Recent Trends in Management Accounting
Management accounting is more than a vital process of preparing management reports and accounts with accurate and timely financial and statistical data. It is also a profession that involves management decision making, devising planning systems, and assisting management in the creation and implementation of an organization’s strategy.
This branch of accounting has evolved greatly from its beginnings in 20,000 B.C. with rocks and stocks piles. Today, managerial economics no longer uses a historical view of strategy and operations, but looks to predict what the market will do in the future.
With this new mindset, management accounting has evolved and adapted to a new digital market. To keep up with this new age, innovations in big data, mobile computing and business intelligence and analytics had to occur. Earlier this year, IMA’s Technology Solutions & Practices (TS&P) Committee identified more than 200 technology trends gathered from analyst firms, technology visionaries, business and technology media, and market research. Here are eight key technology trends specific to management accounting for 2015.
A Booming Number of Data Sources
Big data is a buzzword in the accounting world, but its true potential may not be understood. Big data refers to the growing number of sources of data. These data sets are so large and complex that traditional data processing applications are inadequate. As our ability to capture this data improves, so does the potential to utilize these numbers to power economic activity and decision making.
Big data is being produced with every social media impression and digital process. This rapidly evolving opportunity is enabling business and IT leaders to work together to realize the true value of this information. While it is a great asset, big data also poses several challenges in data storage, analysis, reporting, software deployment, and security. The following innovations in management accounting seek to conquer these challenges.
Emphasizing Secure Data
A data governance strategy includes all aspects of a company’s overall information. From the availability, quality, and utility of that information to its security. A company’s ability to protect these assets is crucial. Credibility, brand, and customers can all be lost due to a lack of good data governance. An effective strategy includes achievable goals and is created with the company’s future in mind.
Governments, utilities, critical infrastructure, and corporations are constantly targeted for a chance at stealing information or even causing harm. In these cases, cybersecurity and data governance go hand in hand. Management accountants play a vital role in protecting this information through a sound data governance strategy and implementation of effective controls and monitoring.
Everything is Connected Through the Cloud
Today’s technology has advanced to the point that we are able to access apps, emails, music, and more on a multiple number of devices, including our fridges. This concept is called the Internet of Things or IoT. The IoT is the interconnectivity of a variety of remote devices through the Internet or internal networks. The IoT provides real-time information for analysis and decision making.
This technology becomes exciting for managerial accountants because of its plethora of applications and ever-growing potential. It also provides a competitive advantage for companies to always be on top of the market and be able to act quickly on different occurrences. Just like anything connected to the Internet however, it is still an unsecure technology. Many of these devices, including the fridge, can be hacked due to their lack of security features. If the IoT is to be considered as a primary application for accounting, changes must be made to protect the data and its owners.
Besides being able to analyze and monitor this data from anywhere on almost anything, these mass amounts of data must be stored somewhere. Big Data has created a large challenge in finding ways to file away and store these valuable numbers. One solution has risen as a true solution: the cloud. Cloud computing is the storage and access to data and programs over the Internet rather than on a single and remote hard drive, network, or server.
The cloud increases the computing capacity and capabilities of companies in an affordable way. It allows smaller businesses to access better accounting features and capabilities. Just like everything connected to the Internet, it too faces security risks and calls for data governance plans.
Panning for Gold
With big data and the ease of mobile computing, the main skill needed in today’s management accounting is the ability to filter and focus the information to gain insight and drive decisions.These advanced analytic capabilities have evolved this business intelligence into a science of improved business decision making. Companies are now able to look at all of the possibilities and gain foresight as they plan for future economic growth.
This data enables companies to make smarter, more strategic decisions based on this intelligence and analytics. Companies are able to see where, what, when, and how their customers are buying. This is where the business intelligence of a management accountant is needed to filter through the numbers and see the real story of the consumer.
Without the knowledge of the potential success and risks of this new technology, big data could lead to the downfall of a company. Management accountants are needed to offer their expertise in these growing trends and make sense of it all for the growing economical market.
Visit here to learn why our online MBA program is designed to prepare motivated, tech-savvy management professionals with the business expertise and technical knowledge vital for success in today’s rapidly evolving global business landscape.