Disintermediation; dis·in·ter·me·di·a·tion (dĭs-ĭn′tər-mē′dē-ā′shən) - The process of removing the middleman or intermediary from financial transactions.
Context. What do I know?
Working in the audit trenches of Kenneth Leventhal & Associates in the mid-90s (now Ernst and Young), I realized how much auditing sucked and how useless my education actually was. I begrudgingly paid my dues for about 2 years thinking I wanted to become a CPA. Fortunately, I was at the right place in my career as it related to technology. I fell into the rapidly emerging technology of PC based accounting systems. And my professional life changed.
QuickBooks Desktop, Great Plains, SOTA MAS 90, Peachtree and Windows Servers were now the tools of my trade. I found the perfect niche in my new role as a consultant in this emerging field of technology.
We were helping companies who were using manual accounting systems or converting from AS400s down to these wonderfully powerful, yet simple, solutions that only needed a talented accountant to operate and about 8 weeks to completely implement.
Until about 3 years ago it’s been an amazing career.
Then I saw it happen again... Change.
Not since Pacioli or BusyCalc have we seen such disruption.
The technology disruption will begin to accelerate away from those who implement ERP software, keep our books in balance, tell us the good news that we'll be getting a return from the IRS and including those who issue the almighty "Opinion Letter."
This technology was authored in the 90s and has exploded, with provable results in the form of BitCoin since its Genesis on January 3, 2009.
It’s called blockchain.
Blockchain
Simply, the technology is a trustless, distributed ledger that is openly available (if designed that way) and has negligible costs of use.
Imagine that the value of each transaction, the accounting application, data and security are bundled together into 1 block (the pre-defined unit usually in bytes or megabytes) along with all the computing resources needed residing on your mobile device. A small example will soon be;
Your Bank
- You will never walk into a bank again.
- The function of banking will be in your control via mobile device.
- Pieces of that combined app are distributed to every user of that bank or possibly, many you may never know.
- Your account balance will be distributed to everyone, but no one person can access it without your private and secret keys.
When?
In just a few short years from the time of this writing, businesses will be able to trust all parties, in every transaction its involved with, without staff, using non-traditional banking sources and or alternative currencies, instantly have accurate up-to-the-minute financial statements and produce an audit for little to no cost. It’s true and we’re almost there.
Is it so far-fetched?
Since the mid-70s we have lived in a digital financial world which is largely based on data repositories and accounting systems. Today we’re able to produce information amazingly fast compared to just a generation before during the 1940s to 1970s. The information industry as we know it today was transformed by pc based computers.
What happened then?
During that transition, traditional accountants using green-bar ledger paper, 10 keys, with rulers and mechanical pencils we’re asked to adapt to the new technology or pack it up.
This is happening to again and in my humble opinion…
Those who produce “software.” You’d better be pouring R&D dollars and effort into this space as fast as you can.
To the accounting clerks, bookkeepers and yes, higher level positions in the accounting role like managers and controllers – You will be replaced.
How about the CPAs who conduct audits? For most, time is limited here too. The very thing that gave auditors value was independence from the entity, ability to apply “accounting rules,” and a State issued license… Who needs that now? We now have a TRUSTLESS system that only adheres to algorithms and isn’t susceptible to opinion, influence or bribery. No government authority required either.
Tax professionals? Tax specialists will find the same fate eventually. Who needs you to prepare a tax return when every transaction is accounted for and taxed instantaneously?
Don’t believe me?
Omisego has been in operation for just a couple years and has a contract with McDonalds, yes the global restaurant brand, in Central and Southern Asia, processing payments, collecting transactions, remitting taxes to authorities, at the point of sale in real time. 1 transaction, no middleman.
It’s not a robot… It’s disintermediation.
Thanks to the latest software technology advancements since computers were invented. It’s called blockchain.
See you in the clouds,
GoToMyERP
Robert Eppele, CEO of gotomyerp
To view the blog post on gotomyerp, click here.
What do you think?
Does technology help accountants and CPAs do their job more effectively or are they at risk for replacement by software? Comment below and let us know what you think, what you've seen happen and what you think technological advances do for the accounting industry.