Performance Management Analytics - The Next Extension in Managerial Accounting

Hypercompetitive businesses are increasingly requiring the need for more rapid and sophisticated information and data analysis. This challenges management accounting's role in effectively supporting the management decision making process. The emerging area of business analytics can potentially extend the domain of management accounting to the comprehension of business dynamics and provide more solid inputs for managing its performance. This paper introduces performance management analytics (PMA) as the next extension in management accounting research and practice. Specifically, it defines PMA as the understanding of relevant business dynamics through the use of data and analytical methods. In addition, it suggests PMA as a relevant part of performance management systems and moreover as the missing link between the existence of highly sophisticated performance management systems and their effective implementation. Furthermore, it provides a framework that incorporates a set of key components (input, process, output, outcome) where performance is grounded in its context, captured, coupled, and controlled. This framework might be useful for research and practice in the area of performance management. The relevance of performance analytics might be a predestinated subject for further empirical research in the field of the advances in management accounting with specific regards to performance management systems. If relevance and effectiveness of performance management analytics will arise, education on management accounting would have to be redesigned and integrated with performance analytical topics and new skills and competences on IT and analytical methods might be required for management accountants.