Emerging technologies for finance.

• Author: Sinnett, William M.
• Position: FERF@65

The second in a series of articles highlighting Financial Executives Research Foundation's published research over the past 65 years, this article looks at information technology and its use by the finance function. The goal of FERF research is advancement through knowledge that is relevant and practical for organizations.

From the early use of the computer by businesses--an "emerging technology" in the 1950s--to XBRL and SaaS today, Financial Executives Research Foundation has been working to identify those technologies that help the finance function work more effectively and efficiently. The following traces FERF research through the years to discover what is popular today, and why.

In the foreword to Appraising the Economics of Electronic Computers: An Approach for a Company to Determine the Feasibility of Acquiring a Computer, Frank Wallace, a partner with Peat, Mar-wick, Mitchell & Co., wrote: "Few scientific or industrial developments have received as much publicity as the electronic computer."

This research study was published in 1956 by the Controllership Foundation Inc., the predecessor to Financial Executives Research Foundation (FERF).

"The purpose of this report is to cut through the technicalities and get to the core of a common-sense, business appraisal of computers," Wallace continued, thus setting the direction for FERF research related to technology for the next 50-plus years.

Indeed, in the years that followed, FERF identified emerging technologies that would either impact or could be used by the finance executives executing the finance function (see chart on the following page).

And since its creation in 1968, FEI's Committee on Finance & Information Technology (CFIT, which was first known as the Committee on Information Management, or CIM) has worked with FERF to identify potential topics, participate in research projects and review drafts of research reports.

Coping with the Computer Revolution

By the late 1960s, society realized that the computer would revolutionize business as well as everyday life. In response to this revolution, FERF published Computer, Science and Management Dynamics, which was authored by three consultants from Arthur D. Little Inc.: Robert J. Fahey, Douglas A. Love and Paul F. Ross.

The first chapter, "Coping with the Computer Revolution: Executive Development Versus Obsolescence," predicted that "by the late 1970s or early 1980s, some large companies, at least, will be led by men whose knowledge of computers is thorough enough to permit their personal use of computers in strategic thinking and policy planning." The rest of the book explained how that would happen.

By the early 1980s, most companies realized they were dependent on the computer, and that they would now need to control its power. So, in 1983, FERF published Senior Management Control of Computer-Based Information Systems, the third study in a series on internal control, by three professors from the University of Michigan: Robert K. Mautz, Alan G. Merten (now president of George Mason University) and Dennis G. Severance.

In their executive overview, the authors stated that, "In discussions with senior financial and operating managers, effective management and control of computer resources ranked high on the list of challenges and concerns." This still holds true today.

EDGAR Will Become Interactive Also in 1983, the U.S. Securities and Exchange Commission created a task force to seek public input into the concept of an electronic filing and...