Information Technology + Management Accounting = Awesome!!!

Nowadays management accounting major role is in planning and decision making function in the management process, while the traditional accounting function was concentrated on profit and loss statement, tax requirement, collecting data of the industry for the use of developing and monitoring the business strategy.  There were also some software which can provide bookkeeping facility and breakeven point information, while the accountant managers must spend long hour in the meeting room to verify about standard costing and capital investment.

The perspective of traditional management accounting has changed by the application of IT. IT makes management accounting to be more prominent to organization, including budgeting, investment planning, standard costing system, and stock control system. The development of IT pushed every company to compete globally.  Even the small business doesn’t have to be afraid to compete with the large companies. When small companies made the use of IT, they could post the company’s financial and management accounting in their website to create confidence of their potential investor, customer, or even partner.

The IT development will make every management accountant play more dominant role in future business strategy. They will have to move from the old thinking way and adapt to every new technology that might help them for the organization’s decision making. The way of thinking is not the only thing that needs to be changed; some skills are also need to be acquired by every accountant such as computer skill, data modeling, making forecasting, creativity, adaptability, strategy formulator, technology oriented, and many more.

IT made every organization able to compete in the global economy. As in management accounting technology such as, data mining and data warehousing, become very useful and also, the automation process that IT offers such as automate data retrieval, recommending decisions, and preparing reports will be very valuable if the users know how to use it properly. The implementation of IT in every business aspect including management accounting is totally supported by the current generations who are very well exposed to IT. That’s why in the future accountant won’t only become the user of management accounting technology, but they will for sure give contribution to the growth of IT in management accounting and it will make the small companies can enjoy management accounting technology with price that match to their budget.

IT and management accountant has emerged as a system to provide essential information to organization’s growth and smart investment. Different from the traditional managerial accounting system that have trouble with accurateness and duration, IT help management accounting to provide information and data more accurately in the shorter period, as such, the budget or cost information provided to the management for the decision making process is deemed as accurate and immediately because the technology allow us to process large number of data and perform multitasking task of management accounting with a few mouse clicks.

The technology helps every managerial accountant to be more focus on important task such as financial analysis, decision making, consulting the management and design business models. That’s because IT helps accountant with the problem about calculating payback period, ROI or breakeven point in just split second, planning or forecasting a long term investment. The system is able to provide historical data and the market trends to the management to assist to make the correct and wise decision so every accountant manager can concentrate more in productive responsibilities.

Technology always changes fast and its company’s challenge to use technology that can be useful for long period and which is upgradeable to meet the future technology development. Every user of the technology must be trained well in order to use the technology efficiently even nowadays many systems available are user friendly and easy to use. The most important thing in applying technology in management accounting is the feasibility and the functionality of the system itself, it is wrong to assume that every implementation of IT in management accounting will improve company’s profits. In the other hand, it may reduce the company’s income if the company adopted wrong technology that is too costly for their development. There’s always a risk to the companies that if inappropriate technology is chosen, then the company will incur some unnecessary cost which lead to waste of expenses.

The cost of implementation of the system is always a question because IT implementation in management accounting is a nonprofit supportive investment. But, by adopting correct system and technology in management accounting is an optimistic direction which can give some benefit in terms of advantages provided by IT even the benefits can’t be seen in cash term.  The selection of appropriate system and technology a very crucial thing, so the waste of money and resource won’t be arise and in the end it will benefit every stakeholder in the company not just the accountants themselves.


Source:
Garrison R.H., Brewer P.C., Noreen E.W., Cheng N.S., Yuen K.C.K. (2012). Managerial Accounting: An Asian Perspective. New York: McGrawHill

Moorthy M.K., Voon O.I., Samsuri C.A.S.B., Gopalan M., Yew K.T. (2012). Application of Information Technology in Management Accounting Decision Making. International Journal of Academic Research in Business and Social Sciences. March 2012, Vol.2, No.3. 

Williams J.R., Haka S.F., Bettner M.S., Carcello J.V. (2008). Financial & Managerial Accounting : The Basis for Business Decisions. New York: McGrawHill