Impact of future technological changes on consolidation
By Allen White, Sigma Conso co-founder & Administrator
In the 1970s, it wasn’t easy to imagine what changes would occur in information technology and what impact they would have on an activity as specialised as consolidation.
Forty years later, admiration and surprise dominate. In fact:
- Since the era of mainframe computers, apparently powerful because of their size and the infrastructure sheltering them, we have moved to computers on our desktops which are much more powerful both in terms of calculation capacity and memory.
- Information has moved from isolated users who depended on the post office for exchanges to lightening fast exchanges regardless of where the recipient is located.
- Technology has moved from the punch card, the 24-line, 80-character screen and listings with 132 lines to extraordinary convenience and ergonomics via the pixel, mouse and copy/paste.
- When, for the benefit of numbers people like consolidation managers, will we finally decide to give a Nobel Prize to a universal software package like Excel although it’s merely a calculation tool?
What innovations can we expect? It’s a very difficult question.
All of the capacities are available today to ensure that consolidation processing times are expressed in minutes, information exchange times in seconds and access to information is possible at all times with an excellent level of reliability. This means that future improvements will gradually become imperceptible to humans.
It’s very possible that technology will evolve toward voice and tactile communication between users and their consolidation software, thereby providing greater comfort, but there will be a very marginal impact on process optimisation. As for functional changes, the past has shown us a great degree of convergence between the approaches of competing software packages, a sure sign that the solutions developed are meeting needs.
It’s probably a shame that no consolidation expert systems have appeared for statutory consolidation, whose principles change very little but which requires a high level of expertise. These systems use a knowledge base to guide users in their search for a solution by asking a series of questions based on previous answers. These expert systems could also help consolidation accountants with IFRS, in particular by formulating suggestions and arguments for set situations which, as we know, are wide open to interpretation.
If IFRS is used by an increasing number of groups, there could be an economic challenge in the coming years that could lead to competition between this type of expert system and the traditional consultancy approach.
Articles in the “Future of Consolidation” series:
- The structure of the data to consolidate and processing in consolidation
- The reconciliation of intercompany balances: is there hope?
- IFRS and local GAAP
- Statutory consolidation and reporting: unified consolidation
- Group structure
- Financial communication
- Impact of future technological changes on consolidation