Abstract
Advancements in information technology (IT) haven't change only people's lives, but they have also changed the way business operates. Since the introduction of the enterprise resource planning in the 1990s, many organizations have started to implement their managerial accounting with IT for sustaining their competitive advantage. Increasing in data complexity has forced the continuous adoption of innovative tools and computer techniques. In this context, with the quick development of computer intelligence the concept of business intelligence and analytics has become centrally for the scholars and practitioners. The advancement in business analytics has shifted the attention to another important technology, artificial intelligence (AI). AI literature is still developing in the managerial accounting field and evidences an important gap in the analysis of empirical studies. After the process of literature review, this chapter tries to fill this gap with a longitudinal case study of practical solutions.
TopIntroduction
Information Technology (IT) advancement has shown an important role in the accounting field. Since the introduction of the Enterprise Resource Planning (ERP) in the 1990s many organizations have started to implement their managerial accounting with IT technologies to sustain their competitive advantage (Cao, Nicolaou, & Bhattacharya, 2013). The amount of data and information required has steadily grown over time, forcing the company into the continuous adoption of innovative tools and computer techniques. In this context, with the quick development of computer intelligence, the concept of Business Intelligence and Analytics (BI&A) has become central for the scholars and practitioners (Chen, Wang, Fan, Sun, & Satoshi, 2015). The extent literature identifies BI&A as systematic processes, methodologies, technologies, analytical tools and techniques that use computer-supported systems to collect and analyze information for effective business activities and better decision-making (Božič & Dimovki, 2019). Consensus in BI&A was given by the huge potential for performance management purposes and is rooted in managerial accounting literature because the combination of these computer-technologies with the Management Control Systems (MCS) increase the ability to elaborate more relevant information for decision-makers. The recent technological advancement has one more time shifted the attention to an important form of computer-technology, the Artificial Intelligence (AI), an advanced form of Business Analytics. This term is referred to the computer simulation processes of human thinking (Li & Zheng, 2018). Computers can learn and perform tasks which were previously considered to require human intelligence. The possibility to combine different external environmental situations and future development trends allows the managerial accounting to obtain better predictable and reliable future conditions. This can be an important revolution for the MCS.
However, the existent AI literature doesn’t allow to analyze more deeply this possible evolution for the future of MCS, because there is an important gap that concerns the empirical analysis of the possible AI applications.
This chapter in the first part presents a literature review about the evolution of technologies that support the managerial accounting, in particular the MCS. In the second part, it also tries to fill the AI literature gap about the empirical analysis. Moreover, the analysis of the relation between the managerial tools described by the consultancy group and their translation into practice in form of software and hardware solutions developed by vendors has the potentiality to understand the AI future implications for MCS. Evidence confirms that AI is still developing in the managerial accounting field and highlights the main potential benefits that regard the possibility to govern the competitive advantage with a better forecast of the future key variable for the business strategy.
From a practical perspective, this study contributes to understand how AI is developing within the managerial accounting context by analyzing the managerial implication and the practical evidence about the solutions of this technology.
This chapter is organized as follows: after the literature review about the IT advancement for the managerial accounting, Section 2 describes the research method, followed by Section 3 which presents the practical evidence of AI. Finally, Section 4 concludes the research.
Key Terms in this Chapter
Advanced Business Analytics (ABA): It regards the automatic or semi-automatic elaboration of business data, using advanced business intelligence techniques and tools. Advanced business analytics techniques include activities of machine learning, forecasting, visualization, network and cluster analysis, multivariate analysis, and neural networks. Artificial Intelligence (AI) is an advanced form of Business Analytics.
Artificial Intelligence (AI): This term is referred to the computer simulation processes of human thinking. The underlying assumption of AI is that computers can learn and subsequently perform tasks which were previously considered to require human intelligence. There are many definitions of AI.
Business Intelligence (BI): This terminology is referent to the technologies for the collection, analysis and representation of the relevant business data. These technologies permit to enhance the ability of the decision makers to predict the business future. Business intelligence (BI), instead of BA, do not encompass advanced technologies for the process of data analysis.
Information technology (IT): This term is related to the use of the computer science for store, process, analyze, create and share all form of business information. Information Technology was coined for the first time by the Harvard Business Review, for distinguishing the simple computer machine to the machine that can support the decision-making processes.
Management Control Systems (MCS): It can be defined as a set of formal and informal mechanism used by organizations for sustaining their competitive advantage and for guiding the processes of strategy formulation, implementation and re-formulation, through activities of planning, analysis, measurement, control, rewarding, and performance management. These systems also support the organizational ability of changing and learning from the business phenomena.
Enterprise Resource Planning (ERP): It is an enterprise information system implemented to integrate and optimize the business processes and transactions in a corporation, with the main goal of standardize and integrate business processes for accelerating access to shared data stores across the organization. ERP represent the first form of information technology (IT) introduced by the firms for supporting their competitive advantage.