Organisations and management accounting
Organisations and management accounting

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Organisations and management accounting

6.5 Technology and its impact

In recent years, information systems (IS) and information technology (IT) have had a profound impact on most organisations. So pervasive is IT that IT skills are now essential for employees in virtually all organisations. IT has:

  • facilitated flatter organisations and wider spans of control
  • made possible faster, more accurate processing of larger volumes of data
  • provided access to more – and more up to date – information for managers
  • provided computer modelling (e.g., simulations) which can improve the quality of planning and decision making
  • made possible the provision of control information to senior managers in real time
  • improved customer service by provision of electronic data interchange (EDI) between organisations, customer databases, extranets and so on.

Perhaps even more dramatic than the improvements in information processing are the improvements in communications that IT has provided. E-mail provides instant worldwide messaging; online conferencing enables collaboration between people in geographically distant locations; voice mail allows communication between people whose working time schedules do not coincide; video conferencing allows face to face meetings without the need for expensive travel.

IT has also changed the relationship between employers and employees and the nature of work, for example in terms of:

  • home working (telecommuting) is commonplace, providing more flexible working arrangements and reducing the time and cost of travelling to work
  • greater visibility provided to management, allowing increased monitoring and control.

Activity 6

  • a.Explain (spend no more than about ten minutes on this) why it is necessary for an organisation to undertake a PEST analysis.
  • b.Give three examples of actions that might result from such an analysis.
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Discussion

Environmental changes may have a significant impact on the organisation’s ability to achieve its objectives, including, possibly, survival. Major environmental changes, however, can often be anticipated if the environment is systematically monitored and analysed, and appropriate action can be taken to safeguard against threats and/or exploit opportunities arising. Examples of possible actions in response to an environmental analysis include:

  • developing a new product range based on emerging technology ahead of the competition
  • developing staff education and training programmes in anticipation of future skills shortages in the local labour market
  • planning a programme of redundancies based on anticipation of a serious economic downturn.
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