One of the things I've been thinking about is how management accounting can be so very tool focused. It seems like our discipline can appear as a set of tools without a cohesive philosophy guiding our activities: cost allocation, activity-based costing, cost-volume-profit, budgeting, standar costing, variance analysis, strategy map and balanced scorecard, ROI, residual income, etc. This seems to me one of the gaps the PACE Framework helps to fill, adding a guiding principle to direct this motley assortment of tools.
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JP … I totally agree with you. I often say, “A fool with a tool is still a fool.”
The PACE Framework is not a process. An underlining guiding principle that you refer to is the “causality principle”. There should be cause-and-effect relationships. That is why modeling is so prevalent with PACE.
PACE is the integration of multiple performance improvement methods including to these and more methods:
· Product, service line, channel, and customer profitability (using activity-based costing [ABC] );
· strategy management using strategy maps, balanced scorecards (with strategic KPIs) and dashboards (for operational OPIs);
· process improvement using lean management with lean accounting;
· process improvement using quality management with the cost of quality (COQ);
· capacity-sensitive driver-based budgeting and rolling financial forecasts;
· enterprise risk management (ERM); and
· data science and analytics.
Applying the PACE analytics framework (PAF) imperative for any organization to excel at to remain viable and competitive.