Management Information systems, are these the three most important criteria?
‘Traditional’ management Accounts would normally be Profit and Loss/Balance Sheets/Cash Flow statements and KPIs, however, Boards are now zooming in on individual components and so therefore more detail and supporting analysis is required in Reporting information on a periodic basis. There will be some odd information requests as a result of external stimuli, for example,
what is the headroom available on the overdraft,
can we review our exposure to Customer X, not just the outstanding debt, but future orders and what action would we have to take if demand fell from that source?
How much do we owe supplier Y and what would be the consequences of alternative sourcing?
We have tended to report steady state positions, with Business models and supply chains fairly robust, however FMIS, needs to have an element of versatility in them that communicates alternatives/ disaster plans and ‘what if’ scenarios, so the normal reports have to be more versatile and used not just for Post Hoc events , but for future control and planning purposes more so in this environment. Agility in the reporting functions need to be displayed when one off informational requests are made.
Carrying on from the above, information is quickly outdated as events in the supply chain change, and so when detail is required it needs to be as up to date as possible and clearly sets out the assumptions and caveats upon how the information is produced based on either past performance or future assumptions.
If Information is produced it must be reliable and able to stand up to interrogation, this has always been the case, will be , and remain so for ever more, Amen.
The issue that FDs sometimes face is that
a) They have misunderstood the information request
b) Provided inappropriate responses
c) Not stated the terms of reference under which the information is supplied, so although the information may be accurate, it is not reliable as a basis for decision making.