Gary Cokins, Director of Industry Relations at ABC Technologies and an expert on activity-based cost management (ABC/M), said in a recent interview with SmartPros that "all managers increasingly must speak in the language of business at the boardroom level -- and that language is the language of money."

 

In his presentation, "From Managerial Accounting to Managerial Economic Decision Making," given at the IMA national conference Monday, Cokins described to attendees the four stages of cost management systems, as detailed in his best-selling book Activity-Based Cost Management: An Executive's Guide: Broken, Financial reporting driven, Customized/stand-alone, and Integrated.

 

Cokins' extension of the first four stages of evolution of cost management systems includes Decision support, a fifth stage. Decision support represents more of a profit management and value management system, a predictive planning process Cokins calls managerial economic decision making -- "the formal step of actually taking actions based on inferences from past information [that] leads us into the broad realm of predictive costing, planning and re-budgeting (during and after cost overruns)."1

 

Cokins' theory of economic decision making in the 21st century includes predictive costing for Internet trading exchanges, simulation, integration to shareholder value creation, and supply chain costing.

 

"I believe that managerial accounting will support and evolve into a form of managerial economics," said Cokins. "My sense is that 21st century managers and teams will require more, not less, integration of their organizations. Due to the introduction of integrated technologies that now deliver activity-based information direct to any employee's desktop, the pace of change has picked up."

 

To contact Mr. Cokins, email him at gary.cokins@sas.com.

 

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