Category: MIS & Systems

Articles on Strategy, Systems & MIS

Why Most MIS frameworks are not effective ?

Defects of Most Management Information Systems

Every company has some form of Management Information System (MIS) which provides information for making decisions. Most of information is generated from with in the organization. Reports are generated for different operational parameters like Production, Sales, Cost, Assets, Liabilities , Profits, Rejections, Stocks etc. Further every organization also develops some sort of Checks and Balances System to ensure hygiene of transactions and activities.

However it is generally found that almost every organization and business owner experiences nasty surprises , lost opportunities, frauds and avoidable losses. These losses and surprises originate from Inadequacy of Information Systems prevailing in the organization.

There is lot of Information flow in organization, but this may not include knowledge which is critical for business. Moreover Information often does not come at time thus preventing timely corrective action.  Some of limitations of Information Systems (MIS), are as below:

  1. Information Not Aligned to Business Goals and Strategic objectives :Flow of Information should start identification of Business Goals and Strategic Objectives. This should include information on critical bottlenecks which prevent achievement of these goals. However most of MIS frameworks are Static and not perfectly aligned to Strategy of Organization. This reduces utility of these Information Systems.

2. Macro Environment Factors Information Missing:  Every business is impacted by wide range of environment factors whose impact can be forecasted. This includes factors such as Government Policy Framework, Market Conditions, Technology, Competitors, Exchange Markets, Capital Markets, Crop Patterns, Global indicators etc. Most of organizations do not have formal systems to track and analyse these Macro Environment factors. Due to this deficiency these MIS frameworks serve limited purposes.

  • Too much Information which may not be needed : This is a common flaw in most organizations. There are too many reports , too much information which may not be needed. Information overload is a common problem today and is not desirable.
  • Critical Information not segregated from Non Critical : In order to make Information systems effective , it is essential that Critical Information is segregated from Non Critical Information. Many MIS professionals see Variance Analysis as critical information. This is incorrect. Information System need to identify Critical Information and develop separate reporting pattern for same.
  • Intangible Information Missing: Business is not run only by numbers and figures. Non tangible factors such as customer sentiments, company image, employee creativity, employee sentiment is more critical than mere balance sheet numbers. Most of organizations do not have systems to track and measure these Intangible factors affecting their business.
  • Too many business review tools & methods -: Most businesses have too many review functions like Internal Audit, Management Audit, Cost Audit, Budgeting, Standards etc. This creates lot of analysis and duplication which is not required. Further every audit tool looks at a particular aspect of business and not as an Integral entity linked to wider environment.
  • Imbalance between Formal & Informal Systems : Big organizations depend too much upon Formal Systems. This cripples the vital creativity and dynamism. On other hand small organizations depend too much on Informal Information. A dynamic MIS combines both Formal & Informal Information systems in perfect balance and aligns to strategic objectives of business.
  • Late arrival of Information : Information for incident happened should be available at the earliest. Similarly Information about probability of events likely to happen should come well in advance. However in most of organizations information comes too late which leads to losses and delay in corrective action.
  • Information to wrong person : Most organizations provide information to too many persons who may not need it. Information should go only to person who are involved in taking corrective action.
  • Incorrect Form of Information : Most of information system rely on information in form of Excel Sheets, Text Reports or PPT Presentations. Information is also circulated mostly by Emails. This is not Action Friendly way of providing Information. Best form of information is in form of brief SMS Texts or Social Media Groups. Reports should only be provided wherever essential.

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Cost Management & MIS

Developing Critical Information System for Cost Management

Profit Maximization objective of business is dependent upon two variables i.e. Revenue Maximization and Cost Minimization. Both these systems together lead towards maximization of top line and bottom lines of balance sheet.

Cost can be classified in three broad categories depending upon their linkages with revenue:

  • Cost Directly linked with Revenue Generation
  • Cost Indirectly linked with Revenue Generation
  • Cost Not linked with Revenue Generation

Cost can also be categorized as costs related to:

  • Business Acquisition
  • Fulfillment or Order Execution
  • Support

Elements of Cost: There are three major cost elements in any organization:

  • Manpower
  • Materials
  • Expenses

Cost Management: A subject of Caution

Cost Management subject has to be treated with a caution. Any Cost Management framework has to ensure that:

  • It does not impact Revenue Generation
  • It does not create resentment among employees 
  • It does not impact vital creativity in organization

The best form of Cost Management comes out of Self Initiative from employees. All systems and frameworks for Cost Reduction have to be creative and owned by employees.

Framework for Cost Management System:  

Cost Management Framework involves following steps:

1.Formation of Cost Management Group: This group shall have representatives from different function heads. The mandate of this group should be to keep cost to an agreed level and work to reduce the levels. This group shall take all steps to develop a Cost Management System.

2. Cost Classification & Cost Centers: Clear cut Classification and Codification of Cost Elements. Every cost from major to minor should have Cost Code and Cost Centre.

3. Integrating Costs Elements with Accounts Master: This shall ensure that Financial Accounts generate information for Cost Analysis & MIS.

4. Entering Cost Center with every transaction: This shall ensure that every cost is booked to a definite cost center. This is an important step towards Cost Management.

5. Zero Based Cost Budgeting: This ideally means challenging each element of cost with an open mind and answering questions such as:

  • Whether it is really required?
  • What will happen if it is not incurred?
  • What can be done to reduce or eliminate it?

6. Integrating with ERP: Integration of Cost Management with ERP is essential. Cost Centers should be integral part of any transaction. Similarly budgets for costs should be mandatory for transactions. Any expense above budgets should raise alert and go to approval system.

7. Incentive Scheme:  Building up an Incentive Scheme which identifies, measures and rewards the Cost Reduction results achieved in different schemes. This shall require building up a Suggestion Scheme where employees are encouraged to provide suggestions to reduce cost in different domains.

8. Collective Bargaining: Some of expenses like Purchases of Material can be done at Group Level. This shall help to bargain in a better way. This can also be applied to some of the services such as Travelling, Cars Hiring, Telephone Expenses etc.

9. Penalties: Penalties is one area which should get first priority. Penalties are mostly paid in area of Statutory Compliance \, Banks and Vendors etc. This cost need to show separately in monthly MIS and ways found to tackle it.

10. Process Mapping: Some of Costs like Manpower Cost and Fuel can also be tackled by way of Process Mapping for some critical areas which involve major cost drivers. These processes need to be identified and studied.

11. Manpower Cost: Manpower Cost is a critical cost. It is a sensitive matter and needs to be tackled with caution. HR Cost management requires that.

  • Any Recruitment and Increment is done after due diligence from a core team which should include a person from Cost Management Committee.
  • An effective Performance Support System should be put in place to ensure that every person is provides optimum performance matching his grade and remuneration.
  • It has to be ensured that every person is effectively utilized. This also requires effective Process Mapping and Work Flow study.

12. Effective Asset Management: Some of costs related to Assets Management like Repairs and Maintenance, Fuel Consumption, Insurance can be controlled with asset management steps like preventive maintenance, AMC etc.

13. Cost Minimization MIS: Costing MIS should be part of regular Monthly MIS. This   should be part of Profit Analysis Statement. A special Cost Minimization MIS can be compiled on regular basis. This report analyses Cost Structure of business and seeks to lay down targets and strategies for cost minimization. This report can be compiled on following lines:

a. Cost Heads: Costs are divided as Variable, Semi Variable Costs & Fixed Costs.

b. Budgeting Factor: Budgeting Factor has to be fixed for each type of cost. Budgeting factor can be as % to Sales, or Per Person basis etc.

c. Present Level: Present Level of Cost to be ascertained and recorded.

d. Reduction Target – Conservative: Targeted Cost Reduction on a conservative basis to be fixed.

e. Reduction Target – Optimistic: Targeted Cost Reduction on Optimistic basis to be fixed.

f. Local Industry Cost Levels – Cost Levels at local industry level.

g. Global Cost Standards – Cost Levels at Global Level

h. Framework: Framework for meeting Cost Minimization Standards

i. Key Strategies: Key Strategies to achieve Cost Standards.

Some of figures like local and global standards may not be easily available, but with some research they may be estimated.

14. Annual Cost Audit – Non Statutory: Annual Cost Audit exercise is essential to have an overall review of Cost Audit. Non Statutory Cost Audit can be integrated with Statutory Cost Audit. For companies not covered under Statutory Cost Audit, cost audit template can be developed as a standalone activity.

Implementation Steps:

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P.S: This article is part of publication Strategic MIS.

To download brochure click: https://www.csmstrategy.com/pdf/SMIS_Brochure.pdf

For Training & Support in Cost Reduction, Planning, Systems, Audit, ERP & MIS

Call: 9818397806 / 9582497948/0120-4130954

Mail: info@csmstrategy.com

Dynamic MIS : Right Information at Right Place at Right Time & Right Form

During my interactions with community of business owners and professionals, one common concern that comes out is Non Availability of Critical Information for decision making. There is lot of information available through reports, systems, people &but this does not prevent from nasty surprises, losses, frauds and lost opportunities.

Being flooded with information doesn’t mean we have the right information or that we’re in touch with the right people. Bill Gates

Non Availability of Critical Information on a Real Time Basis is prevalent in all Big and Small organizations. Big organizations suffer from mind set of depending too much on Formal Systems while Small organizations depend too much on Informal methods of gathering information. Further most of organizations do not have comprehensive Information Systems which tracks Macro Environment Factors as well as Intangibles impacting success of business.

Right Information is most important tool for any business owner and professional. Right Information leads to success, profits, safety, security and opportunities while wrong information or lack of information leads to failures, losses, frauds , risks and nasty surprises.Whether running a prevalent business or planning to enter & exit it , one needs:  

Right Information at Right Time at Right Place in Right Form.

  1. Right Information : MIS Professionals need to Identify Information which is Critical for growth , safety and perpetuation of business. Filtering out of information has to be an ongoing process. Information has to align with Strategic objectives and bottlenecks of business. It has to cover both Macro and Micro as well as Tangible and Intangible factors impacting business.
  2. Right Time : Timing of Information is crucial. Any information which needs corrective action , has to come at early stage. For example Stocks which are slow in consumption need to be highlighted at an early stage. Similarly market information about financial position of a debtor has to be informed as soon as signals for same are available.
  3. Right Place & Person : Information has to provided to person only to person who has to take action on same. It has also to be given at place and time when they can take notice of that.
  4. Right Language and Form : Information has to be provided in a form and language which is brief, simple and easily readable. The best form of information is in form of Short Text Messages over phone or Inter company social media groups. This can be read immediately and action can be taken. Complex Excel Sheets, Text Reports, Power Point presentations etc. are be avoided or used only as a reference. Information on Emails or Printed documents are also to be avoided or used only for detailing purposes.

Dynamic MIS is vital tool to generate Right MIS for any organization. It is a system to identify, collect, present & assimilate critical information from company as well as wider Macro Environment. Dynamic MIS helps in aligning Information System with Business Strategy and helps in Better Planning, Cost Control, Timely Detection of Faults & Effective Decision Making. It tracks Information which is critical i.e. one which is really needed and helpful for taking decisions.

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  • Please watch this space for regular articles and updates on Dynamic MIS, Systems, Planning , Costing , Risk & Profit . To get Free Updates directly in your Inbox, please send your E-Mail details.
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Knowledge Management System & MIS

A successful organization strives to attain Critical Cutting Edge Knowledge in its domain which gives it advantage over competitors and is vital for its long term success. Knowledge Management has developed as a strategic domain in dealing with creation, storage & application of critical knowledge applicable to an organization. 

Critical knowledge is increasingly being recognized as a key strategic input for competitive edge. Knowledge Management leads to a constant learning process & improvement to make organization as a whole more productive & creative.

An organization can be lacking in critical knowledge when it is not able to innovate at a faster pace or when its relations with customer fail to improve. Knowledge management is integrally linked with competency creation as well as business intelligence. It is an essential input to achievement of overall business mission & objectives.

Knowledge Management is a Key Corporate Governance objective. This involves following steps:

  • Knowledge Management Officer (KMO) appointment to lead the KM effort.
  • Knowledge Management Group to support KMO in designing and implementing KM framework.
  • Critical Knowledge Identification as applicable to company and its different business units and functions.
  • Knowledge Gaps Identification: Knowledge required to solve critical problems of organization.
  • Macro Environment Analysis System for collection of External Knowledge from sources such as News Letters, Govt. Notifications, Court Case Laws, Conferences etc.
  • Internal Knowledge Collection System to record critical information generated in form of Flow Charts, Learning Experiences etc.
  • Critical Research & Development Framework
  • Environment Feedback System to collect feedback from customers, vendors, visitors, bankers and wider environment.
  • Creativity Management Policy to develop highly creative company. 
  • Knowledge Preservation System: Technology & systems for storage & processing of this information
  • Knowledge Protection System.
  • Knowledge Culture Development: Developing an organizational culture where knowledge is treated as a valuable asset. 
  • Knowledge Management MIS: Feedback & follow up system to check effectiveness of knowledge management system. 

CSM Strategy Approach to Knowledge Management

The CSM Strategy approach to knowledge management is outlined below:

1.  Appointment of Knowledge Management Officer (KMO): A Knowledge Management Officer (KMO) shall lead the efforts to design and implement Knowledge Management Framework of organization. KMO should be person of high analytic abilities with a grasp of vision of company and industry as a whole. He may not be a person from industry but he should have sound experience of KM function.

2.  Knowledge Management Group: Knowledge Management Group shall be the support group to help KMO design and implement KM framework. It should have ideally executives from different units and functions. KM group should have persons who has time and inclination to spread KM culture in organization.KM group should meet periodically, may be once a month. The group should keep in contact by forming a communication group for sharing mails and views.

3.  Critical Knowledge Identification: Knowledge Management is practical when it focuses on knowledge which is critical and useful. It is futile to create & store knowledge & information’s if it cannot be used. Company should identify critical knowledge factors for different functions and units. This list can be quite vast and include factors such as Industry demand, competitor news, new products launch, new technology, Govt. Policies, Labor Laws, Taxation laws, environment risks etc. 

4.  Knowledge Gaps Identification: Company should make an inventory of problems of its own business as well as industry as a whole. As a strategy , company shall work towards core bottlenecks of market & operations. Every bottleneck is associated with a particular knowledge gap to be filled. It is this gap which has to be identified & knowledge has to be created for this.

5.  Macro Environment Knowledge & Analysis: The company should have a Macro Environment Analysis System which involves identification of critical macro factors which can affect company, identification of sources which provide such information and system for collection & analysis. External Information comes from inputs from macro environment, training program as well as publications. It also comes from interaction with various Govt. agencies and trade bodies. 

6.  Internal Knowledge Collection: A company generates substantial information internally which comes from experiences of doing business. The company should create an appropriate system for collection & development of this knowledge. Internal Knowledge is coming from experiences in form of flow charts & written reports as well as from an effective MIS to gather inputs & analyze to find critical gaps. The company should initiate a learning process in all its operations. As far as possible flow charts, checklists & written reports should be made for each function & process. 

Flow Charts if properly maintained shall keep on improving from experiences & ideas. This should be preserved and can become a reference for future workers executing that operation. This should extend from process in shop floor to all service functions like accounting. This should also involve flow charts for important decisions taken at different level of management. This knowledge comes out of actual experiences & hence is valuable.

7.  External Feedback System: System should also be created for collection of views & opinions of external agencies. The company should have a policy of asking its executives to file a Monthly Feedback Report on their interactions with external agencies. Company can also integrate security function with social feedback system. The gate register should be supplemented with social feedback register incorporating opinions, suggestions & views from people visiting company. 

8. Creativity Management Policy: This company should to have a sound Creativity Management Policy. This involves providing adequate platforms to generate peak creativity in every individual & organization as a whole. Further company also has to develop cross functional teams to create knowledge for complex problems which requires integration of various functions. 

An organization with high level of creativity & focus leads to constant flow of practical ideas and latest information in company. Hence company shall always have an edge over its competitors even if some of this information is leaked out. 

One additional advantage is that it shall reinforce image of company as a highly creative organization in industry which shall result in  additional benefits like: attracting more information, brighter employees and better brand equity. The company shall thus become an information junction for industry.

9.  Research & Development: Every company must have a Research & Development budget to work pointedly on specific issues and problems facing company. Objectives of R&D should be linked to Core Bottlenecks and Problems of company. R&D cost is not a waste but investment in future for organization. 

10. Storage of Information: Knowledge Management system also involves creating system for proper storage & retrieval of critical knowledge. This requires providing for technology & space along with system for protection. This should also involve policy for destroying information when it is not needed. 

11. Knowledge Protection System: System has to be made for protection of critical information. While doing this, one has to see whether information is really secret. Too much secrecy is harmful for organization which should be avoided. 

The strategic approach to Knowledge Protection is to focus on knowledge which is really critical and requires protection. In present age of information era, most of information is not confidential. With advent of Internet most of information is freely available.

However, there is certain knowledge which really gives the company a critical edge over its competitors. It should focus on protecting this knowledge. A hard look needs to be given whether it is really that confidential. This means focus has to be made on really critical & secret information.

 The Threat Analysis has to be on following lines 

  • What are sources of threat of leakage of this information?
  •  Which of these sources present maximum threat?
  •  What are strongest motives of this threat source?

Once this information is peeled over, company shall focus its energies on protecting this information. Further the company shall have a backup strategy – what to do in case the information is leaked in spite of precautions?

12. Knowledge Management MIS & Feedback System: Knowledge Management Officer (KMO) should develop a Quarterly MIS on KM function to KM group and Management Committee. This should include factors such as Implementation of different measures, Quality suggestions and feedback received, Costs incurred, Knowledge security audit, Benefits received from KM framework etc.

13. Knowledge Management Culture: The key to KM framework is to develop a culture in which knowledge is considered a valuable asset which has to be cultivated, preserved and used judiciously. Developing culture is a key strategic function of corporate governance and is discussed separately. 

Knowledge Management is a dynamic function involving system for collecting & analyzing information from internal as well as external environment. If handled properly can lead to long term changes in organizational productivity, creativity & competitiveness.

IMPLEMENTATION STEPS:

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PS: The article is part of publication “Strategic MIS” by author. Detailed formats are provided in manual. More information about Strategic MIS Manual can be downloaded from following link: https://www.csmstrategy.com/pdf/SMIS_Brochure.pdf

©All rights are reserved with author

Strategic Human Resource MIS

HRD is a critical Input function essential to achieve objectives of organization – i.e. Equitable Contribution to welfare of all Stakeholders to business. An effective HR function is vital to success of an organization.

MIS is system to ensure that goals to business are achieved in acceptable quality and cost norms. Strategic MIS ensures that activities of business are aligned to core Strategy of organization. SMIS helps in identifying the bottlenecks of business which prevent achievement of goals. It also helps to judge effectiveness of Strategy adopted and to make changes if required.

Developing a Critical Information System involves following steps:

a). Goal Setting: Goals of Organisation at Macro & Micro Level.

b).  Bottleneck Identification: Identifying bottlenecks which prevent achievement of goals.

c).   Identifying Factors which are critical to achieve goals and solve bottlenecks.

d).   Identifying Inputs required to compile information on these inputs.

e).   Designing Formats to collect information on these factors

f).   Assigning responsibility to collect and compile this information

g).  Analysing the information received and applying to decision making.

h).  Evaluation and Audit of Information System.

SMIS for Human Resources Function:

Strategic MIS for HR function primarily measures synergy between HR and Core Strategic Objectives of organization. Core objectives of every organization are primarily:

  • Stakeholders Satisfaction
  • Optimum Return on Capital Deployed
  • Revenue Maximization
  • Cost Minimization
  • Perpetuation of Business
  • Effective contribution to society

HR function serves the purpose of organization by working for following objectives:

  • Manpower Adequacy
  • Manpower Skills Adequacy
  • Dynamic Organization
  • Performance Optimization
  • Creativity & Innovation
  • Regulatory Compliance
  • Integration with Employees
  • Ownership and Participative Management

A set of MIS reports related to HR can be developed for different levels of management. Most of reports are to be generated on Monthly basis while some can also be generated on Quarterly basis.

HR Strategy MIS

1.    HR Objectives Achievement Report

2.    HR Goals Alignment Report

3.    HR Macro Environment Analysis Report

4.    HR Gaps & Bottlenecks Report

5.    Leadership Development Report

Organization Development MIS

1.    Organization Structure Analysis Report

2.    Team Development Analysis Report

3.    Motivation Analysis Report

4.    Work – Life Balance Report

5.    Family Integration Efficiency Report

6.    Communication Analysis Report

Creativity Management MIS

1.    Creativity Process Efficiency MIS

2.    Suggestions Schemes Efficiency Report

Knowledge Management MIS

1.    Knowledge Management System Report

2.    Trade Secret Protection Report

3.    Intangible Asset Report

Manpower Planning & Costing MIS

1.    Manpower Planning Report

2.    Employee Cost Budget

3.    Labour Standards Report

4.    Manpower Cost Analysis Report

5.    HR Cost Reduction Report

6.    Inter-firm Manpower Cost Comparison Report

Recruitment, Induction & Exit MIS

1.    Recruitment Status Report

2.    Recruitment Efficiency Report – Time Gap Analysis

3.    Recruitment Efficiency Report – Employees Not Joined

4.    Recruitment Efficiency Report: Employees Left in one year

5.    Induction Efficiency Report

6.    Exit Efficiency Process Report

REMUNERATION MIS

1.    Remuneration Management Efficiency Report

2.    Remuneration – Performance Linkage Report

Performance & Productivity MIS

1.    Performance Management Report

2.    KRA Performance Report – Detailed

3.    KRA Performance Report – Summary

4.    Productivity Analysis Report

5.    Productivity Improvement Checklist MIS

Employee Appraisal Report

1.    Appraisal Analysis Report – Employee Wise

2.    Appraisal Analysis Report – Summary

Training & Development MIS

1.    Training Need Evaluation Report – Employee Wise

2.    Training Need Evaluation Report – Department Wise

3.    Training Cost Analysis Report

4.    Training Performance Report

Idle Time, Over time & Attendance MIS

1.    Idle Time Analysis Report

2.    Overtime Analysis Report

3.    Attendance Management Report – Department Wise

4.    Attendance Management Report – Employees Regularly Late

Employee Grievances & Discipline MIS

1.    Grievances Management Report – Detailed

2.    Grievances Management Report – Department Wise

3.    Grievances Management Report – Nature of Grievances

4.    Employee Discipline MIS

Employee Turnover MIS

1.    Employee Turnover Analysis – Department Wise

2.    Employee Turnover Analysis – Grade wise

3.    Employee Turnover Analysis – Reason Wise

HR Documentation & Automation MIS

1.    HR Records MIS

2.    HR Automation Status MIS

HR Regulatory MIS

1.    HR Regulatory Management Report

2.    HR Statutory Liabilities Report

3.    HR Regulatory Penalties Report

Payroll Management MIS

1.    Payroll System Efficiency Report

2.    Leave Management System Report

3.    Salary Advances Report

4.    Employee TDS Deduction Report

Most of inputs of above reports can be obtained from ERP . These reports can also be integrated with Management Audit routine for HR function.

PS: The article is part of publication “Strategic MIS” by author. Detailed formats are provided in manual. More information about Strategic MIS Manual can be downloaded from following link: https://www.csmstrategy.com/pdf/SMIS_Brochure.pdf

For further details kindly contact at: +91-9818397806, 9582497948, Email ID :csmstrategy@rediffmail.com, Website : www.csmstrategy.com

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