Choosing the correct information system from a list offered by outside contractors is a challenging task because tradeoffs have to be made. The assessment should be divided into an initial assessment that focuses on matching the needs of the company to a suitable information system, and technical support assessment. In the case where the company’s needs and the software do not match, the solution can be found in minor software upgrades. A company should not invest in an information system whose technical support is unavailable or costly. The response rate and reliability of the technical team should be excellent.
Development of an information system is a project that costs the Worplestrop firm a substantial amount of money; therefore, various considerations have to be made in the procurement process. Like any other investment, it is crucial to have a cost and benefit analysis of the each of the alternatives considered. Costs are in two broad categories: developmental and operational. Developmental costs are incurred from the inception of the system, and they are fixed costs, on the other hand, the operational costs are recurrent and include wages, supplies and overheads. Costs can also be tangible or intangible, direct or indirect or fixed and varied costs. Management information systems are the culmination of the interaction between the employees, technology and information. Management information systems provide managers with a means for coordinating activities in the firm thus allowing for decentralization. It benefits employees because the information on the activities is easily available.
Variance is the difference between the budgeted costs and the actual costs. A flattering variance shows that the investment is likely to make profits while an unfavourable variance means that losses may be expected. Other forms of evaluation include a return on investment, which is obtained by dividing the average income after depreciation by the initial investment. However, this method is frowned upon because it considers neither the time value for money nor the profitability of the investment. Another method that the company may consider in its evaluation of costs is the payback period. This refers to the amount of time it will take for the information system to recover the costs involved in its installation. It is especially appropriate in risky markets; nonetheless, its use is limited because it does not consider the time value of money and ignores all other cash flows that come after the payback period. The net present value is another method where the expected cash flows are discounted to obtain their present value. This method makes it possible to compare the future benefits to the present cost and thus come to a desirable conclusion. Break – even analysis allows the firm to estimate the point in time that the benefits are realized. The point where the capital outlay for the proposed system equals to the current one.
Point A is the break-even point.
A management organization would most likely to benefit from strategic information systems, customer relation and enterprise resource planning. With the above systems, the company will keep to track of employee performance, the company will be more sensitive to the needs of the customers. However, the paramount function is that the information systems will provide the organization with information thus eliminating the market failure caused by information asymmetry. The management system that is the most suitable for the Worplestop Company is an expert system.
A partnership exists in a highly volatile industry that is always changing; the expert system is of key importance to such an organization because it can be used to forecast. Such forecasts are crucial in streamlining the employees’ response to any given situation. The human resources expert system is an example of such as a system. It was created by the Softlaw Corporation. Its main user groups are employees, managers and the human resource staff. Any of its users can access it through the internet, which is convenient.
The merits of purchasing off the shelf systems are that it is relatively free from mistakes and has the period expected for its implementation is short. On the other hand, it is dependent upon the out-sourced company, and when compared to an in-house developed system, it does not completely fulfill the needs of the company. In addition, firms are always changing thus an off the shelf system will be difficult to tailor and to make to the changing needs of the firm.
The outputs of this information system include summary screens, letters, reports, application and forms and audit reports. Operational managers are the managers that deal directly with the public in the day-to-day activities of the firm. The store-man and the supervisor are examples of common job titles that are found in the operational management. They implement the decisions made by the tactical team. Operational mangers make decisions in real time, and they often have to make quick decisions. Their decisions range from budgetary, customers service decisions to quality control.
This management team is responsible for implementing the decisions that come from the strategic management. They are medium term in nature and in most cases passed down to the tactical team. Decisions made in this level of management are limited to a particular department.
Strategic management is the highest level of management in any organization. Expensive and long-term personnel who shape the relationship of the firm with the external worlds characterize this level of management; the decisions made here, if wrong, could be disastrous to the survival of the company. The managers in this level of management focus on the overall attainment of the objectives of the company.
Tactical and operational managers are the managers that are most likely to benefit from summary reports. The managers in these levels have busy schedules, and will thus require summarized data for analysis that can be provided by the summary reports. Summary reports are important in making strategic decisions such as planning and improve on the accuracy.
The managers in the tactical and the operational levels of management who are more interested in the minute particulars of the business use this form of output. Reports to strategic managers are a waste of time, as they require summarized details of the results.
All the members of the organization use letters because they may be either internal or external. The employees of the company use internal letters to communicate information; thus, key information is passed on from one department to the other. It fosters the development of proper channels of communication within departments. In any organization, inter-departmental relations are inevitable; therefore, proper transmission of information within the company should be heavily emphasized. Strategic managers use letters to communicate to the outside world about the progress of the company or any paramount changes that the company wishes to take. It may be important that all the stakeholders in the company are informed especially where the strategic managers look after the interests of the majority. Tactical mangers use letters to seek permission from the strategic levels on matters that they are not authorized to oversee. Tactical managers, such as advertizing managers, can use letters to notify clients in the availability of certain products and services especially where the client base is small.
Applications and Forms
This form of output is used in all levels of management because each level of management is answerable. The hierarchy of management levels requires that permission be sought before any department embarks on a project of crucial importance. A department that ants to increase its funding has to apply to the strategic team requesting for an additional loan. Applications and forms are extremely good tools for evaluating the transparency of a company. Operational mangers that run offices that deal with queries, will find this output to be of great importance in dealing with customer enquiries.
These are used by the members of the strategic level of management as a predictor of the financial direction that the company is taking. External members of the business environment use audit reports to determine the transparency and accountability of the company. Strategic managers use the audit reports to instill confidence in potential investors.
1. User: Client
Assuming the Worplestrop is an accounting firm then any client who holds an account will need a summary of his accounts activities. In case, they have loans then the client would be interested in how the firm is managing the repayment of those loans. The report contains a payment schedule presented in clear terms such as debit and credit for easier understanding. The report provides the client with an opportunity to examine his financial status.
2. User: Operations Manager
The firm has seen an increase in the number of accounts signed during the last month. Majority of the accounts are those signed by clients who want to have their loans managed. The fraud team has been instrumental to ensure the firm does not take in clients who are likely to default. In addition, the fraud team has done thorough investigations to ensure that the employees are not involved in unscrupulous activities.
Users: Human Resource Managers
Grouping: Branch Office
As at the day of your retirement, you are entitled to a pension of the stated amount as a lump sum and monthly stipends is indicated. The report will contain the name of the employee that seeks retirement, the terms and conditions for employment and retirement.
Users: Accounts Manager
Grouping: Branch Office.
The firm had made a substantial amount of investments that have now reached maturity. The firms’ books of account will record additional income from these time deposits. On the other hand, the firm has outstanding loans and thus needs to make adjustments for the depreciation of currency increased inflation. Failure to make this adjustment will lead to tapping into saved funds to keep the firm afloat.
User: Senior Managers
The total financial credit income for the firm was 407,760 pounds with the head office bringing the highest amounts. Our branch in London was second in place and finally the branch in Leeds closely followed. The total income from other investments was 412,140 with investments from the real estate sector bringing in the most income. The high financial costs are because of an increase in the interest rates of the firm as well as the bankruptcy of Nath Holdings in which the company had a significant number of shares.
Users: Senior Managers
Due to increased inflation, the firm has experienced low performance in the capital markets due to the unavailability of credit in the market. This has led the firm to adopt new marketing strategies as well as to make adjustments for inflation. The high costs of operation have increased costs of our products; thus to cut on costs the firm has been forced to reduce its workforce significantly. The reduced purchasing power in the economy has led to a significant reduction in the productive capacity of some of the loans taken by our clients as well as the firm. Increased completion from other firms has led to a slight decrease in the number of clients signed to the firm. Nevertheless, the several barriers to entry and the large capital outlay needed to start a firm such as this have extremely been helpful in assisting Worplestrop to maintain a rather large share of the market.
Expert systems do make the work easier in any organization and many scholars have gone ahead to call these systems human intelligence. These systems are extremely useful when an organization wants to present accurate and timely results. However, these systems are not a replacement to human capital; on the contrary, they work together with human beings to achieve the best results.
The merits of this expert system are that employees can generate timely on demand reports as well as uniform audit reports in addition to the accurate data. This system ensures that inquiries are handled fast and effectively, and all employees are kept abreast with all the conditions and regulations of the company.
Some of the demerits of this system are that it does not include the entire variable thus its coverage is limited to those included. The users may feed the wrong data; consequently, the data received will be wrong. In addition, it requires internet access.