Part 2: Digitalisation

Question 1

Digitization

Answer 1

The process of transforming analogue information into digital bits

Question 2

Digitalization

Answer 2

Organizational and social changes as a consequence of digitization

Question 3

Some examples of digitalization trends

Answer 3

1. Mobility
2. Cloud computing
3. Social media
4. Internet of Things
5. Big data
6. Data Analytics
7. Artificial intelligence
8. Machine learning
9. Blockchain

Question 4

Big Data challenges in Accounting

Answer 4

Assurance services
Financial and Managerial accounting
Research and education
Challenges common to all areas

Question 5

Pace of change drivers according to Oracle

Answer 5

1. Sustainability
2. Brand reputation
3. Security
4. Compliance
5. Talent
6. Competition
7. Customer expectations
8. Innovation
9. Technology governance

Question 6

Ability to respond constraints according to Oracle

Answer 6

1. IT infrastructure
2. Data
3. Processes
4. People & Culture
5. Operating model

Question 7

Accountant’s work has according to Oracle

Answer 7

Shifted from accounting activities to analysis and actions

Question 8

Business Intelligence

Answer 8

A broad category of applications and technologies for:
1. gathering
2. storing
3. analysing
4. sharing
5. providing access to data
in order to help users make better business decisions

Question 9

Data Analytics

Answer 9

Synonym for business intelligence

Broader term that includes statistical and mathematical processing capabilities

Question 10

What is our position and responsibility as accountants?

Answer 10

Risk & responsibilities
Boundaries & protection
Performativity of data (illusion of objectivity)

Question 11

Analytics three dimensions

Answer 11

Descriptive
Predictive
Prescriptive

Question 12

Challenges for the accounting profession

Answer 12

1. Automation of small, structured tasks
2. More analytical tasks
3. Structured tasks are needed to understand analytical tasks
4. Humans are hesitant to decide against analysis
5. System only as good as the humans programming it
6. Disregarding of implicit knowledge

Question 13

Accountants can

Answer 13

1. Be aware
2. Become an interface between technology, regulation, and business
3. Get involved in standard setting
4. Educate about performativity of quantification
5. Develop control mechanisms
6. Enable transparency through reporting and giving account in different forms

Question 14

Digitalizational logics to create value

Answer 14

1. Automize
2. Inform
3. Transform
4. Visualize
5. Analyse

Question 15

What are the implications of big data on Assurance services

Answer 15

Audit risk
Service organisation controls
Compliance audits

Question 16

What are the implications of big data on financial and managerial accounting?

Answer 16

Strategic partner role
Convince managers of analytics benefits
Monetisation of big data

Question 17

What are the implications of big data on accounting research and education?

Answer 17

Student’s career path

Course credits limitation

Question 18

What are the big data challenges common to all areas within accounting

Answer 18

Analytical skills
Privacy and security
Creative thinking
Automation threat

Question 19

What does the accountants risk & responsibilities mean?

Answer 19

Security & quality (from variety, volume, and details of data)
Ethical conduct & human rights (appropriate use of data)
Shift in responsibility and power relations
Cybersecurity

Question 20

What does boundary & protection mean?

Answer 20

• External regulation and enforcement (coercive pressure)
• Self-regulation of the industry (reputation and customer trust)
  (Who is capable of regulating and enforcing?)
  (Upstream and downstream monitoring of data)
• Transparency
• Extent of customer control over data use

Question 21

What does performativity of data (illusion of objectivity) mean?

Answer 21

• Numbers and quantification give the illusion of objectivity
• Through representing reality we also create reality
• Bias in use
• Bias in design

Question 22

What’s bias in use?

Answer 22

Anchoring
Availability
Unintentional blindness
Confirmation bias

Question 23

What’s bias in design?

Answer 23

What is collected
How it is transformed
How it is analysed

Question 24

How can Simons (1995) four levers of control be used in a digital environment? (From Capgemeni lecture)

Answer 24

Cultural controls
- Relate analytics initiatives to organisational culture, what are the gaps and the risks?

Boundary controls
- Data security and governance

Interactive controls

• Business & IT forums and collaborations for cross functional exchanges
• Exchange of data and information
• Data literacy capabilities
• External partnerships

Diagnostic controls
- Proactive solutions (predictions, cause & effects)

Question 25

What are smart, connected products? (Consist of) (Porter & Heppelmann, 2014)

Answer 25

Physical components Smart components Connectivity components (one-to-one, one-to-many, or many-to-many)

Question 26

What can smart, connected products do? (Four levels) (Porter & Heppelmann, 2014)

Answer 26

Monitoring Control Optimization Autonomy

Question 27

Porters five forces in a digitalisation setting (Porter & Heppelmann, 2014)

Answer 27

1. Bargaining power of buyers - Digitalisation expands opportunities for product differentiation. - Closer customer relationship through customer data 2. Rivalry among competitors - Product differentiation and value-added services 3. Threat of new entrants - Barriers to entry in the form of high fixed costs, complex product design, embedded technology, and IT infrastructure - First mover advantage in collecting data - Barriers can go down when digitalisation invalidates strengths of assets 4. Threat of substitutes - New types of substitution threats, such as wider product capabilities - Product-as-a-Service models 5. Bargaining power of suppliers - New types of suppliers - Connectivity components deliver more value relative to physical components

Question 28

Redefining industry boundaries (Porter & Heppelmann, 2014)

Answer 28

``` Product Smart product Smart, connected product Product system System of systems ```

Question 29

The net effect of smart, connected products on industry structure will vary across industries, but some tendencies seem clear (Porter & Heppelmann, 2014)

Answer 29

1. Rising barriers to entry thanks to first mover advantage in data collection and analysis 2. Consolidation pressures will be amplified in industries whose boundaries are expanding (a single product manufacturer will be in disadvantage to a multiproduct company)

Question 30

The implications of smart, connected products for the value chain (Porter & Heppelmann, 2014)

Answer 30

1. Product design - Hardware standardisation through software customization - Enable personalization - Support ongoing product upgrades - Enable predictive, enhanced, or remote service 2. After-sale Service - Predictive maintenance and service productivity - Take advantage of product data that can reveal existing and future problems 3. Marketing - New kinds of relationships with customers 4. Human resources - Recruit new skill sets 5. Security - Need for robust security management

Question 31

Strategic risks with smart connected products (Porter & Heppelmann, 2014)

Answer 31

1. Adding functionality that customers don’t want to pay for 2. Underestimating security and privacy risks 3. Failing to anticipate new competitive threats 4. Waiting too long to get started 5. Overestimating internal capabilities

Question 32

How is data reshaping the value chain at its core? (Porter & Heppelmann, 2015)

Answer 32

The new data resource | Data analytics