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The overriding purpose of management accounting is the production of information to assist organizational managers in their decision-making. In Chapter 2 of the textbook we highlighted key qualities and characteristics of useful management accounting information, namely: accuracy, timely, global, trusted, practicality, holistic, flexible, contextual and secure.

Moreover, in Chapters 21 and 22 we then highlighted the staggering pace of information technology. One very powerful IT tool nowadays (and no doubt developing much further even in the short term) is ‘big data’, which stores, retrieves and can use enormous amounts of data for analysis and informing management decisions on a scale unheard of previously.

Tesco’s retail invested in big data-type technology on a massive scale, in particular to gain an edge through its customer research, analytics and loyalty schemes. “Tesco was digital before digital was cool” (Schrage, 2014), and many cited Tesco’s approach as big data ‘best practice’.

For a while, in the 2000s, it worked, and Tesco’s was incredibly successful.   However, since the departure of its Chairman during their most profitable times (Sir Terry Leahy), Tesco’s fortunes have been less impressive, and people are asking why. There are multiple theories, including one that Tesco had took their eye off the ball in respect of key competitors, especially new under-cutting rivals like Aldo and Lidl.

Whatever the primary reason(s) for Tesco’s recent decline, there’s surely a lesson to be learned here about what constitutes “useful information” for managerial decisions; and that maybe more information does not necessarily mean the ‘right’ information?

Source: ‘Tesco’s downfall is a warning to data-driven retailers’ (M. Schrage, HBR blog network, posted 28.10.14)