One key finding of a recent research project to identify best practice in integrated design and management accounting was that medium-sized firms whose performance improved over the time of the study had financial managers who were more involved in their design processes (1). Encouraging management accountants to become more active in this area could therefore be one way to improve performance in other medium-sized firms. But how do the designers feel about this? And are the accountants interested in getting more involved?
In an effort to answer these questions, we developed a series of "design statements" to identify the level of accord--or otherwise--between the two parties. We asked management accountants and designers to rate their response to the statements on a scale of one (strong agreement) to six (strong disagreement). The scores for each statement were then averaged for both disciplines.
The table below shows four statements that highlighted the main differences of opinion between financial managers and designers. The respondents differed most on the first statement: "Financial policies that treat design as an expense rather than an investment with a measurable return have discouraged some very profitable design projects." This was strongly refuted by the accountants, but the designers strongly agreed with it. The second statement--"design funding is too often given a low priority"--was again disputed by the accountants and supported by the designers.
These first two results could account for the apparent reluctance of the designers to involve accountants in the design process, as shown by their strong disagreement with statement three: "Accountants should be more actively involved in defining and justifying design expenditure" Their agreement with statement four--"the involvement of management accountants in the design process is counterproductive to the creative work of designers"--reiterates the designers' negative attitude to the accountants.
Why this negativity? Could it be that the designers aren't aware of the benefits that management accountants can bring to the process? As far as many designers are concerned, they already take cost information into consideration when developing their products and services by using tools such as DFA (design for assembly) and part databases contained within their computer-aided design packages. If some extra cost information is needed, they can request that data without having to involve a management accountant. As one designer asked US: "What Other accounting data could management accountants bring to the design process by being more actively involved?"
There are in fact several techniques that management accountants can use at various stages of the design process to aid the development of products and services (2). They include:
* determining which designs will minimise assembly and service times and costs;
* evaluating the impact of different design possibilities on the cost of developing, producing, owning and operating a product;
* appraising alternatives to solve technical, management and scheduling problems;
* balancing the inherent tensions that exist among the needs of customers, suppliers, operators, financiers and senior managers;
* communicating much of the tacit corporate knowledge that affects the filtering of ideas and proposals in the early "fuzzy front end" of the development process;
* making the "go or kill" spending decisions that the development process entails;
* developing a performance measurement system that lets managers assess the performance of projects and the contribution of all departments' activities towards the attainment of strategic objectives;
* helping to communicate to, he senior management team not only the value of the work done by the design department but also the amount of resources required to make a product successful. …