Management accounting tools and business intelligence over the years have grown to become the hallmark of high flying businesses. It is no longer news that critical business success factor is largely based on a company’s ability to analyse big data on a real time basis. You simply cannot succeed in this globalised hostile business environment if you cannot manage to bring out the synergy in combining the traditional management accounting tools and business intelligence tools.
It has always been the function of management accountants to provide useful financial and non-financial information to managers that will enable them carryout their managerial function. Nowadays, management accountants must blend these information with other intelligent information in a single dashboard like platform.
WHAT ARE MANAGEMENT ACCOUNTING TOOLS?
Management accounting tools are those models, techniques, and practices that qualified accountants use to produce sensible and well organised information. Basically, management accounting tools are classified into the following categories:
Strategic planning and management: under strategic management, there are models like; SWOT analysis, PESTEL analysis, Porter’s five forces, strategy mapping, mission and vision statement that management accountants can use to analyse the strategic position of a business. These tools when combined well gives useful insight on the company’s overall strategic standing both internally and externally. Accountants also use cash flow forecast for projecting into the future and make strategic financial decision.
Performance management and measurement: you simply cannot manage what you don’t measure. Accountants rely on performance measurement tools to provide management of all level relevant decision making information.
A balanced scorecard (BSC) is used to ensure that both financial and non-financial perspectives are taken into consideration so as to dissuade management from engaging in suboptimal action that eventually hurts the organization in the long run. Management also use benchmarking technique after establishing the critical success factor to ensure that resources are fully utilised.
Value analysis: here, management accountants can use models like BCG matrix, variance analysis value chain analysis, and customer relations management (CRM) technique to analyses the profitability of a project or portfolios of projects.
Risk management and corporate governance: there are risk analysis tools like; sensitivity analysis, integrated enterprise risk management model, good corporate governance models, and professional accountants ethical codes. Best practice is to manage information on enterprise level.
Product and service costing: products and service costing techniques have been around for some time. You can either use the ABC costing method or the traditional standard costing techniques
Understand that it is no longer enough to produce these management control information in silos, they have to be integrated and blended with business intelligence platform.