Academic journal article International Review of Management and Business Research

The Effect of Business Intelligence Tools on Raising the Efficiency of Modern Management Accounting

Academic journal article International Review of Management and Business Research

The Effect of Business Intelligence Tools on Raising the Efficiency of Modern Management Accounting

Article excerpt

Introduction

All the economist observers in our world agreed that, the current management accounting information system is neglected. This negligence is due to the current systems, which are producing insufficient and unreliable information. Because of lack of suitable alternative, today's managers are still using such systems. Generally, most firms still face lack of regular, consistent information, necessary to accomplish the basic daily operating functions.

Business Intelligence tools can be used as an effective tool to handle such information technology to make management accounting or decision making more effective. Business intelligence can be defined as a specific, integrated information technology of the company, which is based on a global approach, which will be used to support decision-making. (Bars& Kemper, 2006). The application of Business Intelligence in management accounting can be done through its tools such as (ETL), (OLAP), (DWH). Business intelligence applications are one of the three Information Technology systems components; business transaction application, and collaborative applications (Colin White, 2005). Business intelligence applications analyze business operations and produce information to help business users understand, improve and optimize business operations. Recently, there have been significant impacts in the use of business intelligence applications especially in the field of the costing control systems and management performance measures. The business intelligence impact is reaching everywhere and its influence is felt in all the aspects of business. The non-technical users and end users, business analysts, Information technology departments and external users are greatly influenced by BI (Nadeem &Jaffri, 2003).

Management information system is one of the most important components of management accounting in any firm, it provides financial and economic information, and takes over other management functions such as, collection of information for planning, control and decision-making. The information produced by the management accounting system must be subject to periodic technical assessment, so their effectiveness can be measured at the point when targets are achieved.

In the eighties of this century, some writers called to bring about a revolution in management accounting, in order to cope with the revolution of modern manufacturing firms, (Johnson and Kaplan, 1991), in their book titled "Relevance Lost: The Rise and Fall of Management Accounting, "The authors drew several criticisms of management accounting, the most important of these criticisms said that, the traditional management accounting methods do not correspond to modern changes, especially in the competitive industrial environment. There has been a wide controversy about whether the concepts and teachings of management accounting (the theoretical academic), conforms to and supports, the practice of management accounting, (the practical side), (Scapens, 1984).The gap between the theoretical and practical (gap between theoryand practice), and there has been a tendency to change management accounting research, focusing on the interpretation and explanation of practice more than a trend to develop complex models. Also it works on the adoption of research field that is related to reality, and teaching innovative modern accounting techniques which are applied in successful companies. The use of BI tools by managerial accounting can place the end users directly with the data they need. It moves data from sour ces systems to make better decisions, and it enables users to become responsible for the specification, creation and regeneration of the reports and analysis (Inmon & William 2002). In this research, we will try to test the effect of BI application and spread of these tools, and standing on the most important factors affecting its application and analysis. Also trying to prove that management accounting and through the use business intelligence tools will bring about tremendous changes to the decision making process, which means; less time, less efforts, less cost, and finally effective decisions. …

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