Book Description

It would generally be safe to assume that finance and accounting especially strategic managerial accounting (SMA) would be anathema to the software professional. This book, written from the perspective of a software professional, attempts to address that belief. SMA is a prognostic as well as a diagnostic tool and therefore useful for making key day-to-day decisions. However the common view, especially in the IT industry, is that accounting is for the accountants, despite the fact that IT professionals are regularly confronted by financial situations such as project pricing, measuring performance, estimating risk, allocating costs, and so on. This means that every proposal needs to be vetted by the respective specialists. While this may be desirable and even necessary, the speed and reliability of the process could improve if the people who originate the proposal had knowledge of the fundamentals that go into the decision-making process. Another distinguishing feature of the IT and services industry is their unique cost structure, quite different from the manufacturing industry on which traditional managerial accounting is based. Different categories of the industry such as software products, software development (outsourcing), online services, and IT-enabled services have their own distinct cost structure requiring different metrics. The situation is becoming further differentiated as most IT companies shift to the cloud and software ownership is replaced by licensing. These aspects are not adequately addressed by existing books on managerial accounting which are generally manufacturing centric. The online services and mobile app industries constitute the fastest growing and most exciting segment of this industry. However there is hardly any published literature in this area for the software lay person. One chapter is entirely devoted to this subject. This book focuses on strategic managerial accounting in context of the IT software industry, where activities are typically organized as projects which have specific goals and finite life. It seeks to equip the IT professional with some of the knowledge and skills that are generally delegated to the managerial accountants, in an attempt to assist them in making more informed decisions.