
In a prior blog I discussed the importance of management accountants understanding the fundamentals of revenue management (RM). Too often attention to RM is in the hands of marketing and sales managers without the support and expertise of management accountants and financial analysts. That gap presents a competitive opportunity for organizations to invest in rigorous causal modeling, analytics, and systematic support of revenue drivers that can dramatically enhance value creation.
To improve the organization’s revenue management approach, management accountants need to be part of a cross-function team that starts by making an initial assessment of the organization’s current revenue, customer, and market practices. It then needs to develop a revenue management system that is appropriate for the business needs, and then implement a system tailored to the organization’s objectives and the needs of its various business functions.
The following six-step methodology can be used to develop a revenue management approach where management accounting is an effective partner with other business functions:
Step 1: Do a quick assessment of the organization’s use of the four revenue management levers.
Step 2: Review levels of revenue management details to determine current practice and understand different intensities of practice.
Step 3: Analyze the organization’s business’s strategy and business environment to find issues that can assist or hinder revenue management improvement
Step 4: Evaluate revenue and cost driver importance in the organization’s strategy, and identify gaps in current managerial and accounting attention
Step 5: Design the appropriate level of revenue management and driver attention for the organization, consistent with its strategy
Step 6: Establish a cross-functional team to implement new revenue management practices, supported by management accounting skill and tools
PACE will be publishing a monograph describing this process in more detail soon. Stay tuned!
Deacuerdo con Raef Lawson del IMA; los profesionales en contabilidad gerencial deben tener un papel mas preponderante en la Gestión del Ingreso, con el objeto de preparar información útil para los tomadores de decisiones en las áreas de márketing y ventas.
Es en éstos momentos, en que la utilización de modelos robustos de Gestión de Ingresos presentan una oportunidad competitiva para alinar las iniciativas a lo ancho y largo de la organización para apalancar la creación de valor en tienpos de crisis. Por esto es necesario contar con sistema apropiado de gestión de ingresos que contemple como mínimo éstos pasos:
1. Realiza una evaluación rápida del uso que hace la organización de las cuatro palancas de gestión de ingresos.
2. Revisa los niveles de detalles de la gestión de ingresos para determinar la práctica actual y comprender las diferentes intensidades de práctica.
3. Analiza la estrategia empresarial y el entorno empresarial de la organización para encontrar problemas que puedan ayudar o dificultar la mejora de la gestión de ingresos.
4. Evalua la importancia del generador de ingresos y costos en la estrategia de la organización e identifica brechas en la atención actual de gestión y contabilidad.
5. Diseña el nivel apropiado de gestión de ingresos y genera atención para la organización, de acuerdo con su estrategia.
6. Establece un equipo multifuncional para implementar nuevas prácticas de gestión de ingresos, respaldado por habilidades y herramientas de contabilidad de gestión.
PACE publicará pronto una monografía que describirá este proceso con más detalle. ¡Mantente al tanto!
Revenue management fundamental : Comments
It was with great interest that I discovered the production of the team of professor-researchers at the University of Auckand..
It seems to me that this is the first time I have read in a document promoted by the IMA that the cost system must be coupled with value analysis.
My colleagues in Auckland develop in 2020 the recommendations that myself, Michel Lebas and Philippe Lorino made in 1990s. But our works were in French, which inevitably limited the dissemination of our ideas!
But in 1994 my article ABC call for a French approach received the first prize awarded by the FMAC in its annual selection of Article of Merits. In this article I wrote "it is important to note that non-accounting-based performance measures are likely to contribute at the same time to cost reduction, as in the example given above, as well as to value creation where these measures cover quality, timelines, innovation and so forth.
This article also highlighted the complementarity of the monetary cost driver and non-monetary performance indicators
In this article I pointed out "the fruitless pursuit of accuracy" Since then I developed these in many articles and books
What is important is that once we accept the idea that cost must be articulated with value one has an explanation for the dynamics of cost systems. The latter remained structured by direct labour until the 1980s. If the quality of cost systems had been measured by accuracy, these systems should have changed in the late 1950s and perhaps even before. If they were not changed it was because there was a social consensus on the value medium: work. And since we were still in an industrial economy and not of service, it seemed natural for everyone to link value to the content of direct labor and to use this base for the allocation of all other burdens. Direct labor was simultaneously a cost and a value driver.
The advent of delivery time and quality would make this model explode in the 1960s and 1970s. The result will of course be the ABC movement but also a multitude of other systems. In my 2005 book I listed 19cost systems but since then there have been others. Each claiming to answer the only question that interest leaders in a relevant way: how can my cost system help me improve my profit?
It is this question that which is at the heart of the approach developed by my colleagues by proposing to link cost drivers to value attributes.
Most of my articles and my latest book are available in English, free of charge on my account on the Research gate website. I would be happy to make it available to the participants of profitability-analytics.org.. If you think it will help.
Very interesting insights. Please send me a link to a good location on Research Gate to see your material. Perhaps you could suggest what to read first. I would also like to send you a document that has disappeared from the IMA website - The Task Force Report on the Conceptual Framework for Managerial Costing - it has a section that deals specifically with "Truth" as it relates to costing for internal decision support. You may find it interesting. My Email is lwhite@rcainstitute.org.