, 2018

Watch Where Your Data Goes

Many of us have linked our phones to our cars. Such linkages enable hands free usage, making them popular. These linkages work through the use of bluetooth, a powerful but famously insecure technology that enables wireless transmissions over short distances. When a linkage is established, it makes all the personal information on your phone available to your car. Something many of us don't always think about.

Such information would include contact details, call and text logs, and perhaps even full text messages.

This vulnerability was brought to our attention in February by exposure of the CarsBlues Hack and since then has been addressed by some of the car manufacturers, so that some 2019 models have installed preventative measures. But others haven't. So this means when you give up control of your car, such as by selling it or returning it after leasing, it means you should wipe out the information in your car system. This can be done by using the settings function for your car's system. There are usually two steps - delete the phone connection, then delete the associated data from the system. For most cars, this is a relatively simple operation.

The problem with personal data on cars is similar to the issues around the growth of IoT devices, where any number of devices are connected to the internet. When you discard these devices, its wise to delete the data from the devices and also any related internet sites. This is not always simple, but worth doing in any event.

Tuesday, November 13, 2018

Smart Contracts Have Weaknesses to Address

The most common and at this point the most useful application of blockchain is for smart contracts. An industry is growing around this application, including Ethereum, Eos and Tazius, among others.

Smart contracts are designed to automatically implement contracts that involve some routine procedure that can be programmed. Program code is developed and entered into the blockchain for processing. Once an implementation is initiated, it cannot be changed; all blockchain based contracts are immutable. Code can contain errors, so proper development techniques are crucial.

Smart contracts are encrypted and so the encryption keys pose a risk. They need to be fully protected. Most attacks on blockchain contracts so far have involved attacks on the keys.

Setup is therefore critical for smart contracts, and must often involve legal reviews and audit reviews before they are executed.

Some commentators have given a false impression that blockchain contracts are free of risks and do not require any reviews or such procedures. Because of the need for accurate code, strong encryption keys and effective access control, this is simply untrue.

Thursday, November 08, 2018

The Need for IT Oversight

IT Governance has been a major area of concern to Boards of Directors for many years. The problem stems from the fact that the members of the Board usually have limited understanding of IT, yet the Board has overall responsibility for firm governance and is accountable for financial stewardship and results. And IT is a major element of corporate activities.

Many Boards have approached this issue by appointing a member of IT management to the Board, which helps improve communications. Others have formed an IT Oversight Committee, that is closely tied into IT governance and reports regularly to the Board. Still others have formed a digital strategy think tank, which obviously offers insight into IT Strategy for the Board to consider.

There is a place for all of these groups in corporate governance. And several different ways to organize these IT groups, some better than others. The best approach is to make them high level committee, reporting directly and regularly to the Board. Members of the ITO Committee must be very knowledgable about IT and involved in it's management or governance. Functional management groups, such as AI Implementation, Data Management, etc. would need to channel into the ITO.

In this way, overall IT Governance is a network of top management and Board members where IT becomes an integral part of Firm Governance.

It is now all but impossible to avoid IT in firm governance. So, the issue is not to consider including it, but rather how to include the IT issues in a way that can optimize Board awareness and lead to decisions on IT strategy that are most likely to enable achievement of corporate objectives.

Tuesday, November 06, 2018

AI Implementation Levels

The most common approach to AI implementation is to approach it as an exercise in automation. Companies look to the processes in their organization and decide which ones can be automated, thus removing or reducing the human content and saving money.

While this approach can be useful, and perhaps even a way to start, Gartner, in their release "Building the AI Business Case", points out that it is a mistake to stop there. They argue that many organizations are missing the best of what AI has to offer. That the way to approach AI is to find ways in which human effort can be augmented. That involves looking at decisions that need to be made and considering how AI can help that rather than looking at processes that can be automated.

There are several levels of AI - Reactor, Categorizer, Responder, Learner and Creator.

The reactor level involves simply automating existing processes, eg. filling orders. It's the most basic level. The categorizer level , as the name implies, is AI that can identify categories of transactions and apply algorithms to enhance those decisions.

A good example of responders is driverless cars. That level of AI can identify and react to a number of particular situations. This is quite a sophisticated level of AI. Which raises the issue that one of the considerations in implementing AI is the risk appetite of the organization, or its risk appetite in particular interactions, some being more sensitive or critical than others.

Learner levels can learn from experience and then use that experience to augment future decisions. One example of a learner level application is medical diagnosis - obviously a critical application.

An organized approach to AI implementation is critical to gaining the benefits and also to avoiding unnecessary risks. The Gartner paper offers some useful guidance.

Friday, November 02, 2018

Intelligent Automation, a Path to Digital Transformation

Digitizing parts of an organization is a complex process, involving determining what processes are used in the business, and which of them would benefit from automation. And the complex interaction between humans and technology needs to be taken into account.

Many organizations are now automating these processes using smart bots that can monitor an activity and learn how the processes work and determine which ones should be automated. For example, they can follow the work of an insurance representative, track the interactions with customers and potential customers, including the reactions of the people in different scenarios and learn from the experiences. In other words, the bots use machine learning.

The idea is to reduce repetitive, manual tasks to leave more time for the more interesting and important relationship enhancing work. The human/technology interaction is referred to as orchestration and the objective is to optimize it.

For a more in-depth article on this subject, check out this link.

Wednesday, October 31, 2018

Machine Learning, AI and Digital Transformation

AI refers to a variety of technologies, some pretty basic and others very advanced. Basic AI has been in use for many years. As for the advanced - well, it's hard to define that, since it keeps changing so fast.

A powerful use of AI now is in the area of autonomous data analytics. The word autonomous implies that the analytics are able to stand on their own - able to make their own decisions. This is what is happening with the help of AI and machine learning.

Companies have more data available to them than at any time in history. However, that data is of little use unless it is analyzed so as to yield useful insights and prospective information. Also, the analysis must go a lot further than simply being sufficient to support a particular hypothesis. Rather it must be mined to yield the secrets and lessons it holds.

Autonomous analytics, aided by AI, supports that approach by being able to recognize relationships in the data that can then be used to formulate further lines of enquiry. That's where machine learning comes in. All of this is automated. In addition, the analysis can encompass very large bodies of data, maybe even all the data available to a particular company.

Techniques for implementing such systems are advancing quickly and several companies have been reporting useful results.

For a good paper on this subject check out this one.

Friday, October 26, 2018

AI and the Trough of Disillusionment

Artificial Intelligence adoption is playing a major role in the implementation of digital transformation by businesses. The hype is strong and expectations are running high.

Recent Gartner surveys show that a major part of AI implementation is likely to be in the area of customer interaction. It's not going to happen in the next year or so. Five to ten years is being put forward as the most likely timeline. Can the hype survive such a wait? Not likely.

AI still needs to go through the Trough of Disillusionment as identified in Gartner's Hype cycle. With so much emphasis on customer interaction, that trough could be deep. Past and current attempts to have customers interact with computers have been rife with frustration on the part of the customers. Even the established and simple process of calling a company and being met with an array of choices in the form of selecting numbers still does anything but encourage customer interaction.

Of course, the new AI systems will be a lot better than that and will be conversation based. But they had better be very good. Anything less will bring us back to our experience with the more primitive systems of the past. And the trough of disillusionment could then be a canyon. For more on Gartner's take, check this out.

Monday, October 22, 2018

Facial Recognition - A technology to watch

There's a growing realization that facial recognition (FR) technologies, aided and abetted by AI, are becoming more powerful, will be used more often and pose a significant threat to privacy.
In the past, tests have shown that facial recognition is often not very effective. For example, at Boston Logan Airport, volunteers posing as terrorists could only be successfully identified 60% of the time during a test, a rate that was determined to be unacceptable.

The AI component is becoming more powerful, however, and performance will be better in the future.

Given the widespread interest in using FR for a variety of purposes, a major purpose being safety, its use will increase rapidly. Along with this will be a need for new regulations to protect individual privacy.

It will not be possible to seek permission for all applications, so other means will be required, such as oversight boards, and notices to inform people that FR is in use. It will be necessary to define when permission will be required. Or when people may be allowed to wear sunglasses. Lots of issues will arise. See this article for example,

The use of AI will likely be useful in dealing with privacy, by introducing logic that deactivates FR in certain circumstances.

The privacy implications of FR is a major issue in the battle of technology vs privacy and developments merit close scrutiny and monitoring.

Saturday, October 20, 2018

Some Outstanding IT Trends for 2019

Gartner recently released their much anticipated list of IT strategic predictions for 2019. There are a few trends that stand out.

In 2019, efforts will continue to adopt AI, but this will be a rocky road because of skills shortages. Although it may begin to improve by year's end. Also, AI will likely enter into emergency care of chronic patients through powerful AI screening techniques. Thus freeing up emergency rooms for true emergencies.

Privacy will continue to be under attack on several fronts. Increased use of facial recognition technologies will mean that roadside cameras and mobile phones will be able to identify people easily. Think about that. However, Gartner anticipates that public security monitoring will increase without opposition because of fears about public shootings. Also, privacy in social media will continue to be a problem which will remain unabated because people will continue to use social media.

Also in the privacy domain, blockchain has serious loopholes (particularly because it contains text fields that may not be encrypted), which will lead to more privacy issues as blockchain gains more adoptions.

There are other interesting insights or 2019 and beyond. Read the full list here.