Data Analytics – A new paradigm in Management Accounting

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Data Analytics and Management Accounting

Change, they say is the only constant. Technological change is not just fast-paced but also all-pervasive. Businesses need to adapt to these changes, stay in step, and digitally transform themselves. Whilst technological revolution is something the world has come to terms with, there is yet another change creeping in in the form of coronavirus. The COVID-19 pandemic related lockdowns and the resultant dent in the global economy cannot be compared to previous recessions or financial crises. The change we are witnessing now is unprecedented and in all likelihood permanent. Coincidentally, it is the early adopters of technology that are better equipped to deal with a black swan event like the COVID-19 pandemic. The importance and relevance of business intelligence in today’s times cannot be overstated. Changes in human behavior and consumer preferences have made businesses relook at their business models and strategies. Business intelligence enabled by technology and analytics is going to provide an edge to organizations in understanding this change and survive.

In such demanding times, organizations will rely heavily on their management accountants to play a critical role and help them achieve desired objectives. The role of management accountants includes measurement, short and long term planning, control, supply chain analysis, implementing strategy, and improving operational efficiency. Various techniques like sensitivity analysis, variance analysis, budgeting, probability analysis, ratio analysis, decision trees, etc. will need to be used. For all the above activities, data analytics is crucial. However, analyzing data is only part of the solution. It needs to be presented clearly as well. Clear, succinct, and exhaustive reports need to be produced which will help leaders make better-informed decisions. Technology is improving exponentially and we have many technology-driven analytical tools to sort, sift, understand, interpret, analyze, and present data.

Therefore, it is imperative that management accountants must be at the forefront of adopting these new technological & analytical tools to gain better insight into their costs, supply chains, profitability, and efficiencies. In a Nov19 interview to Business Line, CFO of IMA (Institute of Management Accountants) Doreen Remmen, highlighted how the CMA curriculum is constantly being reviewed to keep it relevant. One of the major findings in their survey on the required skills was technology. The CFO also highlighted how the exam pattern is being changed from Jan2020 to focus on analytical skills and business ethics.

Industry Trends

The good news is that across the board there is an acknowledgment. However, the bad news is that this realization does not convert into reality at ground level. A 2019 Deloitte Survey of U.S. executives found that most – 63% – do not believe their companies are analytics-driven and 67% say they are not comfortable accessing or using data from their tools and resources*. Therefore, organizations across the spectrum are being earnest and nimble-footed about the analytical and technical up-skilling of their workforce. There is a huge investment going into technology and training. Amazon’s USD700m towards reskilling its employees or PwC’s plan to invest USD3bn in tech training over the next 4 years are just two examples. There are numerous strategies that are being deployed – gap analysis, training academies, up-skilling programs, certifications, reimbursement of tuition, rewards, and recognition, etc. But this is no easy task. Becoming a data-driven organization is very challenging and entails significant investment and persistence. Up-skilling or reskilling employees will not happen just with capital investment or training programs. There has to be a change in mindset at every level of the organization. Therefore, driving cultural change is paramount. In addition to the traditional training methods, educational programs should be more engaging, the workforce needs to break silos, collaborate and learn not just the use of analytical tools but focus on the outcomes and solving a real-time problem that the organization faces. This requires capital investment, an intent to up-skill, correct tone at the top, and most importantly a cultural change. A prime example is the banking system in India. Computerization of public sector banks and their evolution from the hardbound ledgers to core-banking would have never been achieved if the employees didn’t adapt to the change, adopt new technology, and most importantly bring about a shift in mindset.
* Source: Harvard Business Review

Conclusion

As a final word of caution, it is important to note that up-skilling should include more than the obvious training on technological aides and analytical tools. The training must also emphasize on building an understanding of where to use technology and where to use judgment. It is important to know where to draw the line. No company or firm wants to transform finance professionals into technology wizards. The accountants and finance managers have a specific role to play and analytics and technology should only be enablers. Finance, treasury, and management accountant functions should up-skill in a way that they are able to effectively use analytics to solve business problems.

41 thoughts on “Data Analytics – A new paradigm in Management Accounting”

    1. this blog is very helpful in knowing the importance of data analytics in the filed of accounting and how we can improve it

  1. Anushree Chatterjee

    The blog explains vividly that how changing times demand technological and analytical understanding even in the field of finance! It’s no more just about crunching numbers.

  2. Jyothsna Raju

    After reading this article I came to know, how data analytics could be helpful for management accounting.

  3. Sajal Shrivastava

    For the finance and accounting field, times are changing surely. Data Analytics and Data Science are the new keys to a successful business!

  4. Harshit Sikka

    The world is changing and so is the world of Management Accounting. I would love to read another blog, which can explain about how to up-skill ourselves properly.

  5. This is what I was looking for while considering data analytics in the field of management accounting. Very informative. Thank you.

  6. A great blog featuring the need for data analytics in the current finance industry, there is definitely a need of practical skills beyond bookish knowledge for future finance professionals.

  7. This is a wonderful article on changes in management accounting with respect to changes in the world

  8. this blog was very informative and shows the current industry trends and how to get an edge over others if you are a Management Accountant.

  9. Yashwin Anand

    Data Analytics is one of the highest standards of competence in the field of Management Accountancy across the globe. Thus, for such budding futures, enthusiastic aspirants and eager learner’s of our nation ”Miles” has constantly endeavoured to prepare us for any opportunity and surpass the odds with an unfettered spirit in our struggle to reach the pinnacle of success.

  10. This blog has explained that how industrial trends are changing in this pandemic situation and There has to be a change in mindset at every level of the organization, Driving cultural change is predominant.
    #DataAnalytics is the new successful business in upcoming era

  11. Shubham Gupta

    Data analytics became an important skills now a days for finance professionals very informative blog thank you miles education

  12. In an increasingly globalised workplace, Data analytics is very useful and it is a wonderful platform for career success. The growing importance of big data is driving high demand for analytical skills.

  13. Must say one of the best course for CPA and CMA. If u still haven’t enrolled yet go get yourself registered. On personal note it is very good and informative…

  14. Lukose Joseph Thomas

    It is very informative . And it shows how data analytics is helpful for accounting students .

  15. The relevance of data analytics in the present time cannot be overstated. It has changed each and every sector and same is the scenario with management accounting. The data analytics tools have made it possible for management accountants to dig dipper into the data and come up with better insights.

  16. Veronica Premanand

    Data Analytics is a fast-growing field, required in almost all sectors. Glad Miles has a quick reckoner for curious one like me

  17. Tanmay Harwani

    Data Analytics is very hot topic I should say and certainly it’s the future and integrating it with management accounting is amazing. I didn’t know about data analytics in management accounting and this blog just provided me with everything about the role of data analytics in management accounting and the industry trends.

  18. Saloni Grover

    As this blog is very informative…..
    Business intelligence enabled by technology and analytics is going to provide an edge to organizations in understanding this change and survive.

  19. Very informative and gives a helpful insight into the dynamic market of management accounting and the changes being adapted due to IT revolution!

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