Video Transcript:

"Hello, and welcome to our Decision-Making and the Innovation Economy series, an overview of Managerial Accounting. This module is, Creating Capacity, Capitol Budgeting Considerations.

Hello, I'm David Fionda. Currently I'm a CPA member of the accounting faculty at Bentley University, Waltham, Mass. Thought it was important to take a few minutes to provide you with my perspective on decision making and managerial accounting. Before I joined the faculty at Bentley, I spent the majority of my career as an entrepreneur. I started three companies and had the fortune to sell two of them. I've also had the good fortune to work for companies like Great Plains Software. I watched them grow from a small startup in Fargo, North Dakota to being acquired by Microsoft for $1.6 Billion.

They, then became the foundation for Microsoft's Dynamic's Accounting suite. I spent two years working with them, helping them bring their products to the Italian market. As an entrepreneur, I've always had a great interest in looking at what makes companies successful and what causes companies to fail. Over the past thirty years, I've had opportunity to observe how our world and business climate has changed. How we went from sending memos to the typing pool to sending a text message. How even the smallest companies today can now access markets across the entire globe only accessible, previously to the largest multinationals and how the speed of business has accelerated to nearly light speed.

The common thread to all of this is information and decision making. In today's fast paced, innovation economy, getting the right information and the right decision is more than just an accounting exercise, it's critical to the survival of any business. I've seen our economy transform into an innovation economy. Thanks to the power of the web, consumers today, are keenly aware of every product choice that may be available from multiple channels and providers. Gone are the days when you go to the TV store to purchase your television or you get your housewares at Woolworth's.

Many years ago managerial accounting was simply about going through a series of calculations performed by a select group of individuals. The environment and markets were tightly controlled and you could wait the days or weeks for your answer.

Today, every person in every organization is making those key decisions. The pace of today's competitive markets can't wait for an answer. The largest companies like Apple Computer to the smallest web startups have to understand how the different components of the cost of their product work so they can accurately and quickly predict cost across the whole spectrum of sales and production.

Which products to introduce, which products to emphasize at what price, how to evaluate their performance and take corrective action. Which costs are relevant to any decision, how to manage overhead to drive profitability and how to make decisions on accepting special orders, eliminating a product line, a location or division or whether to outsource and most importantly when and how to replace or acquire new comm equipment.

Successful companies are always innovating by constantly introducing new products and services. Timely, relevant information is critical to supporting these decisions. The competition is so fierce today, there's no margin for error. Companies that understand this concept like Apple, can price their products to succeed and ensure they're profitable. Companies that don't understand their product and service cost often make bad pricing and business decisions that can doom them to failure.

The focus of management accounting is decision making. To make the best decision, you need accurate information quickly. Only the companies with the best information can make decisions at the speed that today's innovation economy requires. I really hope that you enjoy this module. I encourage you to reach out to me and ask any questions or let me know if I can be of further assistance to your organization.

Thank you."

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