OBU RAP Topic 2: Analyse and evaluate the impact (positive or negative) of an internal digital or technological innovation on the operational and financial performance of the organization.

Overview

Digital innovation is defined as the application of modern technology to solve existing business problems. This can be done by optimizing the processes and implementing new business models. Several objectives can be achieved such as improving the customer and supplier experiences.

Areas that could be considered

• New business processes
• New software or hardware
• Supplier/customer processes

A company might introduce new business processes to automate its working and create revenue directly. It can include product manufacturing, order to cash, delivering, and then collecting revenue.

New software or hardware can be installed in the company like better accounting software to innovate with the moving times. In addition to this, Company might want to improve and automate its ordering process with suppliers and the selling process with customers. All these changes must be studied.

The main objective of this topic is to identify the impact of new and modern digital technology on the selected organization and how this links to the financial and operational performance over three years. Operational performance refers to the interaction between various company units and their ability to generate better results when operating together.  Whereas Financial performance measures the ability of a company to use its assets and generate revenues.

Key features/requirements

To be awarded a pass grade in the RAP, the main requirements of the topic are as follows

• Identification of the digital innovation in a selected company
• Identification of the operational and financial aspects of the company
• Evaluating all the possible impacts of modern technology on the operations of the selected company
• Creating a link between digital innovation and the changes in the company’s operational performance and financial position
• Critical analysis of the positive and negative aspects of innovative technology

Key Success Factors

After understanding the requirements and discussing them with your mentor, students should follow certain key success factors

• Selecting a suitable company that has recently gone through a digital change
• Identifying different changes and innovations made in the selected company
• Detailed knowledge of the advancements being made in the relevant industry
• In-depth knowledge of the new software and digital innovation that has made an impact on the functionality of the company
• In-depth knowledge of the operations of the company that are under the influence of the proposed digital innovation.
• Analytical assessment of the impact of digital advancement on the different operations of the company
• Adequate application of the selected goals and objectives that were set at the beginning of the RAP in the proper sections of RAP
• The implementation of the correct research methodology to get satisfactory results on all the selected goals and objectives that were put in place at the beginning of the RAP
• Keeping the discussion logical by keeping all the objectives in mind
• Using reliable and appropriate sources for data gathering
• Properly referencing the information gathered according to the Harvard referencing style as told by the OBU.
• Usage of suitable business models to study various aspects of digital innovation and its impacts

Accounting and Business models for Topic 2

Business process change: Business process change is the modification to the way the business operations are carried out in the company. It is done to achieve a competitive advantage in performance through changes in the relationships between management, information, technology, organizational structure, and people. It is a strategy-driven step to ensure that the business innovates according to the current needs. It ensures that profitability is improved with reduced costs and more efficient performance. The 4 core steps for changed business leadership are planning, initiating, implementing, and stabilizing.

PESTEL: A PESTEL analysis is a tool used to identify the macro (external) forces affecting an organization. PESTEL is an acronym for Political, Economic, Social, Technological, Environmental and Legal. It is an extremely popular model used by management for strategic planning and also for risk management

Value chain: A value chain is a guide that helps us to transform our ideas and dreams into reality by providing us with 5 steps of a business model, Value chains aid to increase a company’s efficiency so the business can deliver the most value for the least possible cost. Five steps to developing a value chain analysis

• Step 1: recognize all value chain activities.
• Step 2: Assess each value chain activity’s cost.
• Step 3: judge what your customers value the most
• Step 4: assess the value chain of your most competitive peer.
• Step 5: finalize your competitive advantage.

Cost-benefit analysis: cost-benefit analysis is a way to ensure if a particular decision or management change will prove to be beneficial for the areas to which change is being applied. If a company does not know the outcome of a decision it is going to make, then it can calculate the cost versus profits to analyse its decision. There are many advantages of taking this test before making any major decision. By doing this analysis, a company can find out the most critical information regarding the outcomes of strategic decisions like the ROI and value chain. The first step of a cost-benefit analysis involves a framework for analysis. Then all the projected costs and their estimated benefits are laid out. Companies should then assign a dollar value to each cost and benefit.  Then tally the total value of costs and benefits and compare. If the benefits outweigh the costs, then the management change should be incorporated without a second thought.

E-commerce model: This model has been remarkably successful since its induction into big companies such as Amazon, Ali Baba, eBay, Daraz etc. In this kind of innovation, customers can buy through online stores where they can get things from all around the globe with the click of a button.

NPV: NPV or net present value is a financial measure that is used to calculate the total cost of a business opportunity. The company can use this to perform a capital appraisal.

So which model can be used for the best evaluation of the topic? Well, it depends on the company you are choosing and the kind of business that company is involved in. An experienced mentor can guide you better regarding the usage of relevant models.

Major benefits of choosing topic 2

This topic requires the students to study the impact of digital innovation and offers a lot of benefits in return which are as follows

• Students will get to know about the new digital and technological advancements and how companies are using them for their benefit
• Students will learn about the adverse effects of technology as well
• A detailed study regarding the company’s operational and financial performance will equip the students for their professional careers.
• Students can apply their theoretical knowledge to real-world situations.
• A critical analysis of the company’s operational and financial performance will help to sharpen the required skills needed by an accountant.
• Students working in IT sectors can move up the professional hierarchy by having a better knowledge of the impacts of digital innovation

Possible limitations faced by the students while researching topic 2

The main aim of conducting research is to set up new facts or confirm the outcomes of the previous research. It enables us to gain new knowledge regarding the subject. However, while preparing for OBU thesis research students face many problems.

Some of the key limitations are as follows:

General Limitations

• Research method: Students need to have a clear understanding of the research methods. The research methods are not relevant or reliable as students are not trained in different methodologies. Simply replicating the knowledge available online or from various sources is not wise. There is a lack of basic knowledge regarding the correct methods of research.
• Interaction between the subject company and student: There isn’t any proper interaction between the subject company and the student. This means that a substantial amount of data going into the thesis goes untapped. The key issues of the company can only be highlighted with the help of internal company management.
• Overlapping information: overlapping information is often obtained because of excessive research through various sources. Each source has its own story to tell. Students often get confused regarding the facts and statements.
• Confidentially matters: Students may not be able to get authorization to talk to the higher management and also some information may not be provided due to confidentiality issues.
• Time constraints: it is without a doubt that students need to complete their RAP before the deadline hits. Sometimes, the time limit can affect the quality of RAP very negatively. Students need to acknowledge this from the very start and set a schedule to be consistent with their research.
• Data collection process: The different ways of collecting data presents a strong limitation. If a student conducts an interview person to person or if he does it over the phone, both can have different effects on the interview. Hence, this data limitation must be reflected upon

Specific Limitations

• No permission letter: It is permission letter is not granted to the students as companies do not like to share their data

Suitable organisation for topic

The most suitable organization is the one for which the student has access to the management and the management is willing to share all the required information. Selecting a company which is established enough so that its performance and financial position for being studied over some time is necessary. To make a high-quality RAP, it is essential that students choose a company whose operations are easily understood by the student, and he can make connections between assorted topics.

The following factors should be kept in mind when choosing a company for RAP:

• The general interest of the students in the company
• The amount of information available for the company
• Access to primary sources of information
• Familiarity with the industry sector associated with the company
• Access to the internal management of the company

Technology, telecommunications, and financial service providers are the most digitally transformed sectors and they are maturing every other day. Moreover, the Healthcare sector is also showing rapid growth in digital innovation. Any suitable company can be chosen from these sectors for writing a RAP on topic 2.

Suggested approach for this topic

Before starting your research, you should understand the assignment. The guidelines mentioned in the information pack should be read. The word count and length should be looked upon. What kind of sources are required by the topic, primary or secondary? The style of citation ‘Harvard referencing’ should be understood by the students. All the other requirements and directions made by the OBU must be complied with. After choosing this topic, a proper mind map must be made from the start, so the student conducts all the required tasks in a proper and timely manner. All the major requirements and aspects of the topic should be considered thoroughly so that a strategy can be devised to meet those requirements. A research methodology and all reliable websites and authentic sources should be noted down. The style of referencing must be kept in mind while researching this topic in order to pass the OBU RAP. A comparison organisation might be helpful for topic 2. Primary data must be collected.

In Part 1 -(  Research objectives and overall research approach), Students need to make a table of contents and a title page mentioning the ACCA reg number and the selected topic. Part 1 mostly contains the introduction and the objectives of the RAP. The objectives should be consistent with the research of the project. Your personal aims and goals are not required to be a part of this section. The reasons for selecting the topic must be jotted down. The organisation which is suitable for topic 2 and why that organisation was deemed appropriate for the topic.  The aims and objectives of the project should be explained in several points. Research questions are written in detail, and it targets the specific areas that need to be researched. Usually, there are 3 or 4 research questions. Consideration of all these points is important in part 1. If you follow all these instructions, you can move very strongly ahead.

Part 2- (Information gathering/accounting and business techniques) is a very crucial section as all your understanding of the business and accountancy models is analyzed here. A quality explanation of the used models or any other frameworks and analysis of all their limitations must be performed. The most structured way of representing section 2 is by first mentioning the sources of information that were used to acquire the data for research on topic 2. Topic 2 relates to financial and business performance about digital transformation so publicly available information can be used such as the annual reports, articles by famous newspapers. The primary sources such as the documents related to digital innovation and its limitations must be written. Next, you would list down all the business and accountancy models and their limitations. The E-commerce model and business process change are the most appropriate for this topic. To find out more about the selection of respective models for topic 2, kindly refer to section ‘Accounting and business models for topic 2’ above.  Word count is to be prioritized which is 1800-2000 words for this section.

In part 3, there is a further evaluation, analysis, and conclusion. It should contain a description of the results obtained and all the limitations. Further research with examples and comparisons between the two companies is done. It is the most critical section, and most students fail in it if they are not in the hands of an experienced mentor. A qualified mentor can guide the students critically to secure a passing grade. Evaluation means that students will list down all the necessary reasons that led to digital innovation and its impact on the business and financial performance of the company. Financial analysis may involve calculating the cost and benefits and then comparing the two. The post and pre-change ratios must be included. you can represent your ratios with the help of graphs over three years.

This is an extremely broad vision of the approach. However, students can choose to do the RAP according to their approach after consulting with the mentor.

Suggested Approach for SLS

The meetings with the mentor must be planned at the start of the RAP and a track of those meetings must be kept in a diary as it will help later on to write the SLS. The time required to conduct effective research needs to be calculated at the start and a timetable should be kept in place. Religiously following the requirements and keeping track of the time is necessary to pass the RAP. All the information gathered should be recorded systemically and needs to be shared with your project mentor so that complete guidance can be given to you. Consultation with the project mentor ensures that a student passes with the highest possible grade. If any issue arises it can be solved by discussing it with your project guide.

Availability of Information

There are two types of sources that can be used, primary and secondary.

Primary sources are the data that you collect on your own and it is considered first-hand. This can be done by conducting interviews, surveys or having participants fill in questionnaires. In this topic, students are required to gather information directly from the management such as business process reports. Internally generated information gives a better evaluation of the company’s decision to make the technological change and its impacts.

Secondary information on the other hand refers to already available and published information. Using it to your own advantage by checking the authenticity of these sources can be beneficial for RAP.  All other sources of information such as online websites, journals, and articles are considered secondary sources of information. For using a secondary source, the reliability must be checked, and then the information should be put in the RAP. This topic can be covered well only with the help of secondary information. Information in the RAP must be through a relevant source and its content should also be relevant to the topic. The sources of information play a crucial role in producing a good RAP that is based on facts. If reliable sources are not found, then a student must consider choosing a different topic for which information is more easily available.