Stethoscopes. Theodolites. Computer-aided design packages. Different professions have their own tools of the trade to help them measure, test or create. But what do management accountants use in performing the wide range of activities demanded by the role? The simple answer would be "a computer"--and it's true that this is probably the only item of equipment we use. But defining a tool as "something applied to a situation in order to accomplish something" widens the scope considerably.
The following examples indicate the huge range of applications, approaches, methods and even philosophies available to accountants in business:
* Performance management tools such as balanced scorecards, Six Sigma and value-based management.
* Budgeting tools such as rolling forecasts, flexible budgeting, zero-based budgets and Beyond Budgeting.
* Investment appraisal tools such as accounting rate of return, net present value and the capital asset pricing model.
* Strategic tools such as Swot analysis, the growth-share matrix, strategy mapping and value-chain analysis.
Every tool warrants periodic evaluation, whether it is a well-established technique that has featured in the textbooks for years or a new method proposed by a CEO who's been subjected to an elevator pitch. Users need to ask: "What contribution do we expect this tool to make? Is it compatible with our other processes? Where is it in its life cycle?"
These are hard questions to answer in isolation, so it's necessary to take an overview of the discipline as a whole and analyse key trends. To this end, we at the CIMA Innovation and Development team (CI&D) are undertaking a significant new project to identify which management accounting tools are being used in practice, which are valuable and which are viable for the future. We are planning to combine the findings of past CIMA-backed research into tool usage with the results of an online survey of members this month (see panel). Among other things, we hope to gain a deeper understanding of a management accounting tool's life cycle, which we assume to include the following four stages:
1 Proving--early adopters run the risk that they are experimenting with a theoretical approach not …