| Despite the vast improvements in information | | | | instructed to highlight exceptions, i.e. significant |
| technology, computers (on which modern IT is | | | | variations between original estimates and actual |
| based) cannot as yet take over business | | | | performance. Managers will thus become aware |
| management. However, business information | | | | of problem areas in the daily course of their work |
| systems have transformed the effectiveness, | | | | simply by looking at the reports they receive, |
| power and efficiency of management. | | | | without having to do detailed data collection and |
| In an earlier article on business management | | | | computations themselves. |
| software, we looked at surface aspects of how | | | | Identifying the factors responsible for the problem |
| modern management information systems help | | | | can also be routinized to some extent by using |
| businesses. We saw how computers speeded up | | | | such tools as variance analysis. Variance analysis is |
| and improved the quality of operations. We also | | | | an element of standard costing system that splits |
| mentioned the existence of broad categories of | | | | deviations from estimates (or standards) into |
| business software - office suites, functional | | | | causative factors such as increase in price of |
| software such as accounting and inventory, and | | | | materials used, excessive usage of materials, |
| industry software such as retail management | | | | unexpected machine downtimes, etc. With such a |
| software. In this article, we seek to look more | | | | detailed report, managers can delve deeper into |
| analytically at the role of information management | | | | the problem factor, such as why there was |
| systems. | | | | excessive usage of materials. |
| Decision Support, Problem Analysis and Overall | | | | Control is also exercised through variance analysis. |
| Control | | | | Budgets are prepared for all business operations |
| Business managers often need to make decisions | | | | by concerned managers working in a coordinated |
| that can affect the business' fortunes one way or | | | | fashion. For example, estimated sales volumes will |
| other. For example, a company with sales outlets | | | | determine the levels of production; production |
| or distributors spread over a wide geographic | | | | levels will determine raw material purchases; and |
| area might want to optimize the logistical | | | | so on. With good information system |
| operations of delivering merchandise to the | | | | management, it then becomes possible to |
| outlets. The best solution might be affected by | | | | generate timely reports comparing actual sales, |
| numerous factors such as demand patterns, | | | | production, raw material deliveries, etc against |
| availability of merchandise, distances involved and | | | | estimated levels. |
| the option of using external carriers (who can find | | | | The reports will help managers to keep a watch |
| two way loads and might prove a lesser cost | | | | on things and take corrective action quickly. For |
| option over long distances) instead of own | | | | example, the production manager will become |
| vehicles. | | | | aware of falling sales (or rising sales) of particular |
| While it might be possible to use complex | | | | products and can prepare to make adjustments in |
| mathematical formulas by hand to compute the | | | | production schedules, and purchasing and |
| best solution, computers transform the whole | | | | inventory managers will become quickly aware of |
| process into a routine task of feeding certain | | | | any mounting inventories of unused materials. MIS |
| information as input and obtaining suggestions for | | | | thus enhances the quality of communication all |
| best solutions as output. The task can typically be | | | | around and can significantly improve the |
| done in a few minutes (instead of hours or even | | | | effectiveness of operations control. |
| days) and it becomes possible to examine several | | | | Effective MIS Involves Humans and Computers |
| alternatives before deciding upon one that seems | | | | Working together |
| most realistic. | | | | The major aspect to note is that MIS provides |
| Identifying problems and analyzing the factors | | | | only the information; it is the responsibility of |
| that cause them also has been transformed by | | | | concerned managers to act on the information. It |
| modern computer information systems. In a | | | | is the synergy between efficient, accurate and |
| typical MIS environment, standard reports are | | | | speedy equipment and humans with |
| generated in a routine manner comparing actual | | | | commonsense, intelligence and judgment that |
| performance against original estimates. The | | | | really gives power to MIS. |
| software that generates the report can be | | | | |