Chapter 14 - Performance Management Information Systems Flashcards
Performance Management Information Systems
Strategic planning - Concerned with setting a future course of action for the organisation e.g. Long term forecasts.
Management control - Concerned with the effective use of resources to achieve targets set at strategic planning e.g. Budgetary measures, productivity measures, labour statistics, capacity utilisation.
Operational control - Concerned with the day to day implementation of the plans of the organisation e.g. Detailed, short term transactional data.
Data and information
Data - Numbers, letters, symbols, raw facts, events and transactions which have been recorded but not yet processed into a form that is suitable for making decisions.
Information - Data that has been processed and a meaning to the person that receives it who will then use it to improve decision making.
Types of Information Systems
Strategic…Tactical…Operational
Time Horizon: Long term… …Immediate
Level of detail: Aggregated/ Summarised… …Highly detailed
Source: Mainly external… …Internal
Degree of uncertainty: Uncertain… …Certain
Frequency: Infrequent… …Frequent
Information systems
Executive information system (EIS):
Gives senior executives access to internal and external information.
Information is provided in a summarised form with option to drill down further.
Decision support system (DSS):
An aid to making decisions.
The system predicts the consequences of a number of possible scenarios and the manager makes the final decision.
Transaction processing system (TPS):
A system for processing routine business transactions often in large volumes, e.g. Sales and purchase information.
Additional systems
Management information systems (MIS):
Provide information to all levels of management to enable decisions for planning and controlling the activities for which they are responsible.
Expert systems:
Hold specialist knowledge e.g. Law, Tax and allows non experts to interrogate.
Used at all levels of management.
Enterprise resource planning system (ERPS):
Integrating the data from all operations within the organisation into one single system.
Closed and open systems
An open system interacts with the environment.
A closed system has no contact with its environment.
Management accounting systems should be open for the following reasons:
- Closed systems can have short lives.
- Closed systems even if they can be self sufficient become irrelevant e.g. A company might attempt to make the same products year after year whilst ignoring advances in technology and customer changes.
- Internal information is relatively easy to capture but not enough to ensure success. External information is difficult to capture.
Internal sources
Sales ledger system:
- Number and value of invoices
- Volume of sales
- Value of sales analysed by customer and product
Purchase ledger system
- Number and value of invoices
- Value of purchases analysed by supplier
Payroll system
- Hours worked
- Output achieved
- Wages earned
- Tax deducted
Fixed asset system
- Date of purchase
- Initial cost
- Location
- Depreciation method and rate
- Service history
- Production capacity
Production:
- Machine breakdown times
- Number of rejected units
Sales and marketing:
- Types of customer
- Market research results
External sources
Suppliers:
- Product prices
- Product specification
Newspapers, journals:
- Share price
- Information on competitors
- Technological developments
- National and market surveys
Government:
- Industry statistics
- Taxation policy
- Inflation rates
- Demographic statistics
- Forecasts for economic growth
Customers:
- Product requirements
- Price sensitivity
Employees:
- Wage demands
- Working conditions
Banks
- Information on potential customers
- Information on national markets
Business enquiry agents:
- Information on competitors
- Information on customers
Internet:
1. Almost everything via databases.
Controls
Input - Should be complete, accurate and authorised e.g. Passwords.
Processing - Should be initiated by appropriate personnel and logs should be kept of any processing e.g. Audit trails.
Output - should be available to authorised persons and third parties only e.g. Distribution lists.
Controls over input
Passwords - Help ensure data is authorised and they provide a software audit trail.
Range tests - Help to ensure data is accurate e.g. Month fields in range 1-12.
Format checks - Help to ensure data is accurate e.g. Account numbers in format A123.
Check digits - Help to ensure data is accurate. Specially constructed numbers which comply with a mathematical test.
Sequence checks - Help to ensure data is complete e.g. Ensuring all cheques are accounted for.
Matching - Primarily addresses completeness e.g. A system checking each employee has input a time sheet for the month.
Control totals - Help to ensure accuracy, completeness and authorisation as batches of input can be authorised manually.
Output reports - ACCURATE
A - Accurate C - Complete C - Cost < Benefit U - Understandable R - Relevant A - Adaptable to needs of user T - Timely E - Easy to use
