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INFORMATION FOR DECISION-MAKING - Coggle Diagram
INFORMATION FOR
DECISION-MAKING
PART A: TYPES OF INFORMATION NEEDED
FOR STAKEHOLDER DECISION‐MAKING
THE INFORMATION NEEDS OF STAKEHOLDERS
IDENTIFYING USERS WITH DIFFERENT INFORMATION NEEDS
External stakeholders
Community
Creditors, including financiers who
provide loans and advances of funds
Customers
Government
Investors
Suppliers (vendors) of products and
supporting services
Trade unions for particular trades or
industry types
Internal stakeholders
Board of directors/senior
management team
Sales and marketing
Production/logistics
Finance and administration
CORPORATE SOCIAL RESPONSIBILITY/INTEGRATED
REPORTING
STAKEHOLDER MANAGEMENT
STAKEHOLDER RISK MANAGEMENT
risk management process
1.identify threats—that is, harm or conflict
2.assess their likelihood—that is, probability
3.determine their impact or consequence.
Stakeholder grid
High power/high interest
High power/low interest
Low power/high interest
Low power/low interest
Stakeholder
Board of directors
• Financial results compared to budget
• Competitive position versus Amazon
• NPS
Senior management team
• Financial results by territory compared to budget
• Budget versus actual costs (AC) by function
Sales and marketing team
• Sales by product group compared to budget
• Sales by territory compared to budget
• Credit notes by reason
• Customer complaints
• NPS by territory
Purchasing, warehouse and
logistics team
• Out-of-stock data/Stock below minimum level
• Picking errors
• Lead time from order to delivery
HR team
• Headcount compared to budget
• Staff turnover
• Staff absenteeism
• Recruitment cost per employee
Employees
• Position description/List of tasks
• Training events
• Payslips
PART B: INFORMATION, INFORMATION SYSTEMS AND THEIR EFFECT ON ORGANISATIONAL DECISION-MAKING AND PERFORMANCE
IMPACT OF INFORMATION SYSTEMS ON STRATEGY
FORMULATION AND IMPLEMENTATION
Costs and benefits of information
information costs
gathering
storing and protecting from unauthorised access
analyzing and interpreting the information—Most Difficult and time intensive
presenting the information to users in a clear and concise way.
Functions of a information system
1.Input
2.Processing
3.Output
4.Feedback
5.Control
DIFFERENT TYPES OF INFORMATION SYSTEMS
TRANSACTION PROCESSING SYSTEMS
MANAGEMENT ACCOUNTING SYSTEMS
PRODUCTION PLANNING AND CONTROL SYSTEMS
CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS
ENTERPRISE RESOURCE PLANNING SYSTEMS
DECISION SUPPORT SYSTEMS
KNOWLEDGE MANAGEMENT SYSTEMS
SOURCING, AGGREGATING AND INTEGRATING
INFORMATION
SOURCE OR DOMAIN OF INFORMATION—EXTERNAL
VERSUS INTERNAL
METHODS OF AGGREGATION AND INTEGRATION OF
INFORMATION
Common Forms of Aggregation
1.Aggregating to get the ‘bigger picture’
2.Triangulating
3.Combining existing information to create new measures
4.Aggregating to produce new, high-level summary measures
5.Aggregating where different information is presented together
CHARACTERISTICS AND LIMITATIONS OF
DIFFERENT KINDS OF INFORMATION
DIMENSIONS OF INFORMATION
Financial versus non-financial information
Primary versus secondary sources of information
LIMITATIONS OF DIFFERENT KINDS OF INFORMATION
It may use non-uniform measures and bases for collecting data resulting in information that is not comparable
The data may be incomplete or only available for limited periods of time
The data may have been originally collected for other purposes, which may affect its quality
SECURITY OF INFORMATION AND ETHICS OF INFORMATION
CHARACTERISTICS OF INFORMATION
validity
reliability.
Qualitative information characteristics
Comparability
Verifiability
Timeliness
Understandability
QUALITY OF INFORMATION
4 elements for analysing information quality
Classifications
Intrinsic
• Accuracy
• Objectivity
• Believability
• Reputation
Contextual
• Relevance
• Value-added
• Timeliness
• Completeness
• Amount of information
Representational
• Interpretability
• Format
• Coherence
• Compatibility
Accessibility
• Access
• Security
EFFECTS AND CHALLENGES OF NEW INFORMATION
SYSTEMS AND PLATFORMS
DATA WAREHOUSING AND DATA MINING
Data Mining Techniques
Issues with ‘big data’ and
personal data used for profiling
Data integrity checks are conducted for
anomalies and dependencies.
statistical analyses (e.g. correlation)
advanced computational techniques (e.g. cluster analysis).
BIG DATA
3V Model
volume’ to refer to the amount of data that arrives via a TPS
variety’, because there are different types of data (e.g. text, html, images, audio, video)
‘velocity’, which refers to the rate at which data arrives>Processing Speed
BUSINESS INTELLIGENCE
Combination of the strategies and technologies used by organisations to analyse their information to improve their operational and strategic decision-making
executive
information systems (EISs)
facilitates and supports senior executive information and decision-making needs by its orientation to defined organisational goals. A major EIS function is to combine internal and external information and present it in an easy-to-use, convenient format.
online analytical processing (OLAP
drill-down
consolidation—roll-up
‘slicing and dicing’ of data—arranged in multiple dimensions or ‘points of view’.
Data discovery
features visual tools—e.g. pivot tables, geographical maps, heat maps. It aims to make
patterns or specific items immediately visible
PART C: THE ROLE OF MANAGEMENT ACCOUNTANTS IN INFLUENCING STAKEHOLDER DECISION-MAKING
BALANCING STAKEHOLDER REQUIREMENTS AND
INFORMATION DELIVERY
Key issues for information delivery—
Delivery of
information
Format of
information
Impact of
information
DIFFERING LEVELS OF INFORMATION IN THE
ORGANISATION
STRATEGIC INFORMATION
information about opportunities
additive
complementary
breakthrough
TACTICAL INFORMATION
OPERATIONAL INFORMATION
Functional requirements
IMPORTANCE OF LINKING INFORMATION TO
STRATEGY
USING INFORMATION STRATEGICALLY
the financial approach
budgets
the performance management approach
Continuous Improvements
ROLES OF THE MANAGEMENT ACCOUNTANT
TRUSTED BUSINESS PARTNER
Trustworthiness = (Credibility + Reliability + Empathy) / (Self-orientation).
CUSTODIAN OF INFORMATION
data steward is responsible for the information content, context and application of business rules
Data custodians are responsible for the authorised access and acceptable integrity of the stored data, including its transport or communication
PART D: UPGRADING OR REPLACING
INFORMATION SYSTEMS
STIMULUS FOR A NEW OR UPDATED SYSTEM
Not Suitable
Out of Date
Not flexible with progress
Too expensive
MAKING A PRELIMINARY ASSESSMENT
INITIALLY ESTABLISHING THE SYSTEMS INFORMATION
NEEDS OF STAKEHOLDERS
How
questionnaires to establish basic facts
observation and document inspection
interviews to establish contextual factors and decision-making criteria
What
Lack of information
Inadequate reports or unavailable suitable reports
The critical success factor approach
Identify and analyse decisions
Three types of decisions
Strategic
Tactical
Operational
OTHER METHODS OF OBTAINING INFORMATION NEEDS
Analyse organisational tasks
Ask the decision-maker
about their needs
Analyse the existing
information system
Strategic goals and
concerns
Process analysis of inputs
and outputs
Use an expert panel
THE LIFE CYCLE OF SYSTEMS
1.Initiation and proposal Feasibility Analysis
2.Design
3.Programming Testing Conversion Installation
4.Maintenance
5.Review of suitability leading- requirements & feasibility
PITFALLS IN EVALUATING MAJOR INFORMATION
NEEDS
ANALYSING NEW AND EXISTING INFORMATION
SYSTEMS
FEASIBILITY AND CRITERIA FOR A NEW INFORMATION
SYSTEM
its feasibility
Three tests of feasibility
Technical
Economic
Operational
the criteria required for a new system
Criteria
Comprehensiveness
Adaptability
Fit
Alternatives
Operational skills
Big data capability
Customisation
Key objectives for ERP system
Increase or capture
Eliminate or reduce
Improve
MAKING CHANGES TO AN EXISTING SYSTEM
Is investment in a new system prudent?
EVALUATING A SUGGESTED INFORMATION
SOLUTION
Benefits of an Info Solution to address Management information and reporting needs
tangible—measurable financial advantage
intangible—where financial benefits are difficult to quantify.
COMPARING COSTS, BENEFITS AND KEY RISKS
4 Global Management Accounting Principles
Communication provides insight that is influential.
Information is relevant.
Impact on value is analysed.
Stewardship builds trust
Drucker (1964)
strategic information is necessary to answer key questions such as
Who will be the future customers?
How will those customers be reached? (What channels will be used?)
What needs to be done now to be ready for a new business direction?
What is likely to go wrong with current plans?
USING INFORMATION STRATEGICALLY
Do we have the right information?
How effectively are we using that information?
Is our information sufficiently built into our products and services?
How can we improve? Or what are we missing? Or how do we go about finding and using it?