Management accounting’s future starts today
Today we celebrate International Management Accounting Day, a time to recognize the accountants in business who provide critical insight and strategy to their organizations. And, given the acceleration of automation in finance departments, we must also consider both the uncertainty and potential opportunity that the future may bring to accounting.
Accounting roles are beginning to change and many in the profession are unsure of what lies ahead. A recent Institute of Management Accountants (IMA) survey of 161 management accounting professionals found that 42 percent are worried that technology will eliminate their jobs, with the greatest concern coming from those overseeing general accounting functions such as billing and budgeting.
So as automation disrupts the profession and business as we know it, how do we position ourselves for success?
The definitive first step is learning to not fear automation, but instead learning to embrace it. The benefits to businesses are enormous, including the reduction of operating costs, an increase in efficiency and new capabilities to provide 24/7 service. The next step is knowing what skills you will need to leverage emerging technologies instead of being displaced by them.
New Technology, New Skills
In a paper released today, I explore the value management accountants bring to their organizations and the new skills they need to address modern challenges. There are four “lines of sight” for today’s finance team: oversight, insight, hindsight and foresight. Oversight, a traditional CFO role, includes resource allocation and ensuring a healthy financial portfolio. Insight involves being able to turn information into intelligence. Hindsight entails looking backward to influence the future in a positive way. The last and newest “line of sight” is foresight, where finance professionals play a leading role in anticipating the future.
For management accountants to excel at foresight, they must possess higher-level data analysis skills. In the past, management accountants have performed analytics at a fairly rudimentary level, largely relying on the use of descriptive and diagnostic statistics. To remain relevant, they must aspire to the higher end of the analytics continuum—to predictive and prescriptive analytics. With vast amounts of data to exploit, management accountants will need to master data governance, analytics and visualization to create value:
• Data Governance: Management accountants are increasingly being called upon to improve the usability, integrity and security of data systems. This means they need to be able to understand data flows, data life-cycle management and governance requirements.
• Data Analytics: Once the data has been produced, management accountants will need to be able to pull insights from findings to support decision-making. This is indicative of a long-running trend of accountants taking on a more strategic role. While all management accountants might not need to be data experts, they must at a minimum know what types of analytical models are available (for example, cluster analysis vs. logistic regression) and to what business problems they can be applied.
• Data Visualization: Finance professionals will need to be able to evaluate data visualization options and select the best tool for presentation to stakeholders. They will need to be able to make analysis of complex data accessible through simplicity of design, often through advanced visualization applications.
Not Just Data
Management accountants will need to have expertise in data, but that does not mean they will need to be data scientists. There is an opportunity to leverage each role’s skills in concert to create even greater value.
Data scientists will use their professional, methodological and technical understanding to search for relevant patterns in an existing pool of data, while management accountants combine those findings with their knowledge of accounting concepts to transform data into business insights. To realize the full potential of this partnership, though, management accountants must develop the business and soft skills needed to be an “analytics translator,” an intermediary bringing together various functions, including scientists, technologists and business leaders.
In this emerging role, management accountants will need to possess leadership and strategic management skills, business acumen and professional ethics. While these skills have always been important for accountants, the advent of new technologies will make the ability to communicate and manage effectively even more important. Management accountants will need to communicate with impact, influence others, and use effective communication techniques. They will need to both work with and effectively communicate with IT and analytics professionals, to scope out projects and determine data and modeling requirements. Working together with others on an interdisciplinary team will enable finance professionals to uncover new opportunities and create new value.
Relevant certifications for management accountants, including IMA’s Certified Management Accountant (CMA) and Certified in Strategy and Competitive Analysis (CSCA) will play an important role in ensuring accountants can be strategic business partners, unlikely to be replaced by machines.
A Call to Action for the Profession
IMA has long advocated that management accountants expand their skill sets to elevate the profession. To remain relevant and have influence, management accountants need to expand their capabilities — starting today. While this is a challenge, in many ways it is also our obligation to our organizations, their stakeholders and society.
In recognition of this International Management Accounting Day, we must make sure management accountants are “future ready” for the coming digital age. To remain competitive, management accountants must stay on the higher end of the analytics continuum. To perform this type of analysis, new competencies are required. If our profession is to remain pertinent, influential and inspiring, it is necessary that accountants catch up or get left behind.