Strategic scorecard – a useful tool from CIMA
A short post today – holiday season.
You may know about tools like the Balanced Scorecard which are used by many organisations to monitor performance from financial and non-financial aspects. Here is another type of scorecard, developed by CIMA, which may be quite useful to managers and boards of directors when trying to formulate a strategy. The tool prompts managers to consider the business model of the organisation and reflect in the external environment, risks/opportunities, implementation and options available. Have a read of a document prepared by CIMA/CGMA by clicking this link .CGMA Strategic scorecard_T1 FINAL . This document explains the scorecard quite well.
Related articles
- The Vision and Strategy of Balanced Scorecard (unicomseminarsltd.wordpress.com)
- 5 Valuable CGMA Resources for Business People (aicpa.org)
Is accounting sexy?
CIMA, Financial Management, Oct 2004.
A few months ago, I was at a workshop which consisted of publishers/editors and accounting academics. I was a bit late and when I arrived one of the editors asked me to introduce myself as follows ” tell us a little bit about yourself, where you are from and what makes accounting sexy?” First two questions, no problem. The last one, well thankfully I am a CIMA member and remember the series of adverts in 2004 from their Financial Management magazine. The ads (see the picture to the left) were for accounting software and featured a dominatrix and the caption “is your procurement strict enough”. I loved that ad! In one foul swoop it got rid of the dull and boring stereotype of accountants. Of course, some CIMA members did not like it at all and wrote to the editors. This complaining perpetuated the dull image of accountant and inspired a further article entitled “Miss Backlash” – see here.
So now for a completely unscientific experiment – I show just a few examples by the way
1. If I Google “is accounting sexy”, I get a good few interesting results:
A blog, accountantsaresexy.com – a bit dated
A blog post with the title The Surprisingly Sexy Chart of Accounts
A you tube video, JustThrive Makes Accounting Sexy – YouTube
2. If I google “sexy accounting”, I get some similar results to #1
I also get some pretty dodgy stuff.
3. If I google “sexy accountant”
The results are getting to beyond a PG rating! But a quick glance at the image search result throws up this ! You can decide for yourself on the sexiness (or otherwise).
So is accounting sexy? I don’t know to be honest, but I hope this short reflection puts a smile on your face. Now back to those ledgers……
(If you want to know more on the images of accountants, check out the work of Baldvinsdottir et al)
Technology and new business-models – taxi despatching
I always like to read about new ways of doing business, or new technology can change existing businesses. You may have seen how various new technologies have helped the taxi-sector. For example, in London you can send a text from a smart phone requesting a taxi and your position can be pin-pointed by the GPS within the phone. Now let’s take this a step further and add an app to the smart phone and then the way the whole taxi industry operates could change? How you might ask. This post from the Babbage blog on Economist.com explains why. In several European countries, taxi users can now use apps to request a taxi. The apps ping the nearest cab, and once a customer accepts a particular offer they can track the taxi progress. All the taxi needs is the same app effectively. This changes the way business is done in the sector as the taxi dispatcher is effectively cut out of the picture. I don’t know about other cities, but I can tell you that a taxi dispatcher would charge its drivers in the order of €200 per week or more in Dublin. For this, the driver (who suffers all risks of owning and paying for the cab) gets fares directed to them usually through some system installed in their cab. Now, if I were a self-employed taxi-driver you could cut out that cost by using an app, I’d be giving it some serious consideration. Of course, as the post notes, taxi dispatchers are not seating idle and a race is on between taxi dispatchers and app developers!
Can decisions be driven by cost alone?
As an accountant, it is too easy to condition yourself to only think about costs when making decisions. Of course many business decisions must consider things other than cost, such as market share, customer satisfaction, quality and so on. I am often looking for examples of how decisions are made in organisations, which seem to be on the basis of cost alone and ignore important qualitative factors.
In May of this year, what seems like a great example of a tough decision which was influenced by cost came to light. The Irish government made a decision on at least re-opening talks with drug companies on whether or not to make a skin cancer drug called Ipilimumab – better known as “Ipi” – available through the public health system. The re-opening followed public pressure. It is what happened before this which provides the example of the tough decision. In September of 2011, it was recommended to the government that the drug should not be made available as it was not cost-effective. The drug costs approximately €80,000-90,000 per patient and according to reports at the time, might prolong life by 3-4 months. Now, I would not like to be the person making that decision I must say. But, from my external view, it would seem the decision was based on cost alone. What about the benefits? Three or four months may be invaluable to a family. And to put my accountants hat on, what would the cost be of not treating the patient. I’d have a wild guess that a three or four-month hospital stay costs way more than €90,000, so there are bound to be some cost savings if a patient is healthier. As I said, I would hate to be making these kinds of decisions, but it does show how cost information can be used in complex decisions where many other factors are at play.
What is big data? And what does it mean for management accountants?
Image Copyright The Economist
You may have heard the term “big data“, or perhaps not. Here, I’ll try to explain it and pause for a moment to consider what it means for management accounting.
The fact that many businesses capture vast amounts if data is not brand new (see this article from The Economist in 2010), but the focus of collecting and analysing what marketing people call big data is now beginning to come firmly under the radar of management accountants too. Before looking briefly at what big data means, we need to define. First, back to basics. Data is simply facts, numbers, statistics etc. For example, 175,80,40 are just numbers. They are in fact my approximate height, weight and age. This is information, as you now know some facts about something i.e. me. The problem with big data is getting the information value from it.
Here is where a management accountant can help – assuming of course (s)he has some technical proficiency. Here is an extract from an item on CNET back in May of this year (bold is added by me):
Put simply, the analysis that big science brings to the table makes big data relevant. I envision big science combining with big data to create big opportunities in three significant ways: real-time relevant content, data visualization, and predictive analytics.
When I read the above, I immediately thought isn’t this what management accountants have been doing for years now? If you remember the basis definition of what management accounting is, you’ll remember it is about providing decision-relevant information to managers. This includes real-time data, forecasts and predictions and is often aggregated (or visualised). Personally, I believe management accountants, IT people and marketeers (who might be responsible for collecting all this big data) can all work together to make big data work as information. In particular, management accountants are well placed to assist as they know what information drives a business.
Our management accounting textbook – sample chapter available
As you may know, I have been part of a team who wrote a management accounting textbook. We have received a sample chapter from the publishers – you can see it here . Hope you find it useful.
Martin's accounting blog 