2017

MBA6043 BUSINESS INFORMATICS

CASE STUDY 3

By:

A. HARIS AWANG(MBA2016-04-1001)

&

MOHD. ZAINI ZAKARIAH(MBA2016-04-1025)

Submitted to:

MR. PARAMJEET SINGHSenior Lecturer

Faculty of BusinessASIA METROPOLITAN UNIVERSITY CHERAS

Tel: 03-9080 5888 Ext: 73104th March, 2017

Case Study 3: Management Information System: Issues and Challenges

(15%)

1.0 Introduction

Management Information System (MIS) can be defined as collecting and processing of raw data into useful information and its dissemination to the user in the required format. It consists of information, which impacts managements to feel the pulse of the organization and take decisions accordingly. In fact a full MIS consists of all the systems that the institution uses too generate the information that guide management’s decisions and actions.

Microfinance Institutions (MFI’S), over the past few years, have been paying increasing attention to information systems. They are increasingly realizing that information lies at the very heart of microfinance. The practitioners as well as donors have become aware of the vital need for formal and informal financial institutions to manage large amounts of data. As a result, there is a massive drive to improve the effective understanding and use of these data. Needless to say that it is no possible to collect and collate large volumes of data without adopting new technology. As a result the MFIs are watching the developments in information technology very closely.

1.1 Problem in Developing MIS

Despite the availability of technology today there is a problem in developing a good and problem free MIS software for the MFIs. The diverse nature of microfinance creates an intriguing complexity for software application development. Some of the complexities in developing a single or a small number of software to meet the needs of the MFIs are discussed below.

a) Many Institutional Models: The organizational forms are a function of the specific of social, political, economics, regulatory and legal environments throughout the world. There are a variety of organizational forms that are assumed by the MFIs for carrying on their work. The MFIs can be in the form of credit union, cooperatives, Non-governmental Organizations (NGO) and even banks. All have their own varied type of requirement for MIS and its automation.

b) Different Lending Methodologies: MFIs have vastly different lending methodologies across the globe and even within the same country. Some MFIs follow individual lending

1 | P a g e

some follow village banking methodology and yet others may be following solidarity group lending. In India for example some MFIs follow the Grameen Model as per the example of the Grameen Bank, Bangladesh while other follow Self Help Group Model as propagated by the institutions like National Bank for Agriculture and Rural development (NABARD).

c) Methodology on Interest Payment: The practices for calculating interest and the periodicity for its payment vary according to the product and organisation. These variations can occur even within the same organisation depending on the product and the area of operation.

d) Other varied requirements: there are variations in terms of the currencies and languages reporting requirements of the MFIs.

1.2 Inference

All these wide variations complicate the development of software that can be picked off the shelf and implemented in most of the MFIs. It creates great burden on software companies creating quality application that is affordable and meets all the requirements of the MFIs. In fact this is the major problem faced by those responsible for providing automation in the industry.

The need of technology cannot be overstated but the complexity and diversity forces one to take a hard look at the following:

What is the role of MIS in improving the sustainability of MFIs? What are the basic components of sound microfinance packages for MFIs? Why are there so few solutions available?

2.0 Role of MIS

2.1 Sustainability

Let us look at what does the MIS do for the sustainability of MFIs? The answer is nothing.

MIS will not do much for the sustainability of microfinance if institutions ignore good business practices. The following are some of the widely stipulated best business practices:

Focus on profitability. Quality loans. Provision for loan loss reserve. Community accepted and appropriate accounting procedures.

2 | P a g e

Gathering and reporting of accurate and timely information.

These good business practices should be in place before any MFI even thinks about MIS software. Without quality business practices, MIS will do little if anything to sustain these institutions. In fact, MIS can complicate the situation by creating a financial drain and propagating but allow you to do bad business more efficiently.

If, however, the MFIs follow good business practices, MIS will go a long way in sustaining these institutions. Some examples of what MIS can do for good MFIs are:

Increased productivity and efficiency. Lower transaction cost per loan. Greater outreach in rural and urban areas. Faster delivery of more products and services. More accurate and timely reporting. Better decision making.

2.2 Uses of MIS

Since it can be programmed to follow business rules uniformly, MIS reinforces discipline in accounting and portfolio tracking.

Computers can link all data pertaining to a customer or customer group hence MIS can provide a consolidated view of each customer or group.

MIS allow for single entry of data that can then be used by many people. Data once entered can be accessed, manipulated and used by all users. Thus MIS reduces duplication of effort and increases speed of work.

MIS integrates information and process. MIS supports workflow and procedures for users. MIS can be ported to remote areas via laptop or palm technology. MIS application can be customized or enhanced to support new products and

institutional growth.

3.0 Components of a Good MIS Solution The catch is that most MIS solutions provide only some of the functionality and capabilities needed for sustainability and outreach.

This can be better understood by knowing the components of a good MIS solution. They can be organized under the following categories:

Functionally and Expandability. Flexibility.

3 | P a g e

Usability. Reporting Standards and Compliance. Technical Specification and Correctness Cost.

3.1 Functionality and Expandability

The MIS solution for the MFIs should have some sort of functional completeness and integration. The areas that must be covered by the solution should be:

Accounting packages: the solution should have an accounting component wherein the data can be captured regarding the financial transactions of the MFI.

Portfolio tracking: the solution should have a module for entering the details of the various products of the MFI and its linking individual borrower-wise in order to enable the organization to track its loan portfolio and product mix.

Deposit Monitoring: the solution should have the data about the depositors of the MFIs wherein tracking could be done individual unit wise depending of the practice being followed by the MFI. In case it is accepting deposits from the individuals then it should be capable of handling data individual borrower – wise or in case it is accepting deposits from the groups then it should be capable of handling data group-wise.

Customer Information Systems: The software should be capable of capturing non- financial data about the customer also, e.g. the software should be able to capture the details like name, address, family history and other demographic information which is needed to maintain proper records and identifying the customer.

The software should be capable of handling large volumes of data so that it is to handle the growing needs of the organization. In fact the software should be capable of growing with the organization. This is critical as MFIs can grow very fast.

3.2 Flexibility

MIS can be built around Accounts or around Customer. In modern financial software’s it is much more preferable to have a Customer centric design as the MFIs need to be as much customer focussed as possible in order to sustain themselves. In such a design the information regarding a customer or group is easily accessible.

Secondly, the software should be parameter driven i.e. it should allow the user to put in business rules for the MIS. It should also be able to accept new products and customers.

Thirdly, the solutions should be able to handle multiple institution types. It should not be limited to one type of institutional model as diversity is the hallmark of MFIs. The solution

4 | P a g e

should be capable of being implemented in a variety of organizational forms. Further, it should also be able to deal with variety of organizational structure like single unit or multi branch structures.

Fourthly, since the MFIs have a variety of lending methodologies hence the software should not restrict itself to one or two types of methodologies, as that will limit its acceptability with the clients.

Fifthly, the software should be able to handle various interest rates of loans and deposit products. It should be able to make accurate calculations of interest and repayments based on these interest rates. It should be able to handle various payment types and frequencies based on the customer. This is important because MFIs can have a variety of repayment facilities for different customers. The software should be able to handle various types of customer accounts. As discussed earlier, the MFIs operate in diverse environments hence the software should be able to handle multiple languages and currencies.

3.3 Usability

The success of the software depends, more than anything else, on its deployment and adaptability at the user end. Since most of the MFIs do not have a specialized MIS department or computer professionals, the MIS software should be user friendly. To begin with the software should have a familiar and friendly user interface. The software should be window based as that is the most popular operating system in today’s world.

The display on the screen should be logical. There should be consistency in terms of language format and functions. The data entry should be easy and straightforward for the user to understand.

The software vendor should provide some amount of training while implementing the software. User documentation and on-line help should be provided in order to enable the MFIs to maintain continuity at its level in case of employee turnover or when some new problem creeps up. The software should as far as possible facilitate straightforward workflow and not create unnecessary complications. In case software requires any MFIs change too much in terms of its workflow then it will probably not be used.

3.4 Reports

The reports required by any MFIs can be classified into 4 categories, viz.

General Reports: By general reports we mean reports like the performance on the budgetary front like comparative report on actual expenses vis-à-vis the budgeted expense or say report on consolidated performance of the MFI

5 | P a g e

Management Reports: These are the types of reports that are generally for the usage of management for decision making and monitoring the performance of the MFIs, e.g., report providing the statistical summary about the MFI, statement of cash flows, delinquencies, etc

Financial Reports: These are the standard reports about the financial transactions by the MFIs, e.g., trial balance, daily transactions, audit reports, etc.

Customer Reports: These are customer specific reports, e.g., account statement, balance inquiries, etc.

The software should have the capabilities for generation and linking of these reports automatically. Most software’s do contain a host of predefined reports.

Depending on the nature of work and the organizational structure different MFIs have different modes and timings for generation of reports. Hence, the system should be capable of generating the reports online or in batch mode on real time or set schedule basis. The software should have the flexibility of generating ad hoc, i.e., user defined reports in addition to the predefined reports. To facilitate meaningful inquiry into the database the software should also provide for some tool based report generation capability.

3.5 Standards and Compliance

The software should have been built on the foundation of sound accounting practices as accepted by the environment in which the MFI is operating. Some of the desirable features of the accounting soundness of the software could be:

It should comply with the Generally Accepted Accounting Principles (GAAP) or International Accounting Standards (IAS) and the local requirements.

It should provide for the real time or batch mode updating of the ledgers as per the convenience of the MFI.

It should also provide partial posting of the entries in order to allow for distribution of the work of data entry.

It should have the capability for categorizing the loan given by the MFIs. For e.g. it should be able to categorize a certain loan into current or delinquent so as to curb operation on the delinquent accounts.

The software should be capable of maintaining the accounts either on cash or accrual basis as per the practice followed by the MFI.

It should be capable of calculating the interest automatically as per the practice followed by the MFI. Interest may be calculated on the basis of current payment, late payment deposit or loan accounts etc.

6 | P a g e

In addition to the sound accounting practices, the software should also be able to meet the regulatory norms applicable on the MFI. These regulatory norms can be from the side of donor or local authorities. The software should have the facility for modifying old norms and adding new ones as and when required e.g. the software should be capable of accepting changes in the tax rates as applicable. The software should be especially compliant to the regulations of Central Bank of the country and should be able to generate the required reports for submission to the Central Bank.

The software should preferably be also integrated with external entities, e.g. in future we may see the development of a national payment system. This is especially useful, as several times the person in the MFI will ensure that the MFIs does not violate any such requirement inadvertently.

3.6 Administration and Support

There are many administrative and support issues that make or mar the success of software in any organisation. Some of them are discussed here under.

Security: Since the database is the heart and soul of the MIS the software should be capable of restricting access to it by login id, etc. it should have in built safeguards to restrict access to the database restrict its modification and manipulation by unauthorized users, it should also be adequately protected against virus attack.

Backup and Recovery: The system should have the feature the user to take a regular backup. The system should have the feature of enabling full or incremental backup so that the user is adequately protected against system failure or sabotage. In case of a failure, the system should be able to restore transactions, balances and statements, etc. from the data backed up by the user. In short it should be easy for the user to restart the system accurately from the stored data.

Fault tolerance: The system should be tolerant to the glitches like unreliable power supply that occur during the course of operation. It should continue to function and notify the user during problem periods. In case of total failure the system should be able to restart accurately when the problem has been resolved.

End of period processing: The software should be capable of handling the data in terms of fixed period of operation, for e.g. one financial year or quarter, etc it should be able to relate the data to the multiple periods as reporting may be required to be done for various periods, it should accurately and automatically post the calculations at the end of the period with minimum human intervention.

7 | P a g e

Support Infrastructure and Maintenance: The support infrastructure and maintenance service should be available. They need to be accessible to the user and should be provided timely in order to keep the system running at peak efficiency at all times.

Versions and Upgrades: No software can be such that it needs no upgrades in future. Hence the MIS software should be upgraded and new functionalities should be added to it as the organization and its needs grow. It is preferable that the new functions should be added as per pre- determined schedule as it helps in managing the cost of the upgrades.

3.7 Technical Specifications and Correctness

1. Technical and Architecture: the software should be built on the platform of a sturdy relational database as they provide the facility of making customized queries to database by the user. A host of database under this category are available in the market today, e.g. Oracle Paradox, etc. The programming language should be current robust and modern e.g. C, C++, Java etc. so that the software is stable despite unreliable infrastructure.

2. Performance: The software should be capable of supporting multiple simultaneous users without compromising the performance in terms of speed. System should also not slow down as the database grows in size. The user should get fast response time from the interface and the reports should be generated quickly so that the user does not have to wait for inordinately long time to get his job done.

3.8 Cost

The price and cost of software can be argued from the point of view of value to the institution. The price of the software should be commensurate to the level of complexity or functionality. The price should be such that the MFI gets a high return on investment. The cost of the software may be worked out in terms of the cost per user or cost per customer such that its ownership represents value to the institution. For e.g. if it costs an MFI $ 14 per loan account and it has 50000 customer then an expenditure of $ 1 per customer i.e. total $ 50000 spent on IT will not be a very big expenditure for it.

4.0 Why So Few Solutions?

Despite the popularity of MFIs and the acknowledged need of good MIS solutions there are very few of them available in the market. The primary reason for this poor availability is money. There is little financial incentive for software companies to develop microfinance solutions for two primary reasons. One is the diversity and complexity across institution and countries in term or organizational form, lending methodologies, legal and regular

8 | P a g e

environments, currency and language. Second is a lack of ability or willingness to pay for robust solutions by the MFIs.

Due to poor financial position of the majority of the MFIs, they are not able to pay for robust solutions. This makes it unattractive for the software companies to enter in this market. It is economics more than anything else.

5.0 What Should We Do?

Thus, what can be done to improve the situation? In a nutshell, the following could be the possible course of action.

Good Business Practices: The MFIs should first focus on building good microfinance practices as only they can sustain the MFI. This is the most important prerequisite for the future of the MFIs and the success of MIS in them.

Strategies with Information Technology: The organizing should elevate its view on Information Technology to a strategic level. Information Technology should be woven in the organizational operation and decision-making process in such a manner so that it becomes a core competency of the organization.

Value based approach: The MFIs should take a value- based approach to MIS solution not a cost or price approach. They should see the expenditure in Information Technology as an investment and not expense.

95% rule: Instead of trying to get or build a software which caters to the 100% needs of the MFI they should take a software which will satisfy 95% of the needs for the simple reason that organisations spend most of the money in getting that additional 5% functionally.

Buy high quality software: The MFIs should desist from buying poor quality software as they may ultimately lead to heavy losses in terms of data and time. Hence, it is advisable that MFIs should buy only high quality and stable software solutions.

Customization: The MFIs should try to manage as far as possible with the features provided in the software. They should customize only when absolutely necessary, as it is costly every time one tries to modify the programme code.

Avoid Internal Development: Unlike the popular perception it is not a good idea to try and develop the solution internally. This is so because, one, the MFI will not have as qualified developers as a software company and, two they may use their valuable human resources more profitable elsewhere.

9 | P a g e

Question 1Based on case study given, what do you understand about MIS? Discuss what issues and solution from the case given.

(10 Marks)

ANSWER:

Based on the case study given, it is understood that Management Information System (MIS) is not simply a computer program as it involves collecting and processing of raw data into useful information and its dissemination to the user in the required format. It consists of information, that can impact the management in their decision making process. Information management is primarily about people communicating with one another about events that affect the work of their organization. The chart of accounts, all the forms used by the organization, from receipts to loan applications to staff vacation requests, meetings, reports, policies and procedures, the staffing structure, job descriptions, the planning process, and the computer software, all these influence the flow of information and so, together, make up the management information system.

A microfinance institution (MFI) is an organization that offers financial services to low income populations. Almost all give loans to their members, and many offer insurance, deposit and other services. However, when it comes to applying MIS, there are some issues faced by MFIs that are discussed as below.

Various Organizational Models The MFIs organizational forms are specific to political, economy, social, technological, legal and environments (PESTLE) of a given geographical area throughout the world. These can be in the form of credit union, cooperatives, Non-governmental Organizations (NGO) and banks. Each of these varies in terms of MIS requirement.

Different Lending MechanismsLending mechanisms vary among MFIs across the globe and even within the same country. Some follow individual lending, some follow village banking and others may follow solidarity group lending.

Interest Payment PracticesInterest calculations also vary among MFIs depending on the product and organization. These variations can also occur within the same organization.

Other Varied RequirementsCurrencies, languages and reporting requirements also can be different among MFIs.

10 | P a g e

No Standardized SoftwareThe issues discussed above are only some that have been identified. There may be some other issues that are beyond the scope of this case study. These issues whether known are unknown complicate software companies from coming up with a quality MIS application that can be purchased off the shelf affordably by MFIs.

While it is acknowledge that it is difficult to develop an affordable quality MIS application for MFIs, it is also beneficial to identify what makes up good components of good MIS solution. As a solution, a good MIS application should have:

Functionality and expandabilityThese should cover the accounting package to capture transactions, portfolio tracking to track details linking borrowers to track loan portfolios and product mix, deposit monitoring to monitor individuals and group deposits and customer information system to capture customers non-financial information such demographics, etc.

FlexibilityThe MIS application has to be built and focused around customer, allow new products or services to be added at any time, able to handle multiple organizations types, able to switch among various lending mechanisms, and able to handle various interest calculations.

UsabilityThe MIS application’s success depends on its deployment and adaptability at the user end. It has to be user friendly, have familiar and friendly user interface and window based since it is the most widely used operating system. Moreover, a good MIS application should also have a display that is logical can intuitive where data entry is easy. The application developer must provide training and on-line help toward facilitating a straightforward workflow.

Reporting Standards and ComplianceReports generated by MIS should be in compliance with MFIs’ requirement that are categorized into general, management, financial and customer reports.

Standards and ComplianceThe MIS application should be in compliance to the Generally Accepted Accounting Princip0les (GAAP) or International Accounting Standards (IAS). It should also be able to meet the regulatory norms applicable to MFI.

11 | P a g e

Administration and SupportFor the implementation to be successful, MFIs and MIS application developer have to address issues of security, backup and recovery, fault tolerance, end of period processing, support infrastructure and maintenance, and versions and upgrade.

Technical Specification and CorrectnessThe MIS application has to be built on the platform of reliable and robust relational database system such as oracle, MySQL, etc. Current popular languages are C, C++, Java, etc. In terms of performance, the application should be able to perform multiple user inquiries and data entries without compromising its speed.

CostThe cost of the application should be made affordable to MFIs. If it is too expensive, smaller MFIs may not be able to afford it. It is recommended that the government gives incentives for solution/application providers in developing MIS for MIFs, so costs can be kept as low as possible.

Question 2Discuss about the implementation of MIS in your organization.

(10 Marks)

ANSWER:

Under this case study, OAESB is selected as the organization under which MIS is implemented.

Over the years OAESB has been operating supported by MIS. It has seen growth, modifications, changes and implementations of various systems since 1990. With the recent system being OPS (Onkyo Production System) implemented as MIS, the company has been able to successfully operate in order to compete in the global market.

Since 2009, OAESB has been using OPS which involves most multi-discipline departments in the organization from raw material warehouse, planning, purchasing, production, quality assurance to shipping.

The implementation of MIS at OAESB is summarized and discussed as follows:

12 | P a g e

The phasing out of the old systemEven though stable, reliable and predictable, the old system (PRONES) which was in operation since 1996 has to be replaced due to the lack of support and the obsolescence of windows operating system. The PRONES operated on Windows 3.11 platform which was no longer available from Microsoft thus making it impossible to expand user licenses. Furthermore, hardware such as printers, scanners, servers, desktops and other peripherals used today are not supported by the old system. So the old PRONES has to be phased out and replaced with a new system, OPS.

The analysis of systemThe OPS was adopted from a system implemented at a sister factory in Japan. So, operations wise, it has been tested. Somehow, adjustments have to be made to suit the application in Malaysian factory where language, currency and conditions are different. Though not fully integrated throughout the entire organization, the MIS system at OAESB is tasked at achieving the following:

Inventory control

Purchase order by MRP system

Shipping and accounts invoicing

Production status inquiry

Interface buildingSince the old PRONES system was a success, the new system OPS tries to imitate what it can do. The new interface is quite similar to the old one except that it has that modern looks. The application programmer interviewed each user for feedback and input on how the interface can be improved and easy to use.

Figure 1. Example of OPS user interface.

13 | P a g e

Trial runA trial run took place parallel to the old system to check and determine problems and bugs that need to be addressed and ironed out. This is important so as not to jeopardize the entire system. This was not run once but multiple times just to be sure that it really works.

DebuggingThe debugging process is where application developer re-program by editing the codes upon receiving feedbacks from the trial run.

TrainingAll personnel involved under this system from top to bottom had to undergo a training. Trainings is done either face-to face, in a class room or at the workstation.

Pilot runThe pilot run is the operation of the OPS independent of the old PRONES system. At this stage, there should be no major problems that may compromise data integrity.

ImplementationFinally, the implementation is done upon receiving the top management’s approval. At this stage, there’s no turning back as the old system is scrapped for good. From the beginning to the end, the implementation of the MIS took about six months to complete. The OPS has been operating successfully at OAESB until today.

MaintenanceThe systems has to be maintained by the IT group on a daily basis. Data has to be checked for errors and a backup has to be performed on a daily basis. Every three months, OAESB performs a physical inventory count to ensure that the data in the system matches with the physical inventory.

The implementation of MIS at OAESB is summarized as in figure 2 below.

14 | P a g e

PRONES(Old System)

OPS(New System)

ANALYZE SYSTEM

BUILD INTERFACE

TRIAL RUN

DEBUG

TRAINING

PILOT RUN

IMPLEMENTATION

MAINTENANCE

PROBLEM?

PARALLEL RUN

STOP RUNNING

PHASED OUT

N

Y

Figure 2. Flow chart of MIS implementation at OAESB.15 | P a g e

Question 3Do SWOT analysis & propose your solutions to the issues faced by your organization regarding MIS and information flow.

(15 Marks)

ANSWER:

With regard to the MIS and information flow at OAESB, solutions on issues are proposed based on strengths, weaknesses, opportunities, and threats (SWOT) analysis (Figure 2).

SWOT ANALYSIS OF MIS

• THREATS• Fire• Hackers• Virus• Downtime

• OPPORTUNITIES• Expandability• Marketable• JIT• Accuracy

• WEAKNESSES• Less integrated• Interdependency• Highly sensitive• Growing data

• STRENGTHS• Stable• Support• Snap shot• Transparent

S W

TO

Figure 3. SWOT analysis of MIS at OAESB.

StrengthsThe OPS system at OAESB has been stable and believed to serve flawlessly as an inventory control system for many more years to come. Glitches are very minimal. The system has been very reliable and predictable.

16 | P a g e

Another strength is that it is consistently getting the support from the developer in Japan as the application was at earlier stage developed by the Onkyo group.

The OPS is also an MIS solution that can give a snapshot of the company’s inventory which is very useful to decision makers.

WeaknessesHowever, as an MIS system, the OPS has its weaknesses. In term of being integrated, the OPS is quite lacking. The system only integrates the supply chain processes from planning, purchasing, warehousing, production to shipping. It is not linked to other systems such as accounting system, production efficiency and quality monitoring system, debit/credit system, human resource information system (HRIS), and finished goods scanning system.

The company has to look into implementing a fully integrated MIS as a solution to this problem as the problem creates redundancy especially when it comes to reporting. For example, both OPS and accounting system generate financial reports but there’s always discrepancies between these two that need reconciliation.

Another issue is that the OPS is “transaction based” which means data cannot be entered unless the previous process has already entered its data. As a solution to this problem, it is recommended for the company to introduce a barcode or RFID system that can detects materials as it pass through a certain process. That way, the results can automatically enter the system without human input.

The OPS is also a very sensitive toward changes in data. As data is keyed in manually, any mistakes made during data input will have serious consequences on the output. The solution to this problem is to have the employees trained and from time to time periodical data audit is also necessary.

Another concern is the growing data that needs bigger storage as time goes by. As required by some statutory regulations, data has to be stored for at least three years. To solve this problem, it is recommended for the company to purchase more storage in the form of high capacity hard disk drives.

OpportunitiesOne opportunity presented by the OPS system is its expandability. The system can be expandable to integrate other systems as described under weaknesses above. The system can also be expanded to include suppliers and customers along the supply chain.

The OPS system developed can also be marketed to other companies that operate similar to OAESB. System can be sold as fully integrated or as modules.

17 | P a g e

The system when fully integrated along the supply chain will present an opportunity for Just-in-time (JIT) system to take place.

With automation such as bar code and RFID, the OPS system can be more accurate in the future.

ThreatsAs with any facilities, fire poses a threat not only to the system, but the entire factory as well. Fire can destroy everything from data, machinery, people, buildings, documents to property. As a solution, it is proposed that the company to have a fire fighting team, fire extinguishers, safety audits and insurance. Backed up data has to be stored in a fireproof storage or inside a cloud server.

Hackers and viruses pose a threat to all MIS system throughout the world. The company needs to install firewall, anti-virus and malware protection software on all computers and servers as a solution. There should be a policy governing the security of the system. For example, passwords need to be changed on a regular basis by employees and the physical access of the server room must be controlled and constantly monitored by CCTVs.

Another threat is downtime. Network and internet downtime which most of the time are caused by external factors are unavoidable. One way to counter this is to have regular backups and mirror servers so it can replicate and run even without the internet.

Question 4What are the recommendations for the management to improve the quality of MIS at the company?

(15 Marks)

ANSWER:

At the end of the day, bottom line really matters. As presented under question 3 related to weaknesses, no matter how good the inventory control system is, the financial reporting is the one that matters to decision makers of the company. By improving the quality of management information system, the finance team can support effective decision-making and help the business understand how much progress has been made towards growth targets. The four key areas recommended for the management to focus on are:

1) Improving data qualityThe company has to regularly conduct regular reviews of finance data to ensure accuracy. At present, the financial reporting is based on manual and summarized reporting from other

18 | P a g e

departments. For example, the purchased amount of materials appear on the OPS must match with the payment to the suppliers by the finance department and this is not always the case at OAESB.

Materials Purchasing Sales Finance

OPS SYSTEM FINANCE SYSTEM

With a fully integrated MIS, financial reporting can be more accurate. In this context, there are significant opportunities for the company to achieve greater data accuracy and reliability by improving and simplifying systems.

2) Investing in talentInvesting in the right talent is an important factor in improving the quality of management information system. However, finding candidates with the appropriate skills and qualifications has proved challenging.

Insufficiently attractive remuneration packages and the location of the workplace were the other most common obstacles to recruitment. In this context, the company must provide opportunities for staff to develop their analytical skills in MIS.

3) The right balance of KPIsEnsuring a good balance of forward-looking indicators and lagging indicators can help provide a clearer picture of performance.

Do regular review on the alignment of the company’s key performance indicators (KPIs) with strategic objectives.

19 | P a g e

It would be beneficial if there were more non-financial KPIs in the reporting. Suggestions included future orders pipeline, employee retention rates, customer satisfaction, enquiry-to-sales conversion rates, and corporate responsibility initiatives.

4) Data accountabilityRather than leaving it to the people working in the IT department, all other departments that are involved throughout the process must be held accountable for their action or non-action. The head of each department must be able to thoroughly check their data as required by the total quality management (TQM) policy. Therefore, data accountability must be included in the policy itself.

20 | P a g e

ReferencesAcharya, S. (2011). SWOT Analysis of MIS Systems (A General Perspective). Retrieved 27 February, 2017, from http://oradesparado.blogspot.jp/2011/02/swot-analysis-of-mis-systems-general.html

Read, M. (2012). Practical Steps to Improve Management Information in Government. Commissioned by the Minister for the Cabinet Office and Chief Secretary to the Treasury.

White, S. (2015). 3 Ways to Improve the Quality of Management Information. Retrieved 01 March, 2017, from https://www.cgma.org/.../improving-quality-of-finance-information-201511885.aspx

21 | P a g e