An introduction to An introduction to

Management Information Management Information (and) Systems(and) Systems

by Rock P.V. Klaar by Rock P.V. Klaar Master of Public AdministrationMaster of Public Administration

Certified Public ControllerCertified Public Controller

SubjectsSubjectsI.I. Context of Performance Context of Performance

management within the Dutch management within the Dutch Government Government

II.II. How do I determine what How do I determine what information I needinformation I need

III.III. How to make use of How to make use of Information TechnologyInformation Technology

I. Context of Performance management within the Dutch Government

a.Separation of policy bodies and operational bodies

b.Governance model around agencies

c. VBTB – From policy budgetting to policy accountibility

d.Accrual accounting

I.a/d. Separation of policy and I.a/d. Separation of policy and operational bodiesoperational bodies

Since the 90’s a proces has started to put Since the 90’s a proces has started to put the operations apart from the policy the operations apart from the policy departmentsdepartmentsToday 80% of the civil servants are Today 80% of the civil servants are working within agenciesworking within agenciesThe actual operation of government policy The actual operation of government policy takes place at the operational bodies such takes place at the operational bodies such as agencies and Independent as agencies and Independent Administrative Bodies (IAB)Administrative Bodies (IAB)Agencies and IAB are at the end of the MIS Agencies and IAB are at the end of the MIS line (where policy results are measured) line (where policy results are measured)

Government as business?Government as business?

private private governmental governmentalenterprisesenterprises bodies bodies

Contractor Contractor market or policy director

(pays) other enterprises general

ownerowner stockholders (dpt) secretary general

auditorauditor supervisory director of board Finance

I.b/d. Governance model around agencies and IAB’s

performerperformer enterprise agency/IAB

Government as business?Government as business?

private private governmental governmental

enterprisesenterprises bodies bodies

drive return of investment serving society

document annual account planning

orientation market politics and citizins

• Cost awareness concerted weighing of both policy and operational management

• professionalization of the relation between policy and operations with attention for results/effects for dutch society

Shared values:

I.b/d. Governance model around agencies/IAB’s

Information-pyramidInformation-pyramid

Regional offices of the agency

Agency

Owner

contractors Degree of detail of information

Accounting

Steering

Lower Chamber

Society: Consumer/ Target groups

minister

PoliticsMedia

Still there are many different formsStill there are many different forms

Minister

SG

DGDG DG

D D D

d4

board

d1

d2

d3d5

1)

1)

2)

3)

4)

5)

I.b/d. Governance model around agencies

5)

2)

3)

II. How to determine what information is neededa.Performance management in the perspective of

outcome

b.Performance management in the perspective of ambition

c. Different information on different tasks

d.Different information for different users

e.Performance management reflected in the Balanced Scorecard of dr.Kaplan

f. Use of Dashboards

g.Requirement of performance indicators

Implementation

Planning

Outcome

Sociaty effects

Output

Products, services and results

Throughput

Activities & processes

Input

Usage of people and means

EffectivityDoes the organization do the right things?

EfficiencyDoes the organization do the things right?

Efficiency and effectivity

II.a/g Performance management in the perspective of outcome

II. b/g Performance management in the perspective of ambition

Different levels of result orientation

Level of result orientation

Level of professionality of

instruments

Process oriented

Outcome oriented

Input oriented

Output oriented

Impact oriented

Management focus on utilizing input (budget disbursement)

(

Management focus on realizing outcome (effects on society)

Management focus on realizing output (products and or services)

Management focus on optimalizing processes (throughput)

Management focus on realizing van integral society changes

The level van be determined bij examening the instruments (components and approach).

II.c/g Different information on different tasks

Distinction of 5 types of tasks

1.1. Administration of estates or datasetsAdministration of estates or datasets2.2. Provision of entitlementsProvision of entitlements3.3. Keeping supervision by inspectionKeeping supervision by inspection4.4. Provide training or information/ related Provide training or information/ related to doing research to doing research 5. Registration and providing licences or 5. Registration and providing licences or permits permits 6. Other6. Other

II.c/g Different information on different tasksTaskTask Performance IndicatorPerformance Indicator AgencyAgency

1. Administration of 1. Administration of estates or datasetsestates or datasets

Number of buildings and Number of buildings and parcelsparcels

Government Government Building ServiceBuilding Service

2. Provision of 2. Provision of entitlementsentitlements

Number of processed Number of processed tax returns, % mistakestax returns, % mistakes

Tax departmentTax department

3. Inspection or 3. Inspection or keeping supervisionkeeping supervision

Costprize per inspection, Costprize per inspection, number of inspectionsnumber of inspections

Food & Goods Food & Goods authorityauthority

4. Provide training 4. Provide training or information or information bases on researchbases on research

Quality measured bij Quality measured bij visitation, client visitation, client satisfactionsatisfaction

Netherlands Netherlands Forensic Forensic InstituteInstitute

5. Registration and 5. Registration and providing licences providing licences or permits or permits

Number of registrations, Number of registrations, time per registration, time per registration, lead timelead time

Netherlands Netherlands Patent OfficePatent Office

6. Other6. Other Costprize per client, Costprize per client, percentage of escapespercentage of escapes

Prison ServicePrison Service

Example of BSC for Netherlands Example of BSC for Netherlands Emission authority Emission authority

Product Product typetype

Ministry of Ministry of EnvironmentEnvironment

OwnerOwner

Cost-Cost-efficiencyefficiency

Ministry of Ministry of EnvironmentEnvironment

ContractorContractor

Policy-Policy-

EffectivityEffectivity

EnterprisesEnterprises

TargetgroupTargetgroup

Administrative Administrative burdenburden

turnroundtimeturnroundtime

SocietySociety

/politics/politics

EffectivityEffectivity

registrationregistration

Number of Number of handlinghandling

Hours / kg Hours / kg CO2CO2

System-System-

costs per costs per registred kg registred kg CO2CO2

% of % of enterprises enterprises that that participate in participate in the trade of the trade of CO2 CO2 emission emission rights rights

Execution time Execution time of data within of data within the public the public registerregister

Percentage Percentage defective in defective in registerregister

Debit/Credit Debit/Credit balance balance between between obtained and obtained and sold kg of sold kg of with other with other countriescountries

InspectionInspection Costs per Costs per evaluated kg evaluated kg CO2CO2

% of CO2 % of CO2 reports reports evaluated evaluated within the within the legal term legal term

% complaints % complaints concerningconcerning

Incorrect Incorrect treatmenttreatment

Catching rateCatching rate

Internal Internal

OrganisationOrganisation

Personel-Personel-

SatisfactionSatisfaction

ProcessesProcesses

InnovationInnovation

Number of Number of corrections corrections after first after first inputinput

Percentual Percentual number of number of justly justly suspected suspected enterprisesenterprises

II d/g. Different information for different users Management information system (MIS)

• A MIS provides managers with information and support for effective decision making, and provides feedback on daily operations

• Output, or reports, are usually generated through accumulation of transaction processing data

• Each MIS is an integrated collection of subsystems, which are typically organized along functional lines within an organization

TYPES OF INFORMATION SYSTEMSTYPES OF INFORMATION SYSTEMS

DATA WORKERSDATA WORKERS

KIND OF SYSTEM GROUPS SERVEDKIND OF SYSTEM GROUPS SERVED

STRATEGIC LEVEL SENIOR STRATEGIC LEVEL SENIOR MANAGERSMANAGERS

MANAGEMENT LEVEL MIDDLE MANAGEMENT LEVEL MIDDLE MANAGERSMANAGERS

OPERATIONAL OPERATIONAL

OPERATIONAL LEVEL OPERATIONAL LEVEL MANAGERS MANAGERS

KNOWLEDGE LEVEL KNOWLEDGE &KNOWLEDGE LEVEL KNOWLEDGE &

SALES & MANUFACTURING FINANCE ACCOUNTING HUMANSALES & MANUFACTURING FINANCE ACCOUNTING HUMAN RESOURCESRESOURCESMARKETINGMARKETING

II d/g. Different information for different users

II. d/g Different information for different users

Different levels of result orientation

Level of result orientation

Level of professionality of

instruments

Process oriented

Outcome oriented

Input oriented

Output oriented

Impact oriented

Management focus on utilizing input (budget disbursement)

(on behalve of financial department)

Management focus on realizing outcome (effects on

society) (on behalve of the policy Director General)

Management focus on realizing output (products and

or services) (on behalve of the board of directors)

Management focus on optimalizing processes (throughput)

(on behalve of operational management)

Management focus on realizing van integral society changes

(on behalve of the Lower Chamber)

The level van be determined bij examening the instruments (components and approach).

• product portfolio

• quantities

• qualitiy of products

and services

• cost-prize

Performance Indicators between agency and Contractor

Contractor Agency

Citizens / enterprises

Citizens / enterprises

• responsibilities/ authorizations• management control systeem• cost prize model• investment policy• financings policy• risk policy• reporting requirements• approval of tariffs

Scope of management

Agency

Owner

Director of Finance, Court of auditors,

General Audit Chamber

Balanced ScorecardBalanced Scorecard

II.e/g Performance management reflected in the Balanced Scorecard

(dr.Kaplan)

Innovation perspective

Internal Organization

Financial perspective

Costumer perspective

Owners perspective: : The perspective of the Secretart General in the role of The perspective of the Secretart General in the role of ownerowneris continuity and quality of the organization is continuity and quality of the organization Contractors perspective:Contractors perspective: The perspective of the policy Director General(s) in the role The perspective of the policy Director General(s) in the role of contractor is focuses on content and quality of the of contractor is focuses on content and quality of the products delivered and the costprize that must ne payedproducts delivered and the costprize that must ne payed

Internal Organization perspectiveInternal Organization perspective: : the perspective of the internal organization is the the perspective of the internal organization is the perspective of a positive balance of personel needs, perspective of a positive balance of personel needs, processes, infrastructure and organizational structure processes, infrastructure and organizational structure aswell as apropropriate corporate culture aswell as apropropriate corporate culture

Innovation and learning perspectiveInnovation and learning perspectiveIs the perspective of the degree of readiness for future Is the perspective of the degree of readiness for future developments in the broadest meaning developments in the broadest meaning

II.e/g Performance management reflected in the Balanced Scorecard Within the public sector these perspectives can

be interpreted as follows:

BalancedScorecard

Customer perspective

Innovation & Learning perspective

Owners Perspective

Internal & Business Perspective

•#of days per employee spended on education

•# of defined brand concepts

•# drop out R&D projects

•company image•profitibility•Embedded value •Movement•Company costs•Progress in investment

plan

•price premium•preferred supplier status•service levels•brand awareness•time to market

•Users (target groups) satisfaction

•Number of complaints

•progress in realisation of plans

•% staff on required level•progress in IT plan•potentials +criteria•Staff contentment•Absence through sickness

Balanced Scorecard

From mission to DashboardFrom mission to Dashboard

StrategicobjectivesStrategicobjectives

Critical SuccessFactors

Critical SuccessFactors

Performanceindicators

Performanceindicators

Organisation

Mission Business

scope/SWOT

Businessscope/SWOT Translated

CSF’sTranslated

CSF’s

MT Dashboard

BalancedBusinessScorecard

Customer perspective

Innovation & Learning perspective

Financial Perspective

Internal & Business Perspective

• # new product/market combinations• sales new product/market

combinations• # R&D projects in progress• # end products per brand

• sales• gross margin• ROS %• milk results• operating cash flow %• economic premium/ROI• tons

• % weighed distribution coverage• consumer appreciation• retailer appreciation• market share

• % realised plans- brands- countries- acquisitions- account plans- R&D products- R&D processes

• production result• employee satisfaction• sales cost/total sales

II. f/g Usage of Dashboards

Steps to make

1. Mission

2. Business scope/SWOT

3. Strategic objectives

4. CSF’s

5. Translated CSF’s

6. Definition of PI’s (Action oriented en Result oriented)

7. Selection of PI’s for GD Dashboard

8. Evaluation PI’s

What to do after What to do after designing a dashboard ?designing a dashboard ?

design the

dashboards

Definethe

document

Build the formats

Routing/ embeddin

gin systems

test the Dasboards

Use the Dashboard

s

II. g/g Requirements of Performance indicatorsII. g/g Requirements of Performance indicators

Financial and non financialFinancial and non financial

Related to translated CSF’sRelated to translated CSF’s

Both internal and externalBoth internal and external

Specific for each dashboard levelSpecific for each dashboard level

Sometimes temporarySometimes temporary

SMARTSMART- S = Specific- S = Specific- M = Measurable- M = Measurable- A = Achievable- A = Achievable- R = Reliable- R = Reliable- T = Timely- T = Timely

PI’s do not have to cover everything ; it’s all about focus and setting priorities

III.How to make use of Information Technology

a.Types of information systems

b.Financial versus operational information

c. Entreprise Resource Planning systems

Information Systems: Concepts and Information Systems: Concepts and DefinitionsDefinitions

Data Item.Data Item. Elementary description of things, Elementary description of things, events, activities and transactions that are events, activities and transactions that are recorded, classified and stored but are not recorded, classified and stored but are not organized to convey any specific meaning.organized to convey any specific meaning.

Information.Information. Data organized so that they have Data organized so that they have meaning and value to the recipient.meaning and value to the recipient.

Knowledge.Knowledge. Data and/or information organized Data and/or information organized and processed to convey understanding, and processed to convey understanding, experience, accumulated learning and expertise experience, accumulated learning and expertise as they apply to a current problem or activity. as they apply to a current problem or activity.

SYSTEMS FROM A FUNCTIONAL PERSPECTIVESYSTEMS FROM A FUNCTIONAL PERSPECTIVE

1.1. SALES & MARKETING SYSTEMSSALES & MARKETING SYSTEMS2.2. MANUFACTURING & PRODUCTION MANUFACTURING & PRODUCTION

SYSTEMSSYSTEMS3.3. FINANCE & ACCOUNTING SYSTEMSFINANCE & ACCOUNTING SYSTEMS4.4. HUMAN RESOURCES SYSTEMSHUMAN RESOURCES SYSTEMS5.5. OTHERSOTHERS6.6. MANAGEMENT INFORMATION SYSTEMSMANAGEMENT INFORMATION SYSTEMS

III a/c Types of information systems

1.Sales & Marketing Systems (SMS)1.Sales & Marketing Systems (SMS)

MAJOR FUNCTIONS OF SYSTEMS:MAJOR FUNCTIONS OF SYSTEMS:

Sales management, market research, Sales management, market research, promotion, pricing, new productspromotion, pricing, new products

MAJOR APPLICATION SYSTEMSMAJOR APPLICATION SYSTEMS::Sales order info system, market research Sales order info system, market research system, pricing systemsystem, pricing system

III a/c Types of information systems

2. Manufacturing & Production Systems (MPS)2. Manufacturing & Production Systems (MPS)

MAJOR FUNCTIONS OF SYSTEMSMAJOR FUNCTIONS OF SYSTEMS::

Scheduling, purchasing, shipping, Scheduling, purchasing, shipping, receiving, engineering, operationsreceiving, engineering, operations

MAJOR APPLICATION SYSTEMS:MAJOR APPLICATION SYSTEMS:

Materials resource planning systems, Materials resource planning systems, purchase order control systems, purchase order control systems, engineering systems, quality control engineering systems, quality control systemssystems

III a/c Types of information systems

3. Finance & Accounting Systems (FAS)3. Finance & Accounting Systems (FAS)

MAJOR FUNCTIONS OF SYSTEMS:MAJOR FUNCTIONS OF SYSTEMS:

Budgeting, general ledger, billing, Budgeting, general ledger, billing, cost accountingcost accounting

MAJOR APPLICATION SYSTEMS:MAJOR APPLICATION SYSTEMS:

General ledger, accounts receivable, General ledger, accounts receivable, accounts payable, budgeting, funds accounts payable, budgeting, funds management systemsmanagement systems

III a/c Types of information systems

4. Human Resources Systems (HRS)4. Human Resources Systems (HRS)

MAJOR FUNCTIONS OF SYSTEMS:MAJOR FUNCTIONS OF SYSTEMS:

Personnel records, benefits, Personnel records, benefits, compensation, labor relations, trainingcompensation, labor relations, training

MAJOR APPLICATION SYSTEMS:MAJOR APPLICATION SYSTEMS:

Payroll, employee records, benefit Payroll, employee records, benefit systems, career path systems, systems, career path systems, personnel training systemspersonnel training systems

**

III a/c Types of information systems

5. Other Types (e.g., University)5. Other Types (e.g., University)

MAJOR FUNCTIONS OF SYSTEMS:MAJOR FUNCTIONS OF SYSTEMS:

Admissions, grade records, course Admissions, grade records, course records, alumnirecords, alumni

MAJOR APPLICATION SYSTEMS:MAJOR APPLICATION SYSTEMS:

Registration system, student Registration system, student transcript system, curriculum class transcript system, curriculum class control system, alumni benefactor control system, alumni benefactor systemsystem

III a/c Types of information systems

MANAGEMENT LEVELMANAGEMENT LEVEL

INPUTS:INPUTS: HIGH VOLUME DATA HIGH VOLUME DATA

PROCESSING:PROCESSING: SIMPLE MODELS SIMPLE MODELS

OUTPUTS:OUTPUTS: SUMMARY REPORTS SUMMARY REPORTS

USERS:USERS: MIDDLE MANAGERS MIDDLE MANAGERS

EXAMPLE: ANNUAL BUDGETINGEXAMPLE: ANNUAL BUDGETING

6. Management Information Systems 6. Management Information Systems (MIS)(MIS)

III a/c Types of information systems

Management Information System (MIS) Function: Produce reports summarized from transaction data, usually in one functional area.Example: Report on total sales of each customer.Supports: Primarily for middle managers, sometimes for lower level managers as well.

STRUCTURED & SEMI-STRUCTURED STRUCTURED & SEMI-STRUCTURED DECISIONSDECISIONSREPORT CONTROL ORIENTEDREPORT CONTROL ORIENTEDPAST & PRESENT DATAPAST & PRESENT DATAINTERNAL ORIENTATIONINTERNAL ORIENTATIONLENGTHY DESIGN PROCESSLENGTHY DESIGN PROCESS

Management Information Systems Management Information Systems (MIS)(MIS)

III a/c Types of information systems

Features

INTERRELATIONSHIPS AMONG SYSTEMSINTERRELATIONSHIPS AMONG SYSTEMS

FAS

SMSMPS

HRSMIS

III a/c Types of information systems

Finance and accouting

Human Resource

Management information

Manufacturing and production

Sales and marketing

An Organization’sMIS

FinancialMIS

MarketingMIS

HumanResources

MIS

Etc.

AccountingMIS

Drill down reports

Exception reports

Demand reports

Key-indicator reports

Scheduled reports

Databasesof

externaldata

Databasesof

validtransactions

Transactionprocessing

systems

Businesstransactions

Businesstransactions

ExtranetExtranet

InternetInternet

Etc.

– Function: Integrate all functional areas of the Function: Integrate all functional areas of the organization.organization.

– Example: Oracle, SAPExample: Oracle, SAP

Enterprise Resource Planning (ERP) Enterprise Resource Planning (ERP) systemssystems

integrate the planning, management and use of integrate the planning, management and use of all resources of the organization.all resources of the organization.

ERP’s major objective is to tightly integrate the ERP’s major objective is to tightly integrate the functional areas of the organization and to functional areas of the organization and to enable seamless information flows across the enable seamless information flows across the functional areas.functional areas.

•Business process is a set of related steps or procedures designed to produce a specific outcome.

•Business processes supported by ERP modules include Financial and Accounting Processes, Sales and Marketing Processes, Manufacturing and Production Processes and Human Resources Processes.

Enterprise Resource Planning (ERP) Enterprise Resource Planning (ERP) systemssystems

Best practicesBest practices are the most successful are the most successful solutions or problem-solving methods for solutions or problem-solving methods for achieving a business objective.achieving a business objective.Drawbacks to ERP systems are that they Drawbacks to ERP systems are that they can be can be extremely complexextremely complex, , expensiveexpensive and and time-consumingtime-consuming to implement. to implement.Leading ERP software vendors include Leading ERP software vendors include SAP (SAP R/3), Oracle and PeopleSoft.SAP (SAP R/3), Oracle and PeopleSoft.

Enterprise Resource Planning (ERP) Enterprise Resource Planning (ERP) systemssystems

BENEFITS OF ENTERPRISE BENEFITS OF ENTERPRISE SYSTEMSSYSTEMS

FIRM STRUCTURE & ORGANIZATION:FIRM STRUCTURE & ORGANIZATION: One One organizationorganization

MANAGEMENT:MANAGEMENT: Firmwide knowledge-based Firmwide knowledge-based management processesmanagement processes

TECHNOLOGY:TECHNOLOGY: Unified platform Unified platform

BUSINESS:BUSINESS: More efficient operations & More efficient operations & customer-driven business processescustomer-driven business processes

**

CHALLENGES OF CHALLENGES OF ENTERPRISE SYSTEMSENTERPRISE SYSTEMS

Daunting implementationDaunting implementation

High up front costs and future High up front costs and future benefitsbenefits

InflexibilityInflexibility

Hard to realize strategic valueHard to realize strategic value

Corporatedatabasesofinternaldata

Databasesofexternaldata

Databasesofvalidtransactions

Operationaldatabases

Transactionprocessingsystems

Managementinformationsystems

Decisionsupportsystems

Executivesupportsystems

Expertsystems

Businesstransactions

Input anderror list

Drill-down reports

Exception reports

Demand reports

Key-indicator reports

Scheduledreports

Employees

Corporateintranet

Applicationdatabases

Outputs of a Outputs of a Management Information SystemManagement Information System

Scheduled reportsScheduled reportsProduced periodically, or on a schedule (daily, Produced periodically, or on a schedule (daily, weekly, monthly)weekly, monthly)

Key-indicator reportKey-indicator reportSummarizes the previous day’s critical activitiesSummarizes the previous day’s critical activitiesTypically available at the beginning of each dayTypically available at the beginning of each day

Demand reportDemand reportGives certain information at a manager’s requestGives certain information at a manager’s request

Exception reportException reportAutomatically produced when a situation is unusual Automatically produced when a situation is unusual or requires management actionor requires management action

Characteristics of a Management Characteristics of a Management Information SystemInformation System

Provides reports with fixed and Provides reports with fixed and standard formatsstandard formats– Hard-copy and soft-copy reportsHard-copy and soft-copy reports

Uses internal data stored in the Uses internal data stored in the computer systemcomputer system

End users can develop custom End users can develop custom reportsreports

Requires formal requests from usersRequires formal requests from users

Characteristics of Enterprise Characteristics of Enterprise SystemsSystems

24*7 usage24*7 usage

Many users Many users

Stable and safeStable and safe

Supports primary processSupports primary process

Contains essential business dataContains essential business data

Linked to others systems and Linked to others systems and technologiestechnologies

Critical asset for businessCritical asset for business