The limelight scarcely falls on a management accountant at a modern organization, yet that does not take away in the slightest from his/her contribution to the success of the business.
- For the modern business, management accountants provide myriad services – planning, decision-making, financial reporting and control, and performance management systems, to name but a few.
- For professionals, management accounting offers growth in an influential and respected profession, with career paths and roles related to:
- Value creation: financial planning, M&A assessment, and others
- Value stewardship: strong internal controls and risk management to protect value
The value and importance of advisory and partnering skills better enable sustainable growth of organizations, and this is no doubt why the profession is growing in double digits, as per the US Bureau of Labor Statistics (BLS).
The field must contend with disruptive factors.
There have been indirect challenges, of which the biggest has been COVID-19. The pandemic ravaged the world in 2020, but appeared to be tapering off in early 2021, giving rise to hopes of a full recovery. Reality is not quite so simple, and complete economic recovery and a return to “normal” life are distant dreams as of now. Goldman Sachs reflected the cautious outlook for 2022 in downgrading its growth projections from 4.2 percent to 3.8 percent, in deference to the Omicron variant of COVID-19. A proper response to this dynamic environment in a confidence-instilling manner that helps strategy development for the new paradigm cannot be achieved without competent management accounting teams.
However, like many other domains, management accounting is being disrupted by new technologies. AI, big data, blockchain, cognitive computing, machine learning, predictive analytics, and robotic process automation (RPA) will certainly eliminate many job positions in management accounting.
The new technologies could automate repetitive, routine tasks such as auditing, transaction processing, and financial accounting, at a lower cost and a higher pace. New jobs, though, cannot be achieved without a shift in the role of a management accountant – from traditionally focusing on financial reporting and stewardship to enabling enhanced organizational performance as a more complete business partner. Else, the fear of management accountants of being replaced by machines in the event of the profession not evolving symbiotically is not unfounded.
Digitization means management accountants need to evolve.
Finance professionals are known for pulling data from diverse sources, working with that data in spreadsheets, and feeding the results into another system. The inefficiency and error-prone nature of this work makes it a ripe target for automation, a reason why 42 percent of management accounting professionals polled in an IMA Pulse survey were worried that technology would take away their jobs.
New roles for management accountants
- Business partner
- Analytics translator vs data scientist
Here are two new roles that a management accountant must play if (s)he wishes to stay relevant:
- Business partner: The key value proposition of accounting must be defined in terms of formulating and analyzing strategy, creating plans, and executing strategies that help the organization succeed. With technology taking away the need for human focus on lower-value-added activities, the accountant could switch focus to providing strategic insights to senior management. Technology will help to:
- Eliminate the load of rote, repetitive tasks
- Enable improved decision-making capabilities
- Use organizational data to provide greater insights into the business and thereby unlock business value
- Analytics translator vs data scientist: If data is to drive improved performance, a data scientist must combine analytical skills with business knowledge and other key competencies to design a relevant, manageable data strategy that extracts information from huge data quantities. This role seems somewhat similar to that of a management accountant, and in fact that is why both can work well together – the accountant uses conceptual knowledge to identify and pull out feasible data, and the data scientist works with it to find relevant patterns.
Several factors are driving change for management accounting.
The organization of today must contend with changes within and without, and these in turn have implications for management accountants. Here are the key factors to consider:
Key drivers of change for management accounting
- Information technology
- Business structure
- Big data
- Global competition
- Environment and sustainability
- Rules and regulations
- Information technology: IT is driving the most change in accounting roles toward those of finance business partners at higher analytical levels.
- Business structure: Organizational decentralization has created more influence for the management accountant, who can now assist the manager in decision-making.
- Big data: A step away from tradition, big data is driving decision-making, and management accountants must combine their financial and non-financial knowledge to attain the right results.
- Global competition: With competitive global markets, the accountant needs to take a long-term vision, looking beyond mere numbers and helping to forecast the future of the business.
- Environment and sustainability: The management accountant will influence strategic decisions by designing the right revenue models and balancing financial stewardship, the international economy, and environmental concerns.
- Rules and regulations: Roles and tasks are further influenced by changes in rules and regulations, which the accountant must build into his/her duties.
Building up the requisite skills is essential to make management accountants future-ready.
Management accounting is advancing at a dizzying rate of change, and the competencies of accountants are grossly inadequate to assume new roles in the digital age. Their skillsets require change and rebalancing, with existing skills changing in importance and new skills – especially in analytics and IT – becoming important.
Future-ready skills required by management accountants
- Descriptive statistics: Analyzing historical events
- Predictive analytics: Forecasting future events
- Prescriptive analytics: Actions and interventions basis historical and future trends
- Business advisory skills: Real-time situation analysis, advisory, adaptability, and resilience
Equipped with the right skillsets, accountants will be in a position to duly handle four lines of sight:
- Oversight: Allocating resources and ensuring a healthy financial profile for future investment
- Hindsight: Using historical data for future predictions
- Insight: Turning information into intelligence with business analytics
- Foresight: Strategic planning, competitive actions, and innovation to anticipate the future
There are signs of optimism.
Business leaders now seek agility in the short term and anticipatory thinking over the long term, a significant and long-overdue pivot in thought and action. Management accounting needs to move beyond the compliance mindset and seek engagement as full business partners and strategic partners looking to the future. The potential advantages they offer make management accountants immensely valuable to organizations as the world moves further into 2022 and ahead.
Given the perpetual demands to do more with less, this is a great chance to enrich accounting careers, employing organizations, and public interest too. Rich, on-the-job work experience is a great way to work toward these goals, and further gains come from education and credentialing as well as peer-to-peer networking.
Focused action is imperative for management accountants.
Looking toward the future, the following are the most significant steps management accountants and their employers could take:
Top four imperatives for the future of management accounting
- Upskilling, particularly in data analytics
- Strategizing for digital transformation
- Focusing on sustainability
- Cultivating soft skills for better agility
- Upskilling, particularly in data analytics: The right data capabilities will determine the ability to adjust costs, prices, and product or service levels at short notice.
- Strategizing for digital transformation: Top management must take the lead in setting strategies to implement technologies reshaping accounting, such as automation, blockchain, cloud-based computing, and data analytics.
- Focusing on sustainability: Management accountants will need to steer disclosure and reporting in order to establish transparency and build more sustainable operations within the organization.
- Cultivating soft skills for better agility: Adaptability to continuous change requires emotional intelligence, empathy, and other soft skills.
The last word…
2022 is a year when management accounting could come into its own, boosting its visibility and value to organizations. Accountants are no longer confined to looking at the books – they must be cross-functional, global in outlook, nimble, and tech savvy. Automation is not a future phenomenon but something very much in the present, across different parts of the accounting profession.
If management accounting is to remain influential, inspiring, and relevant in the future, it must outpace technological change and build new, critical competencies. The right upskilling measures and a proper redefinition and repurposing of their roles will take organizations toward success in 2022 and beyond.