This month, our interview series highlights one of the most recognized experts on the topics of cost management, enterprise performance and risk management systems. He is the founder of Analytics-Based Performance Management, an advisory firm located in Cary, North Carolina and has written a number of books on the topic of performance management.

Mike Fournier (MF): For quite a while you have been a high profile member of the cost management community. How do you view the current state of the profession?

Gary Cokins (GC): I believe the management accounting profession is approaching a fork in the crossroads where either it can raise the bar and accelerate the adoption rate of advanced methods or it can muddle along as it has for decades. It will be a shame if it misses this opportunity.

By advanced methods, an example is to stop using traditional flawed and misleading cost allocations techniques that violate costing’s “cause-and-effect” principle and apply activity-based costing (ABC) techniques. Other examples include more effective applications of the strategy map and its associated performance measures (KPIs) selection and monitoring. A big shift will be from reporting historical information, ideally including channel and customer profitability, to the predictive view. This means classifying the change behavior of resource capacity expenses as sunk, fixed, semi-fixed, variable and discretionary. Decisions only impact the future. So rolling financial forecasts, make-versus-buy, and “what-if” questions require predictive costing. Managerial accounting will shift emphasis to managerial economics. This will also mean more skills with applying business analytics, like correlation and regression analysis, will be needed by accountants.

A concern I have is the failure for CFOs to realize that cost measurement for external regulatory accounting for the investment community will be different than internal managerial accounting for insights and decision making. Also, for those who do understand this, there continues to be confusion about what “best” costing technique to use. It is if alternative techniques, like ABC and lean accounting, are rivals. They are not. There can be two or more co-existing costing techniques for a single organization.

To conclude, the “current state” of the profession is one where the leadership, determination, and vision of accountants will be tested.

MF: You are active with the Management Accounting Section of the American Accounting Association (AAA MAS), the organization that represents college/university level teachers in Accounting. Could you tell us a little bit about your work with them to improve cost management?

GC: The objective of the AAA MAS task force that I am a member of is to suggest reforms to a university’s accounting curriculum. The seven task force members are all university faculty except myself as the practitioner. They are passionate about the need to shift the emphasis of the accounting curriculum from external financial accounting to internal managerial accounting and enterprise performance management (EPM) methods.

The focus is on the student and preparing them with greater competencies so they can be a stronger contributor to their employers. The task force members are bothered that universities typically prepare students for careers with public auditing firms when most students inevitably work in commercial or public sector government organizations.

MF: What does the future of cost management look like in the best case scenario? In a most likely case scenario? Near-term and long-term?

GC: A best long-term case scenario is cost management professionals will embrace change and recognize there is so much more they can do to provide substantially better information, both financial and non-financial information, to their co-workers and executive teams. This would involve more focus on what types of decisions are made and then understanding which information is needed to improve those decisions. In the business analytics field, I have admired and learned from the consultant, James Taylor, founder of

My sense for a “most likely case” scenario is that cost management professionals will achieve the “best case” I just described – but it will take a much longer time than I would prefer.

I position near-term scenarios as in the next three to five years. Given that time horizon, my opinion, which applies to both my best and most likely scenarios, is the catalyst that will accelerate getting to my long-term scenario is technology.

Three years ago I thought the most critical near-term factor is better training and education. But most companies have cutback training budgets and conference speakers often have hollow messages. Now I choose technology as the big lever for near-term change. One example is improved and more integrated software with increasingly better technical data management to assure the systems access reliable data. But a different aspect of technology involves much more powerful and faster computing. As accountants become more analytical (and with increasingly more time to perform analysis versus bookkeeping) they will embrace test-and-learn approaches already used in marketing, sales, operations, and other functions. With faster technology that has in-memory capabilities, what-if models that took hours now take only seconds.

MF: You agreed to become an Executive Committee member of the Society of Cost Management (SCM) at its founding. You were probably a little apprehensive about this role at that time. Why did you accept? How do you see SCM fitting into the costing profession? What should its role be?

GC: I volunteered to get actively involved with SCM in large part because of your reasoning for why SCM is needed. You were passionate in describing accounting professional societies and institutes as coming up short and not sufficiently fulfilling the needs management accountants.

SCM fits into a mosaic of other professional societies including non-accounting ones such as in marketing, operations, strategy, supply chain management, and other professions. However, cost data competes with many other metrics such as for quality, cycle-time, responsiveness, service-levels, customer loyalty, and so on. They are all integrated. But cost information is more core in the sense that money (i.e., the monetary view) is the only common denominator for decisions.

SCM’s mission statement well describes what SCM’s role should be. I participated in writing and editing SCM’s mission statement. Doug Hicks and I lobbied for and were successful with including in the mission one of several “roles” SCM can play as an “intermediary” one to integrate non-accounting professional societies (e.g., ASQ, APICS, CSCMP). Just as many organizations perform in silos, so do their professional societies. But cross-functional thinking is demonstrating that there is value and performance improvement from removing org chart barriers. SCM stimulate interest in building a needed coalition of professional societies.

MF: You recently made a career transition. Could you tell us a little bit about that and what you are doing now?

GC: At age 63 and completing sixteen fun-filled years SAS, the analytics software vendor, I decided to “quasi-retire.” I plan to continue to remain busy and work on things I like and try to get better at what I am already good at. So, how do I do that?

The short answer is I created a new website at . It has two purposes. The first is to provide free educational information on topics related to enterprise and corporate performance management (EPM / CPM) including managerial accounting. The second purpose is so that people who already know me or are aware of me can then find me. That is happening almost evenly split among three groups: managers, consultants, and software vendors. That has resulted in scheduled company visits and seminars with several in 2013. So I guess I am just flowing with it to see where it takes me. Check back with me a year from now!

About Gary Cokins

Gary Cokins (Cornell University BS IE/OR, 1971; Northwestern University Kellogg MBA 1974) is an internationally recognized expert, speaker, and author in advanced cost management and enterprise performance and risk management systems. He is the founder of Analytics-Based Performance Management, an advisory firm located in Cary, North Carolina.  He began his career in industry with a Fortune 100 company in CFO and operations roles. He then worked 15 years in consulting with Deloitte, KPMG, and EDS. In 1996 he joined SAS, a global leader in business intelligence and analytics software, as a Principal Consultant. His two most recent books arePerformance Management: Finding the Missing Pieces to Close the Intelligence Gap (ISBN 0-471-57690-5) and Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics (ISBN 978-0-470-44998-1). Mr. Cokins can be contacted at


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