Members of the team here at TradeGecko recently attended the Xero Roadshow 2017 as an ecosystem partner. Thanks to Xero’s CEO Rod Drury’s keynote “The Future of Accounting Looks Magical with AI and Machine Learning”, we have come away with an exciting picture of how cloud-based accounting is set to evolve.
As Xero’s Ecosystem Partner of the Month in January 2017, we already have insights on how the huge developments Xero has made in artificial intelligence (AI) and machine learning will combine with our own innovative inventory management system.
Understanding the difference between AI and machine learning
The world of retail is changing, and AI and machine learning are a prime example of how technology is becoming increasingly integrated into the process. For the uninitiated, AI and machine learning might be the stuff of science fiction movies. In fact, these new forms of technology are already a present reality, especially in the world of digital data management. These two buzzwords are often confused and even sometimes taken to mean the same thing. However, although they do operate together, AI and machine learning are two very different things.
What is AI (artificial intelligence)?
According to a study conducted by Deloitte University Press, “A confluence of forces has propelled artificial intelligence into the business mainstream.“ But what is AI exactly?
AI is mostly accepted as being something of an all-encompassing term to describe smart machine technology. That is, a machine which can carry out a task through using a smart approach such as the utilization of logic to solve a mathematical problem. Earliest pursuits in the field of AI were aimed at creating human-like thought processes that were carried out by what is, in essence, a mechanical brain.
What is machine learning?
Once we enter the field of “machine learning”, the interrelation of the two concepts becomes clearer. Rob Schapire of Princeton University describes machine learning as the science of teaching computers to think for themselves. “The goal is to devise learning algorithms that do the learning automatically without human intervention or assistance.”
In the pursuit of what are termed as “generalized AIs” (machines or systems that are capable of handling any task), machine learning is currently at the leading edge. This is one of the reasons why so much excitement and anticipation is being generated in the digital community.
From reading and analyzing the intent of written text to interpreting a person’s mood through music and other mediums, machine learning is providing the missing piece of the AI puzzle and taking the technology to the next level at a dizzying pace. This technology does exactly as its name suggests; it works with AI to enable the machine to ‘learn through doing’.
Xero’s solid track record in innovative accounting
During Rod Drury’s keynote “The future of accounting”, the CEO and self-confessed accounting junkie, outlined where he started and how he has arrived at the forefront of these exciting new developments.
Xero’s CEO explained that he has always had a keen interest in accounting and providing digital solutions for double entry bookkeeping even during his school days. After working as an auditor and IT consultant, he worked closely with Microsoft before branching out as an entrepreneur. Following the sale of his successful AfterMail business, he realized that there was a real need for providing an innovative accounting system that addressed some of an auditor’s biggest pain concerns.
In an interview with Intuitive Accountant, Drury explains his thought process behind the creation of Xero. “Creating simple and beautiful software takes more time, innovation and effort than complicated offerings. Every functionality needs to be carefully designed with a user’s workflow and end purpose in mind.”
The future of SME accounting
10 years later, Drury’s team now find themselves poised at the cutting edge of the next major evolution of digital cloud-based accounting. This is nothing less than great news for SMEs who continually grapple to control their inventory and accounting processes.
It does pose some questions concerning the future role that accountants will play in such businesses. In this new reality, Drury believes that “the accountant’s role becomes one of quality control and certification of the automatic accounting processes, rather than that of number cruncher.” Bernard Marr of Forbes theorizes that, “the key will be to focus on the areas of the job that are more difficult to automate such as the business advisory function, rather than simply number crunching.”
The impact of cloud accounting
In his presentation, Rod Drury left little doubt in his listeners’ minds that one of the most important breakthroughs in recent years has been the use of cloud-based accounting systems. They have played a major role in progressing both AI and machine learning technologies to the point they are at today.
If business owners and accounting software developers still think that a cloud-based system is merely about putting desktop software online, they need to stop and think again. The reality is that moving systems from the confines of the owner's hardware to the huge expanse of the cloud has facilitated the “magical” in the market. This means that data-driven accounting is accessible on all types of devices from virtually anywhere.
Xero and AWS
The recent migration of Xero’s cloud-hosting to Amazon Web Services (AWS) platform is just one of the key moves that demonstrates the level of their commitment to the evolving AI and machine learning technologies. Drury points out that this will allow the accounting magic to happen, as they aim to make accounting for SMEs simpler and attract 100% of the global business market into utilizing the benefits of cloud-based accounting.
Xero gave several examples of where AI and Machine learning were already being used, including:
- GPS locating (Advisor Directory)
- Predictive typing
- Code-free accounting (Find and Recode)
- Business Directory (matching credit scoring + Google + Xero CRM)
- Reporting (Big Data, BI)
Making SMEs the smart winners
The burdens on SMEs through legislative restraints and other time-consuming processes means that time continues to be one of their most valuable commodities. Rod Drury’s keynote “The Future of Accounting” talks about moving into the golden age of smart services within cloud accounting.
With time at a premium, these innovative accounting systems are set to save your business some of that most valuable asset, freeing you up to engage and apply yourself to doing what you do best - growing your business.
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so you can get back to doing the things you love.