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Home > Performance Management Best Practice > Reducing Costs and Improving Efficiency with New Management Information Systems

Performance Management Best Practice

Reducing Costs and Improving Efficiency with New Management Information Systems

by Beverly Goldberg

Executive Summary

  • A management information system (MIS) enables businesses to provide answers to managers in search of knowledge. MIS does this by combining raw data about the organization’s operations (contained in its basic information technology systems) with information gathered from employees in expert systems that reflect the organization’s procedures.

  • As organizations grow, MIS allows information to move between functional areas and departments instantly, reducing the need for face-to-face communications among employees, thus increasing the responsiveness of the organization.

  • Putting in place the advanced technological systems needed to collect and sort data and employee information can be costly unless senior management, especially the CFO, controls the purchasing of the basic systems needed by different functional areas from the outset.

  • Well-constructed and well-organized MIS can provide management with the knowledge it needs to reduce operating costs and increase profits.

  • MIS can help management increase efficiency by quickly providing critical information about procedures and operations.

Introduction

Management information systems (MIS) make it possible for organizations to get the right information to the right people at the right time by enhancing the interaction between the organization’s people, the data collected in its various IT systems, and the procedures it uses. It brings together the raw data collected by the various business areas of the organization, which, while useful for specific functions such as accounting, does not provide, by itself, information that can be used to make decisions. Moreover, in older companies, the systems in which the data reside may be incompatible and need to be migrated to a data warehouse (DW)1 before they can be used. Once all the basic data are pulled together, they can be combined with information collected in more advanced systems meant to simulate human reasoning, such as expert systems2 and decision support systems.3 This enables the data mining (DM)4 of all the collected information in response to the needs of management involved in operational, strategic, and tactical decision-making.

In many companies, functional/departmental systems are being replaced by enterprise-wide systems—such as enterprise resource planning (ERP), customer relationship management systems (CRM), and supply chain management (SCM)—that ease the problems that arise from having multiple, incompatible systems. Whatever move is made to modernize and simplify data collection, however, the key to using a company’s systems to increase efficiency is the technical business analyst, whose job, according to a guide by the International Institute of Business Analysts, is to “collaborate with business stakeholders to build a strong relationship between the business and the technical communities when implementing a new IT-enabled business solution.” In most organizations today, the person overseeing the work of the technical business analyst is the chief financial officer. In the past, when people thought about the role of CFO, they considered it primarily an accounting role. That is no longer the case. As Pfizer CFO David L. Shedlarz says, “when you take a look at a CFO’s responsibility today, you also have operations planning and analysis, information technology, strategic planning, and M&A.”5

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Further reading

Books:

  • Fleisher, Craig S., and Babette E. Bensoussan. Business and Competitive Analysis: Effective Application of New and Classic Methods. Upper Saddle River, NJ: FT Press, 2007.
  • Haag, Stephen, Maeve Cummings, and Amy Phillips. Management Information Systems for the Information Age. 6th ed. New York: Irwin/McGraw-Hill, 2007.
  • Kroenke, David M. Using MIS. 2nd ed. Englewood Cliffs, NJ: Prentice Hall, 2008.
  • Kroenke, David, and Richard Hatch. Management Information Systems. 3rd ed. New York: McGraw Hill, 1994.
  • Post, Gerald V., and David L. Anderson. Management Information Systems: Solving Business Problems with Information Technology. 4th ed. New York: McGraw Hill, 2005.

Websites:

  • International Institute of Business Analysis (IIBA)—A Guide to the Business Analysis Body of Knowledge: tinyurl.com/7725rfy
  • Journal of Management Information Systems: www.jmis-web.org

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