We all know and feel that the world is changing. Not only in our private life but also at work things have changed over the last couple of years. The skill set, role and tasks of a management accountant are no exception. Recent development in management accounting include:
Let’s have a closer look at all those points:
With the technological advances of the past years, it got possible to increase the amount and speed of data analysis. Many companies invest heavily in building up data gathering in order to obtain more insight. For management accountants this means dealing with more data, producing more reports, explaining more relations and deviations.
Gathering data is one part. However, using all the data to produce useful insight is another, often underestimated, time-consuming and complicated part. A major risk involved is getting lost in data, investing much effort and money, producing reports people can’t process anymore due to an overdose of information. It is a management accountant’s task to help figuring out what information adds value and what should be left out. Doing that we should keep in mind that less can be more. We talked already about optimising the number of reports in the article lean finance: 4 awesome tips for busy mgmt accountants.
The classical role of a management accountant focused in the past strongly on preparation and analysis of historical figures. During the last years, however, a continuous process of change can be observed. The pure use of figures and comparing actuals to plan is not anymore the only key responsibility. Management accountants are more often asked to look forward, help shaping the corporate future and add value with their business knowledge. This recent development in management accounting clearly underlines the importance of these positions in companies.
This means, the skill set of management accountants has changed. Business understanding, thinking forward, seeing connections and communication become more and more important. With those abilities, business partnering gets possible and extra value can be added.
The more forward-looking the less black and white situations occur. Looking backwards and judging figures doesn’t require the same amount of communication skills as looking forward, perceiving the future and help shaping it. For management accountants, this means proper communication is an essential skill nowadays.
If you look at the curriculum of professional diplomas, for example the Chartered Management Accountant CIMA, you can see that communication is considered an essential part of a management accountant.
Another area in business going trough a massive change is the field of project management. Earlier, projects were set up with clear goals in mind. A plan was made and written down and the board or another committee could approve a project appraisal. You may know this sequential project management approach by the expression “waterfall”. This situation made it also easy for management accountants to check the finances. Progress could be monitored towards the initial proposal. In the end of a project, actual costs and results could be compared with the initial plan.
The introduction of agile projects, where the solution is designed in an iterative way, makes it harder for management accountants to judge the progress and financial consequences of a project.
Recent development in management accounting…
After reading the mentioned recent development in management accounting we might ask ourselves whether we will see even more change in the future. Personally, I think the business world will keep changing and consequently also the working environment, tools and priorities of management accountants.
Have you been affected by recent developments? Share your story with us using the comments section.