D1: Performance Measurement and Control | Performance Management Information Systems (ACCA F5)

D1- Performance Management Information Systems

Performance Management Information Systems identifies the accounting information requirements and the types of information systems used; describes and identifies the main characteristics of transaction processing, management information and executive information systems; and defines the good and bad of open and closed systems with regard to performance management.

Performance Management Information Systems

a) Identify the accounting information requirements and describe the different types of information systems used for strategic planning, management control and operational control and decision-making.

Accounting information can be drawn from both internal and external sources and is used to create plans and for decision making.

For strategic planning, information about competitors, profitability of products, customer profitability, pricing decisions and the value of the market share are useful in order to set goals and create a strategy.

For management control, information about resources, efficiency and effectiveness is required to set targets and objectives. Much of this information can be generated internally.

For operational control, information about the operations, transaction data (e.g. customer purchases), detailed operating information that is expressed in the right units is used to organize day to day tasks and activities.

b) Define and identify the main characteristics of transaction processing systems; management information systems; executive information systems; and enterprise resource planning systems.

Management information systems include transaction processing systems, management information systems, executive information systems and enterprise resource planning systems.

Transaction processing systems (TPS) “collect, store, modify and retrieve the transactions of an organization” and are characterized by:

  • Controlled processing
  • Inflexibility
  • Rapid response
  • Reliability

Management information systems (MIS) “convert data into information” and are characterized by the following:

  • Provide support for structured decision
  • Are designed to report on existing operations
  • Have little analytical capability
  • Inflexible
  • Focus on the internal

Executive information systems (EIS) use data from the MIS and allow to create a “generalized computing and communication environment.” Characteristics include:

  • User friendly interfaces
  • Interactive tutorials that visualize situations
  • Links to external databases
  • Tracking of critical information

Enterprise resource planning systems (ERP systems) are software packages that pull together the organization’s processes into one system. Some characteristics are:

  • Can be accessed by anyone who’s computer is linked to the central server
  • Has decision support features
  • Can be linked to external systems
  • Works well for global operations
  • Allow for standardisation of information and work practices

c) Define and discuss the merits of, and potential problems with, open and closed systems with regard to the needs of performance management.

A closed system is “isolated and shut off from the environment” – there is no flow of information. An open system is connected to the environment and can be influenced by it.

For the merits and problems of open and closed systems, please refer to BPP’s ACCA F5 Performance Management Study Text.

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