Managerial Accounting and Information Technology

There are numerous information technologies supporting managerial accounting practices. Here, we briefly highlight some technologies that have had a particular impact on the nature and use of managerial accounting information:

Computers: Most students have probably grown up with computers everywhere in their lives, and now take the power of computers for granted. However, the substantial role that computers (also laptops, tablets, and hand-held devices) now play in organizations, and life, in general, has only been that way for the past 25 years or so.

Spreadsheets: These tabulate numbers, for example, accounting numbers, in an ordered and integrated way. The significant thing about spreadsheets is that they permit managers to set out their plans and forecasts, for instance, cash-flow forecasts, over a particular period of time, but then they are also able to consider different scenarios and new assumptions caused by changes in external and/or internal context and to recalculate the effect.

Database/data warehouses: A database is a means for organizations to systematically record their data, store such data in convenient and useful formats, and permit easy but secure access for its user.

A database managerial system (DBMS) is the main software required to operate a database. Frequently, though not always, an organization will centralize its databases at a single corporate location, or at some external data storage facility.

Enterprise resource planning systems (ERPs): These are built on databases that essentially include all the data used within an organization’s information system. Typically, its software integrates the accounting systems with the information systems underpinning other organizational functions such as human resources, manufacturing, distribution and sales systems.

Thus, with ERP systems, ‘common’ information is shared and flows between and across different parts of the business process. They are integrated, process-oriented and organization-wide information systems.

Business intelligence: This describes the combined use of present-day data technologies such as data warehousing and data managerial for collecting, storing and providing access to a considerable mass of data that can then be used to inform decisions.

The Internet: We are all familiar with the impact is still relatively recent times of the Internet. Managerial accounting has been no exception; for instance, many organizations now advertise and sell their products via the Internet.

Numerous Internet-based organizations such as the internet retailer have evolved and very quickly challenged the once-dominant market leaders of the high street. 

Intranets are now also being used by many organizations – that is, a web system that allows access only to users within a particular organization and not to outsiders. Importantly, intranets facilitate the organization-wide accessibility of managerial accounting information, at the click of a mouse or the touch of a screen.

Technologies such as those listed above have fostered a revolution in managerial accounting. Compared to, say, 10 years ago, there has been a significant capacity increase in the technologies underpinning managerial accounting information, faster processing speeds, and the opening-up of wider and anytime accessibility.

Managerial accountants need not necessarily be experts on information technology – IT technicians and statisticians will continue to serve this role. However, managerial accountants will work alongside such colleagues in driving and implementing new information systems designs (including, but not exclusively, the managerial accounting systems).

Hence, a managerial accountant will need to be IT proficient to the extent that they are aware of the latest software, what this software can achieve, its compatibility with other information systems in their organization, the scale of local knowledge required, the necessity for training, and more.