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TITLE: Keynote Address by Dr Nurmazilah Dato’ Mahzan, Chief Executive Officer, Malaysian Institute of Accountants at The IIUM International Accounting Conference (INTAC) on Big Data Analytics 2020

DATE: 20/02/2020

KEYNOTE ADDRESS BY

DR NURMAZILAH DATO’ MAHZAN

MALAYSIAN INSTITUTE OF ACCOUNTANTS

AT

IIUM INTERNATIONAL ACCOUNTING CONFERENCE (INTAC) ON BIG DATA ANALYTICS 2020

17 FEBRUARY 2020 (MONDAY), Senate Hall, Muhammad Abdul-Rauf Building, IIUM Gombak Campus

  • YBhg Datuk Dr Mohd Daud Bakar, President of IIUM
  • YBhg Prof Emeritus Tan Sri Z Dato’ Zulkifli Abd Razak, Rector of IIUM
  • YBhg Dato’ Sri Syed Hussien Abd Kadir, Chairman of Majlis Agama Islam Wilayah Persekutuan (MAIWP) and Chairman of Audit & Risk Committee IIUM
  • Tan Sri-Tan Sri, Datuk-Datuk
  • Senior Management of IIUM
  • Invited Guests and speakers
  • Ladies and Gentlemen
  1. Good morning! I’m honoured to be here today at the IIUM INTERNATIONAL ACCOUNTING CONFERENCE (INTAC) ON BIG DATA ANALYTICS 2020, not just in my capacity as CEO of MIA but also as an alumnus of IIUM. It is my pleasure to give back to my alma mater and to contribute in the area of my passion, which is digital transformation for sustainable business and the accountancy profession, in support of nation building.
  2. Thank you very much to the organisers for inviting me to speak and Congratulations for organising this very timely event.
  3. As the leading advocate for digital transformation of the profession and business, which is anchored by our MIA Digital Technology Blueprint, the Malaysian Institute of Accountants (MIA) is delighted to support INTAC.
  4. The theme for INTAC 2020 is LEADING THE WAY WITH BIG DATA ANALYTICS. But before I touch in more depth on data analytics, I’d like to present a big picture of digital developments and how these are affecting business.
  5. Since most of us here are accountants, we always follow the money. And it’s big money. Worldwide IT spending is projected to total $3.9 trillion in 2020, an increase of 3.4% from 2019, according to the latest forecast by Gartner, Inc. Global IT spending is expected to cross into $4 trillion territory next year.
  6. In terms of top technology trends, there are a lot of divergent and common opinions on these. I’m just going to highlight some findings from Gartner as the leading tech research firm and Forbes as a leading business media.
  7. During the late 2019 Gartner IT Symposium/Xpo, Gartner singled out ten strategic technology trends for 2020 . “Gartner defines a strategic technology trend as one with substantial disruptive potential that is beginning to break out of an emerging state into broader impact and use, or which is rapidly growing with a high degree of volatility reaching tipping points over the next five years.” The top 10 strategic technology trends for 2020 are:
  8. 1. Hyperautomation
      Hyperautomation is the combination of multiple machine learning (ML), packaged software and automation tools to deliver work. This would include robotic process automation (RPA), which is probably what accountants are most familiar with. Hyperautomation refers not only to the range of tools, but also to all the steps of automation itself (discover, analyze, design, automate, measure, monitor and reassess). Understanding the range of automation mechanisms, how they relate to one another and how they can be combined and coordinated is a major focus for hyperautomation. Hyperautomation requires a combination of tools to help support replicating pieces of where the human is involved in a task.
    2. Multi-experience
      Virtual reality (VR), augmented reality (AR) and mixed reality (MR) are changing the way in which people perceive the digital world, and will create future multisensory and multimodal experience.
    3. Democratisation of Expertise
      Democratisation of Expertise is focused on providing people with access to technical expertise (for example, ML, application development) or business domain expertise (for example, sales process, economic analysis) via a radically simplified experience and without requiring extensive and costly training. “Citizen access” (for example, citizen data scientists, citizen integrators), as well as the evolution of citizen development and no-code models, are examples of democratisation. Through 2023, Gartner expects four key aspects of the democratisation trend to accelerate, including democratisation of data and analytics (tools targeting data scientists expanding to target the professional developer community), democratisation of development (AI tools to leverage in custom-developed applications), democratisation of design (expanding on the low-code, no-code phenomena with automation of additional application development functions to empower the citizen-developer) and democratisation of knowledge (non-IT professionals gaining access to tools and expert systems that empower them to exploit and apply specialised skills beyond their own expertise and training).
    4. Human Augmentation
      Human augmentation explores how technology can be used to deliver cognitive and physical improvements. Physical augmentation enhances humans by changing their inherent physical capabilities by implanting or hosting a technology element on their bodies, such as a wearable device. Cognitive augmentation can occur through accessing information and exploiting applications on traditional computer systems and the emerging multi-experience interface in smart spaces.
    5. Transparency and Traceability
      Transparency and traceability are critical elements to support growing digital ethics and privacy needs, to manage the increasing risk of securing and managing personal data. Governments are also implementing strict legislation to heighten security.
    As organizations build out transparency and trust practices, they must focus on three areas: (1) AI and ML; (2) personal data privacy, ownership and control; and (3) ethically aligned design.
    6. The Empowered Edge
    In Edge computing, information processing and content collection and delivery are placed closer to the sources, repositories and consumers of this information. It is localised and enables greater autonomy.
    Gartner predicts that edge computing will become a dominant factor across virtually all industries and use cases as the edge is empowered with increasingly more sophisticated and specialized computing resources and more data storage. We will more use of complex edge devices including robots, drones, autonomous vehicles and operational systems e.g. for transport, logistics, manufacturing, you name it.
    7. Distributed Cloud
      A distributed cloud is the distribution of public cloud services to different locations while the originating public cloud provider assumes responsibility for the operation, governance, updates to and evolution of the services. This represents a significant shift from the centralized model of most public cloud services and will lead to a new era in cloud computing.
    8. Autonomous Things
      Autonomous things are physical devices that use AI to automate functions previously performed by humans. The most recognizable forms of autonomous things are robots, drones, autonomous vehicles/ships and appliances – which I mentioned earlier will be deployed in edge computing. Their automation uses AI to deliver advanced behaviours that interact more naturally with their surroundings and with people, as the technology capability improves, regulation permits, and social acceptance grows.
    9. Practical Blockchain
      Blockchain has the potential to reshape industries by enabling trust, providing transparency and enabling value exchange across business ecosystems, potentially lowering costs, reducing transaction settlement times and improving cash flow. Assets can be traced to their origin, significantly reducing the opportunities for substitutions with counterfeit goods. Asset tracking also has value in other areas, such as tracing food across a supply chain to more easily identify the origin of contamination or track individual parts to assist in product recalls. Another area in which blockchain has potential is identity management. Smart contracts can be programmed into the blockchain where events can trigger actions; for example, payment is released when goods are received.
    10. AI Security
      As AI and ML are applied across a broad set of use cases, this creates significant new challenges for the security team and risk leaders with a massive increase in potential points of attack with IoT, cloud computing, microservices and highly connected systems. Security and risk leaders should focus on three key areas — protecting AI-powered systems, leveraging AI to enhance security defence, and anticipating nefarious use of AI by attackers.
  9. Meanwhile, futurist Bernard Marr who is also a technology strategist and advisor to governments and companies wrote in Forbes in late 2019 about the 7 technology trends he predicts for 2020 .
  10. These are: AI as a service. We have all heard of software-as-a-service and lately Malaysia provider Green Packet’s Kiplepay launched e-wallet-as-a-service , where companies customise the package to fit their needs. PETRONAS is using this now for their SETEL e-payment solution. During 2020, we will see wider adoption of as-a-service platforms and a growing pool of providers that are likely to start offering more tailored applications and services for specific or specialized tasks, probably at more competitive pricing.
  11. Next, 5G. Bernard thinks 5G will fly in 2020, as the 5th generation of mobile internet connectivity is going to give us super-fast download and upload speeds as well as more stable connections.
  12. Bernard also highlighted autonomous vehicles, like Gartner, and also personalised and predictive medicine, extended reality and blockchain.
  13. Another interesting highlight from Bernard is computer vision equipped tools and technology that are already and will be used in facial recognition for identity verification, to help autonomous cars navigate, production lines watch for defective products or equipment failures, and security cameras to alert us to anything out of the ordinary, without requiring 24/7 monitoring. So, there is going to be a need to upskill those security officers and police officers who now sit in CCTV rooms monitoring the feeds!
  14. Ladies and gentlemen, that’s the big picture globally. For our purposes today, INTAC is focusing on data analytics, because this is the tool that is predicted to have tremendous impact on accountants, auditors and the profession.
  15. So, what is data analytics? According to the IFAC 2018 report on DATA ANALYTICS: An Information Resource for IFAC Members, data analytics is a broad term that encompasses many diverse techniques and processes of drawing insights from historical data over time. This sounds like something that accountants have been doing throughout our careers, right?
  16. The difference is that today, we face the challenge of analysing large volumes of data and/or data, which presents unique computational and data-handling challenges .
  17. But we must overcome the challenge because we have a lot to gain. Data analytics as applied today in business can reduce costs, increase productivity, enable us to offer new products and services, improve risk management and controls, which is not only useful for internal auditors and management but essential for strategy development and execution, grow revenues and profits in alignment with our purpose.
  18. IFAC encourages accountants to embrace data analytics as it offers real value for financial reporting and our roles and functions. Together with automation, analytics enables better risk understanding across thousands of data points in P&L reporting. Data analytics can improve the co-operation with external auditors to detect patterns and trends, and identify process improvements that can increase efficiency and enhance audit quality. It can help uncover valuable insights within the financials, and better manage risk across the organisation. The automation of large parts of audit plans using analytics can also make the internal audit function more efficient and effective.
  19. Ladies and gentlemen, During MIA Conference 2019, which was record-breaking and drew over 3000 delegates, many sessions focused on technology and impacts on the profession. One concurrent panel session on Harnessing Analytics to Maximise Business Performance had a lot of useful takeaways from business and technology leaders operating in the local context, which I want to share today.
  20. Like it or not, today we are inundated by data, and the expert panellists estimated that only 0.5% of all data in the world has actually been analysed.
  21. Data analytics can be sorted into: descriptive analytics - to tell you what happened; diagnostic analytics - to tell you why it happened; predictive analytics – to project what could happen in future; and lastly, prescriptive analytics – which tells us what to do to achieve the desired outcome.
  22. Shortage of talent, specifically experienced data scientists, is the leading problem faced by firms keen to embark on data analytics, in Malaysia and globally. Rather than waiting for talent to become available, organisations are recommended to identify and groom internal talent as data scientists.
  23. Data scientists possess three main skill sets: IT skills, math skills and industry expertise. IT skills are required because data scientists must be able to build programmes and data science models using programming languages like R and Python. Math is critical in order to use algorithms in their predictive models. Industry knowledge is essential in order to understand the organisation’s problem statement and pain points – to frame the questions that can be addressed using analytics.
  24. Accountants already have math skills and industry expertise. As it is challenging to recruit experienced data scientists, organisations can try to convert people with Excel capabilities and industry knowledge, such as accountants in the finance and business functions, into data scientists. That’s what we’re trying to do today, through this event and other micro credentialing programmes offered by MIA. To make you into tech accountants and value creators.
  25. If it sounds daunting, start slow. The panellists recommended that accountants are only just getting familiar with data analytics, try data visualisation with Power BI and Tableau - which refers to presenting data that has been analysed. Once familiar with visualisation which falls under descriptive analytics, accountants can move into diagnostics and eventually predictive and prescriptive analytics.
  26. Cost is always a big challenge for accountants keeping an eye on the bottom line. To manage costs of technology and analytics adoption, leverage free open source tools such as R and Python to run data analytics and mine the data, subject to the rules and regulations of the organisation’s IT department to safeguard security.
  27. Last but certainly not least, get certified internationally as citizen data scientists and non-IT experts in order to practise data analytics. I spoke earlier about democratisation of expertise as a key trend for 2020. Online training courses are also a good option for data analytics training, but for practical hands-on experience you must get coaching, mentoring and face-to-face training with actual data sets. Consider using the Kaggle platform which is an online playground for data scientists to practise these new skills. And do get your micro-credentials, such as Professional Certificate in Digital subjects.
  28. Ladies and gentlemen, I would also like to share that data analytics is gaining even more momentum, as based on the recent MIA-ACCA Business Outlook Report 2020, based on a survey of 743 accountants, of whom about half were senior leaders and decision makers e.g. CFOs, board and public practice partners.
  29. The survey findings provide invaluable insights on the level of digital and technology investment in Malaysia, even as the government pushes harder for enterprise and corporate digital transformation. A quarter of respondents reported that their organisations are allocating more than 10% of their budget on technology spending and digital transformation over the next three years, including investing in big data analytics (64%), cloud computing (57%), machine learning and artificial intelligence (33%), and robotic process automation (27%). This represents a significant catalyst for driving the digital and technology transformation of Malaysian businesses.
  30. Interestingly, despite these technology adoption plans, 70% of respondents have either no plans to reduce headcount or in fact plan to increase headcount over the next three years. Importantly, 60% of respondents have plans to evolve and improve existing employees’ digital skills and competencies. This clearly demonstrates tremendous opportunities for professional accountants to raise their game and increase their relevance to the organisations and clients they serve.
  31. And this is also why you’re here today. To raise your game and increase your relevance.
  32. Ladies and gentlemen, Research from the likes of Gartner has shown that technical skills relating to data analytics, IT fulfilment and IT innovation are in short supply especially for finance professionals . I would like to point out that data analytics was at the top of Gartner’s list of competency gaps. Therefore, I congratulate you on investing the time to be here today to learn more about data analytics and how it will impact you.
  33. Even as we acquire new tech skills, I think it is imperative that we acquire digital wisdom, which I think is very relevant for accountants. Along with smarts, we need wisdom to navigate the digital world.
  34. Digital wisdom is a term first coined by Marc Prensky, who also invented the term “digital natives.” Prensky is a leading intellectual and educator who is trying to reform how people learn by leveraging on technology.
  35. Prensky said, and I think many here today will agree, that learning should be “integrating the technology of our times into our thinking and decision making, doing it wisely, and sharing the results”. In other words, learning should change with the times – and as Gartner research showed earlier – we should augment our learning capacity and abilities – physical and cognitive – with technology. So, while it might not be possible for us to be born superheroes like Superman or Wonder Woman, we can all be Ironman.
  36. Coming back to what I was saying earlier, Prensky is saying that digital wisdom is a new wisdom that requires finding the best combination of mind and technology. It is the wisdom received through a creative use of digital technologies. In other words, digital tools can make us truly wiser and digital wisdom comes from thoughtful use of digital technologies. This is what today’s conference is all about – learning and applying data analytics tools to become smarter, wiser and more productive and impactful.
  37. More than digital wisdom, I think this is also a playbook for the digital age. As the regulator and developer of the profession, MIA will strive to infuse our professional development programmes with these principles of digital wisdom, underlaid with a strong foundation of empathy, and of course, ethics, integrity and trust.
  38. Ladies and gentlemen, each time I speak to an audience, I bring up the question of ethics, integrity, and trust.
  39. This is because ensuring trust through ethics, integrity and assurance is the core competency of the accountancy profession, since time immemorial. We need to defend and strengthen this core competency to future-proof ourselves and remain relevant.
  40. Other organisations that have survived the test of time have also had a core competency, but it evolved. Last week on February 13, BBC ran an article on the oldest companies in the world. Japan has 33,000 companies that are at least a century old. They have passed the test of sustainability by continually reinventing themselves while upholding their core competency. For example, Nintendo first began in 1889 as a maker of playing cards. Its core competency is creating fun through games. Another example is Hosoo, which has made kimonos since 1688. Now it supplies carbon fibre production for materials companies. The core competency is the same – 3-D weaving.
  41. If you look at the history of accounting, it can be “traced back thousands of years to the cradle of civilisation in Mesopotamia” and is said to have developed alongside writing, counting and money . Italian Luca Pacioli, in 1494 first described the system of double-entry bookkeeping, used by Venetian merchants in his Summa de Arithmetica, Geometria, Proportioni et Proportionalita. Backed by this core competency, the profession has ensured its relevancy and usefulness through providing systemic and systematic accountability and transparency for finances, and going forward, evolving into accounting, analysing and reporting for non-financial data as well.
  42. If we want to ensure that we will still be around in the future, sustainable and future-proof, we must embrace data analytics and other technologies. We must evolve with the time in order to deliver on our core competency of trust, efficiently and effectively.
  43. I leave you with that thought. I hope that today’s Conference will be immensely beneficial to all of you and that your organisations, the profession and the nation will gain from your new knowledge.
  44. Thank you!