Question

One of the applications of Management Accounting is in short-term business decisions: Product Mix Decisions. Discuss how management accountant can use big data and data analytics in product related decisions.

Answer 1

with investment to develop its competitive

position. Striking this balance requires a keen

understanding of the drivers of cost, risk and

value in the business. Management needs better

information. Developments in the use of data are

revolutionising management, providing the insights

needed for better decision making and performance

management. Some early adopters in the use

of big data and advanced analytics have already

enhanced both their operational performance

and their competitive position.

Ensuring that data is harnessed to inform decisions

improves performance. Companies that have

embraced the opportunities offered by developments

in data are three times more likely to rate themselves

ahead of their peers in financial performance.1

For example, the Intercontinental Hotel Group

improved operational and strategic decision making.

Intercontinental built a data platform that makes

use of a wide range of both internal and external

data to improve operational reporting and customer

service. They are now better able to predict guests’

purchasing patterns and they can proactively

identify market trends to guide investment.2

Yet a survey of over 2,000 finance professionals

conducted by CIMA and the AICPA found that

86% of organisations are struggling to get valuable

insights from their data.3

Businesses and management accountants are always on the lookout for the next

big thing – and big data is already making big changes in many sectors.

Introduction

Ready for big data?

Nearly 9 in 10 organisations are

struggling to get valuable insight

from data

Management accountants have an important role

to play in ensuring business success in today’s

data-driven era. They also need to stay abreast of

developments to ensure continuing career success.

This briefing provides an overview of the

competencies businesses must develop, key roles

management accountants can play and the skills

they will need.

An SAS report,21 identified that in the UK the

uptake of big data analytics will more than double

in large organisations. The finance department is

the most likely after the IT department to be

responsible for big data activity. In many businesses,

finance and IT both report to the CFO or COO,

necessitating management accountants to be alert

to the potential in big data and the roles they could

play (see figure 2).

Management accountants are well positioned to

provide businesses with many of the competencies

they need to realise the potential in data. However, it

is as business partners that management accountants

have the most potential to help businesses make the

most of these developments.

Data scientist

Data scientists are needed to meet the challenges

of advanced data analytics. The shortage of data

scientists may seem like an attractive opportunity for

more quantitative management accountants. As the

leaders in the financial planning and analysis arena,

Big data is part of a wave of digital technology which has the potential to threaten

many highly skilled roles.19 For example, it has become easier and faster to identify

potential fraud or diagnose an illness without human input.

Management accountants: ready for

big data

management accountants are numerate. However,

to become data scientists they must be prepared

to invest in further education to complement

their accounting skill set with greater expertise in

advanced analytical techniques.

An important message for management accountants

is that they do not need to feel that the only way

to survive in a new era of digital data is to become

a data scientist. This is a highly specialised

and technical area that is not necessarily in the

management accounting space.

Data manager

Many management accountants maintain a good

understanding of their business’s information systems.

As trusted providers of accounting information,

they have the professional disciplines necessary to

ensure data quality. They can contribute structure

and credibility to data projects and they are often

best placed to articulate the needs of the business .

Businesses need to be forward-thinking and

innovative to ensure that they develop the

competencies necessary to exploit developments in

data for survival and success in the digital age.

Likewise, accountants in business must continually

develop their skill sets to remain relevant to employers’

needs. They must ensure that their continuing

professional development enables them to ride the new

wave of technology so that their professional skills are

recognised by employers and that they are engaged to

help their businesses to succeed.

Big data is a reality for many businesses around the world, but many more are not yet

making the most of their data.

Conclusion

CGMAs are well positioned to help ready businesses

to take advantage of developments in big data. As

finance business partners, they can work with IT

professionals, data scientists and business managers

to ensure data is used to inform decisions, improve

performance and help develop new business models

or strategies.