Journal of Management Control (2020) 31:1–8

https://doi.org/10.1007/s00187-020-00300-5

EDITORIAL

Digitalization in management accounting and control:

an editorial

Klaus Möller1 · Utz Schäffer2 · Frank Verbeeten3

© The Author(s) 2020

Abstract
Digitalization has the potential to disrupt the management accounting domain. It
may not only affect the digital landscape of the organization and the associated busi-
ness models, but also management accounting and control practices as well as the
role of the controller. This editorial discusses these developments by introducing
the concept of digitalization and describing its impact on the field of management
accounting and control.

Keyword Digitalization · Management accounting · Controller roles · Future of

finance

Digitalization is the use of digital technologies to change a business model and pro-
vide new revenue and value-producing opportunities—the process of moving to a
digital business (Gartner, 2020). As such, it has affected all kinds of business activi-
ties, including business models and supply chains, as well as support functions such
as human resources and accounting. Digitalization enables various new forms of
cooperation between companies, suppliers, customers, and employees, leading to
new product and service offerings. At the same time, digitalization is a challenge
for incumbent companies, as it requires them to reflect on their current strategy and
to explore new business opportunities. In the finance function, digitalization has

* Utz Schäffer
[email protected]
1
University of St. Gallen, St. Gallen, Switzerland
2
WHU - Otto Beisheim School of Management, Vallendar, Germany
3
University of Amsterdam, Amsterdam, The Netherlands

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2 K. Möller et al.

resulted in the automation and robotization of routine processes, the introduction of

business intelligence, and the application of data analytics. Digitalization is affect-
ing our daily lives as well as the role of controllers.1

1 Research in digitalization

Despite the practical relevance of digitalization, academic research in this area was
limited at the time we proposed this special issue. We noticed a large gap between
theory and practice: academic papers hardly discussed the effects of digitalization
on the finance function, while in our meetings with practitioners this was generally
the only topic on the agenda. Many practitioners indicated that the potential impact
on management accounting practices and the finance function was huge, with sev-
eral companies having special transformation departments (for example in market-
ing, human resources, and finance) to guide the digital transition.
Although quite a few papers have been published in this area since then and
authors such as Moll and Yigitbasioglu (2019) as well as Rikhardsson and Yigit-
basiglu (2018) have provided overviews of the literature, we still observe that digi-
talization is only about to enter the scholarly debate. Most of the papers are largely
conceptual (e.g. Bhimani & Willcocks, 2014; Quattrone, 2016; Arnaboldi, Busco, &
Cuganesan, 2017a, b; Appelbaum et al., 2017), with some case studies (Arnaboldi,
Azzone, & Sidorova, 2017a, b) and empirical analyses (Labro et al., 2019; Oester-
reich et al., 2019). The field still appears dominated by consultants and practice pio-
neers (e.g. McKinsey, 2018; Deloitte, 2020). We believe that the development is too
important for academia to leave it at that. The topic deserves a careful definition
(what exactly are we talking about?), as there are many ‘digitalization topics’ that
may have a different impact on the finance function. In addition to this, an over-
view and structuration of the field as well as conceptual ideas and reflection may be
required.

2 Impact of digitalization on the finance function

Where and how does digitalization affect the finance function? This content has
mainly been fueled by discussions with practitioners in the field, but also devel-
oped from conversations with fellow academics at conferences, seminars, and other
encounters. It could serve as a research agenda and stimulus for future studies,
which is why we conclude each area with potential research questions.

1
We use the term ‘controller’ rather than the equivalent ‘management accountant’ in this editorial. Sim-
ilarly, we use the term ‘finance function’ rather than ‘management accounting and control function’ or
‘accounting and finance function.’

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Digitalization in management accounting and control: an… 3

2.1 Strategy implementation and control

As the ‘economic conscience’ of the organization, controllers should be aware of

the (long-term) viability of an organization, and therefore its digital strategy. Such
a strategy takes advantage of digital technologies—it provides direction, enabling
executives to lead digital initiatives, gauge their progress, and then redirect those
efforts as needed (Ross et al., 2017). Controllers should play an active role in
addressing digital opportunities and corresponding changes in business models and
organizational strategies. That has many implications. Controllers not only need to
develop and adapt new KPIs, but also flexible steering approaches (e.g. the Objec-
tive and Key Results system) and new portfolio techniques, mixing traditional with
digital business models. In addition, traditional capital budgeting or investment con-
trol approaches might be inadequate in the context of exponential growth fueled by
digital products, platform strategies, and network economies.
Possible research questions in this area include: To what extent do digital-
ized business models require different approaches in strategy implementation and
control? Which management control systems can be used or how should they be
adapted in a digital context? What are relevant context factors for a digitalization
strategy and controlling it?

2.2 Financial planning and analysis

Some companies have already introduced data analytics and automated forecast-
ing technologies, using (or combining) time series techniques, machine/deep learn-
ing, and/or simulation. Key challenges include identifying and adequately applying
appropriate techniques and drivers, and—even more importantly—the right combi-
nation of ‘(wo)man and machine’ in the application process. Especially in the light
of structural breaks (such as the coronavirus/Covid-19 crisis) it seems to become
evident that a combination of human judgment and business acumen with the exten-
sive use of data and technology are key. Complete automation will likely only be
effective in niches with clearly defined and understood processes.
Possible research questions include: What will be the impact of specific digital
techniques on particular finance function processes? How can drivers for planning,
forecasting, and simulation be identified, used, categorized, analyzed, and opti-
mized? How can the interplay between ‘(wo)man and machine’ be designed? Which
behavioral biases can be mitigated or can arise with the use of digital technologies?

2.3 Reporting

Relevant and reliable data from a trustworthy, secure database should be the foun-
dation of every decision. Creating and maintaining such ‘a single source of truth’
is a core responsibility of controllers that is, however, increasingly challenged by
data scientists and other functions like IT. In the WHU digitalization pulse check,
Schäffer and Weber (2018b) find that only 50% of chief data officers in large Ger-
man companies report to the chief financial officer (CFO) or (in one case) the

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head of controlling. In other words, in half of the companies, the person ultimately
responsible for data quality does not report to the person who traditionally claims
to be the company’s single source of truth regarding financial data and the interpre-
tation thereof. In addition, new information routines might lead to a more decen-
tralized, self-service-based reporting and decision-making environment that may
change the nature of control as well as the role of controllers. The use of chat bots
and other robotic process automation techniques can create efficiency gains, but
requires sound governance.
The challenges are manifold and so are the opportunities for research: What are
effective digital reporting designs, process, structures, and governance systems?
What are preconditions for self-controlling and self-reporting solutions? Which
behavioral issues occur in digitalized reporting? How does a self-service reporting
system affect managerial decision-making, and how does it affect the relevance of
the controller? How are companies dealing with data governance?

2.4 Competencies, roles and organizational structure

Given the challenges mentioned above, the finance function as well as individ-
ual controllers may need to develop new competencies. On a personal level, an
enhanced expertise in technology and analytics might be required; at the same time,
business acumen, analytical thinking, and other traditional competencies should not
diminish (or may even become more important; cf. Kolthof et al., 2017b; Schäffer
& Brueckner 2019). On an organizational level, the finance function will likely face
a reduction in size (in the number of full-time equivalents; see Frey & Osborne,
2017; Schäffer 2017). This should however not restrict the effectiveness and impact
of the function. On the contrary, new opportunities as well as new roles emerge (see
Schäffer & Brueckner 2019).
Possible research questions include: Which competencies are required in a more
digitalized context? What are effective strategies for competence building, transfer,
and governance? What is the impact of digitalization on the roles of controllers?
Which contextual factors are enabling or hindering a digitalized finance function?
How should a digitalized finance function be structured by means of processes,
responsibilities, and IT resources?

2.5 The diffusion process

In the last couple of years, scholars, consultants, and practitioners have postulated a
fundamental transformation of the finance function due to digitalization and increas-
ing globalization (cf. Schäffer, 2017; Schäffer & Weber, 2016; Bhimani & Will-
cocks, 2014). Not surprisingly, Schäffer and Weber (2016) found empirical evidence
that CFOs and controllers in Germany increasingly expect the finance function in
their company to change. They conducted three studies on the future of controlling
(2012, 2015, and 2018a). In the first survey, the average difference between the per-
ceived importance of the top ranked controlling trends in 2011 and the importance
expected in five years from then was 0.39 points (on a 7-point Likert scale). The

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Digitalization in management accounting and control: an… 5

respective delta points increased to 0.73 in 2014 and 1.00 in the 2017 study; the lat-
ter increase being primarily driven by trends relating to digitalization.
Most finance functions in large companies are not as advanced in their digitaliza-
tion efforts as the commonplace c-suite rhetoric and the high expectation of change
might suggest. This is reflected in the third WHU study on the future of controlling
as well as a further study Schäffer and Weber conducted, namely the first WHU
digital pulse check (Schäffer & Weber, 2018b). The authors consistently found that
actual implementation is still in its infancy: 50% of the controllers surveyed indi-
cated that their company has no digitalization strategy for controlling, while 30%
reported the presence of only a preliminary strategy and a mere 6% of companies
reported a relatively mature digitalization strategy in controlling. In addition, only
12% of respondents consider their company’s financial investment in the digitali-
zation of controlling to be sufficient. Similarly, in the Netherlands Kolthof et al.
(2017a) found that robotic process automation (RPA) is used in transaction process-
ing for less than 50% of the activities. In addition, only in a minority of observations
business analytics is used for financial planning and analysis.
Clearly, changes in finance function practices fall short of what has been sug-
gested in earlier years. For instance, the expectations that CFOs and controllers
reported in 2012 regarding managers’ access to data were consistently not met in
2017. Similarly, respondents’ prognoses in 2014 regarding the prevalence of the
business partner concept in 2019 also appear to be unrealistic given the values in
2017. According to Schäffer and Weber (2018a), the adaptation processes in both
instances require more time than the controllers in their three studies on the future of
controlling originally expected.
Other findings in the aforementioned study by Schäffer and Weber provide empir-
ical evidence that digitalization in the finance function, despite all the lip service
and high expectations, is still in its infancy:

• In 2017, assessments of the importance of the trends ‘business analytics,’ ‘digital

business models,’ ‘self-service reporting,’ ‘agile management,’ and ‘digital lit-
eracy’ range only between 3.2 and 4.2 on a 7-point Likert scale.
• Two thirds of the respondents perceive deficits in terms of data quality and
accessibility. With regard to IT system integration, this number is even higher at
80%.
• Business analytics is used intensively in only a fraction of controller func-
tions—5% of respondents reported intensive use.

Another important challenge for the finance function is therefore to develop

expertise in big data and analytics. However, most controllers are not inherently
competent in this area. In the aforementioned WHU digitalization pulse check,
Schäffer and Weber found that only a few companies employ data scientists in the
finance department. In the companies they surveyed, data scientists typically worked
in IT and operations and only 22% of companies that employ data scientists did so
in the controlling function. The findings also indicate relatively little interaction
between controllers and data scientists, regardless of whether the latter work in con-
trolling or elsewhere. According to respondents, controllers and data scientists work

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closely together in only 17% of companies in the sample of the WHU digitalization
pulse check (Schäffer & Weber, 2018b).
So why does it take so long for the postulated transformation of the controlling
function to get underway? First of all, we know from numerous studies that pro-
cesses of fundamental change take time—at least when the changes are to be sus-
tainable and more substantial than merely scratching the surface (Frey & Osborne,
2017). For example, Pritsch (2000) showed that it took at least 25 years—an entire
generation—for the NPV method to become widespread (cf. Pritsch, 2000). In addi-
tion, the call for a new and more proactive controller role is not new, but can be
traced back to the 1970s (see Henzler, 1974; Zünd, 1985; Siegel, 1999). However,
many controllers still seem reluctant to act as business partners and the concept is
far from being intern internalized by the majority of controllers in the field. And
finally, the study by Schäffer and Matlachowsky (2008) demonstrates that even a
structured implementation project provides no guarantee that an instrument’s use
(specifically the balanced scorecard) will be securely anchored long-term and that
this process often spans many years. In all three examples, sustainable change in the
finance function is therefore a long process that cannot be measured in months or a
few years. Why should this be any different in the case of digitalization?
One potential reason is the way top management teams prioritize business units
and corporate functions in the pursuit of digitalization. However, anecdotal as well
as more substantive empirical evidence seems to show that CEOs tend to prioritize
areas that directly add to corporate value creation, such as marketing and supply
chain. Internal service providers tend to be deprioritized, resulting in the finance
function being a relative latecomer as far as digital transformation is concerned. This
may have implications for the overall status of the finance function and for its role
in digital transformation. Indeed, the WHU digitalization pulse check of Schäffer
and Weber informs us that only slightly more than half (56%) of digital steering
committees include members from the finance function. A relatively large portion of
German companies therefore appear to address digitalization topics without directly
involving the finance function.

3 Articles in this issue

Summing up, we believe that the digitalization of management accounting and

control has substantial potential to transform our research field, and that the arti-
cles in this issue provide an interesting avenue to start the dialogue. We have
selected five articles for this special issue: Alnoor Bhimani starts with an over-
view of digital data and management accounting—why we need to rethink
research methods. The next two articles focus on the effects of digitalization on
core controlling processes: budgeting and reporting. Mareike Bergmann, Chris-
tian Brück, Thorsten Knauer and Anja Schwering deal with the digitalization of
the budgeting process. Based on an empirical study, they research the determi-
nants of the use of business analytics and its effect on satisfaction with the budg-
eting process. Lisa Perkhofer, Conny Walchshofer and Peter Hofer focus on visu-
alizing the design of big data and investigate the effect of visualization type and

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Digitalization in management accounting and control: an… 7

interaction in an empirical study. Then we enlarge the perspective on the overall

control system in two articles with a more holistic approach: Thorsten Knauer,
Nicole Nikiforow and Sebastian Wagener deal with information systems, but on a
more abstract level, by analyzing determinants of information system quality and
data quality. Finally, Gianluca Vitale, Sebastiano Cupertino and Angelo Ricca-
boni show the interplay between formal and informal control systems, influenced
by big data based on a case study.
We thank all contributors, reviewers, and especially the managing editor of the
Journal of Management Control, Prof. Dr. Thomas Günther, for supporting this spe-
cial issue.

The guest-editors of the special issue:

Prof. Dr. Klaus Möller
Prof. Dr. Utz Schäffer
Prof. Dr. Frank Verbeeten

Acknowledgements Open Access funding provided by Projekt DEAL.

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