Management Information System and Integrated Accounting System - Essay Example

? Report on Evaluation of the Issues/ requirements of the ABC Ltd’s Board The purpose of this report was to evaluate the Issues/ requirements of the ABC Ltd’s Board. It was identified that the new system despite the cost incurred in implementation of the new technology the returns that come -with the same outweighs the expense. The current challenges facing ABC Ltd are discussed at length in the report. Strategic decisions are made in way to solve the management problems incurred. Findings of the current status of the firm are drawn thus stating the progress of the firm in the market. Management Information System package is discussed at length putting into consideration the impacts that it brings with it. It was found to provide information that organization need in order to effectively manage their businesses. This package was found to be the best in managing a company’s data and information. An Integrated Accounting System was also discussed in detail comparing its significance to the company and the impacts that accompany it. Various challenges were found to face the company in absentia of the package which can be solved with the application of that software. This system was found to be able to manage different accounts which are essential to the operation of the company. The package worked with use of modules which include the following: the financial Management Module, Accounts Receivable Module, Account payable module, fixed assets module, the inventory control model, sales order module, and purchase order module. The report further recognizes the importance of Michael Porter’s generic strategy to be used by the ABC Ltd in order to make appropriate strategic decisions and the rationale that accompany the same. The strategy relied on two major aspects in its operations which were competitive advantage and competitive scope. Various functions of customer care were also discussed in the report. Contents Abstract 2 1.0 Introduction 4 1.1 Purpose 4 1.2 Scope 4 1.3 Method 5 1.4 Limitation 5 1.5 Assumptions 5 1.6 Background 6 2.0 SWOT Analysis 6 Strengths 6 Weaknesses 7 Opportunities 8 2.1 Alternative solutions 8 2.2 Management Information System (MIS) 9 2.3 Integrated Accounting System 10 2.4 Cost of Installing an MIS in the company 12 2.5 Discussion 13 3.0 Conclusion 15 4.0 Recommendations 17 Project management Gantt chart 19 1.0 Introduction 1.1 Purpose The purpose of this report was to analyze and determine the suitable management system and an integrated accounting system to be used by the ABC Ltd. The report considered both the internal and external environment surrounding the company and identified the challenges posing a threat o the company and opportunities available to the company. Customer service was rather discovered to be the best solution in identifying and satisfying the customer needs. This is because the service was found to be more effective and efficient way of handling the customer needs in any business. 1.2 Scope While determining ways to link Management Information System to an Integrated Accounting System, there are various factors that are put into considerations. Identify ways to increase sales of the firm’s products, regular staff training, management strategies to be used by the company, improve the product line of the organization and to crown it all, conduct customer service to increase the effectiveness and efficiency of their service. The reports looks at was in firm’s strategic decision are reached and how effectively and efficiently an organization should be managed. ABC Ltd had problem of facing their system which had not been up-dated since the date of its installation. The report puts across rationale of using an up-dated system and the returns that comes with it. Considering the findings obtained in the study and the discussion thereby, a conclusion and recommendation of appropriate measures was done. It was concluded that IT usage in the business was necessary in the organization’s activities and he daily operations. 1.3 Method The information used in this report was obtained from a case study scenario carried out about the ABC Ltd Company, information from auditing reports, and other secondary sources which are pointed out. The information gives the current status of the firm and he expected future status which is to be achieved through the use of Management Information System and an Integrated Accounting System. Different managerial strategies used in business operation are considered. An up-dated accounting system that is required for efficient management of the business is also put into consideration. 1.4 Limitation Time limit to conduct the research. Additional information was difficult to obtain concerning the MIS. Inadequate training of the ABC Ltd to use the Management Information System and an Integrate Accounting System. Cost that is incurred in investing in the computer system 1.5 Assumptions It has been assumed that ABC Ltd will adopt the new technology and be able to accommodate the link between management information system and the integrated accounting system. This will enable easy operation of the company. It has been assumed that the company will regularly train their staff to make them competent for the job. This will enable them to able to effectively compete in the market. It will be assumed too that the company will be in a position to upgrade its computer system to enable achievement of efficiency as the new system will work better. 1.6 Background ABC Ltd is a supplying company that deals with supplying small tools, fixings such as nails and screws, paint and similar DIY materials to their customers. The firm has a wide market which makes up the whole city. The market has been in the market for a while and has even obtained customers who are loyal to their products. Loyalty comes out conspicuously when despite the fact that some of the products from ABC failed to meet the ever changing customer needs requirement, there was still loyal customers. It is an already established firm with a good staff and a long history in the job. Some of the employees worked for the company for more than a decade something that portrays a low turnover of the employees. This shows that the company’s management has a good relationship with its employees. The firm is seen to have already advanced technologically as it uses partly computer system and manual to run its accounting services. Despite all this efforts, the company still made low level of profits due to use of poor managerial strategies. Quality of customer care rendered at the company was no up to the expected standards. However, quality of customer care plays a huge role in dictating the customer’s preference on which company they prefer to buy related products. ABC limited lost customer’s loyalty to their competitors’ decreasing their net income as a result of decrease in sales. The loyalty that the company had built for a long time was destroyed in a short period of time. To fulfill the ABC Ltd’s Board’s the research carried out will identify possible solutions needed for the company’s recovery. 2.0 SWOT Analysis Strengths The firm has been in the market for a long period of time. It has thus established itself in the market by gaining consumer loyalty. The company also has a long time serving staff with a great history at the organization hence in a better position to manage the organization well. I was also significant to note that the company made relatively small profits hence was not making any losses hence was still rational in is operations. Another strengthening aspect of the company was the fact that ABC Ltd conducted a personal customer relation something that made them gain customers confidence despite their slow pace at their services. Weaknesses ABC Ltd faced a number of challenges which led to significant reduction in the amount of their returns. The company had poor human resource management in that they never trained their employees at regular intervals to make them competent in their fields to cope with the ever changing demand in the job market. This made them unable to cope with changing technological changes hence unable to compete effectively with their fellow competitors in the market. There were no training services in the last seven years that was offered to them. Their services were relatively slow as compared to their competitors and their system was not updated to meet the present needs of the company. This and other major reasons maintained that the company management needed to put a new management system by putting MIS into place and link it to an integrated accounting system. ABC Ltd faced four major challenges concerning the current system which justified the essence of carrying out the research as required by the ABC Ltd’s Board. The problems experienced included the following; i. Noted delays and errors found in the credit sales system used by the company. ii. A decrease in sales which was incurred due to competition from firms using internet. iii. Inventory control system to control price of the stock merchandise. iv. Up-dating of management accounts and a management information system Opportunities There was a great market for ABC’s products hence the company would still make profits. The company was still able to compete with competitors by putting in place new management system and updating their system. The major threat that faced the company was competition from the competitors. This made the company to lose some customers as the competitors had relatively better services than them. There were various reasons that contributed to the status; there was no enough market searches to forecast the future changes in the customer requirements; threat from new entrants into the market posing competition; and the challenge of investing in the IT industry. 2.1 Alternative solutions Significantly, the managerial staff of ABC Ltd was faced by a number of challenges. Introducing the Michael Porter’s Generic strategies, this focuses on competitive advantage and competitive scope. Competitive advantage involves two major aspects which include focus on cost advantage and differential strategies. Cost leadership strategy is whereby a firm has a broad scope and many industries serve many segments. The company becomes more cost effective than its competitors. Differential strategy consists of creating differences in firm’s products by producing a unique product valued by customers. This allows gaining access into new markets thereby making more revenue for the firm. Focus strategy rests on choice of a narrow competitive scope within the industry. This strategy was to exploit the market niche that differs from the rest of the industry. The focus strategy included the cost focus and the differentiation focus. Cost focus exploited differences in the cost behavior the buyers. Differentiation focus aims at securing competitive advantage by offering niche members a product they perceive as well as suited to their own unique tastes and preferences. The organization in essence had to maximize on the available opportunities and minimize their weaknesses. Threats were converted to opportunities or else minimized. The company strengths were generally used to make the company competitive in the market. This was made possible by use of strategic management system. 2.2 Management Information System (MIS) Management Information System provides information that organization need in order to effectively manage their businesses. Management information system is made of five major components that include; hardware, software, data, procedures and the people who use the information. Management information system facilitates strategic and operational activities that are the core values of any business. Management information system and accounting go hand in hand and thus should be linked to make the operation of the company to run smoothly. The software enables the managers to get relevant information needed in making of optimal strategic decisions. Over the years the software has been improved to work more efficiently. Managers are able to work from wherever they are as long as they can access a computer something that has made work easy. The application helps in performing the following roles: decision support system, resource management and human resource management, enterprise performance management, customer relationship management, supply chain management, database retrieval applications and project management. Management information system is used by different managerial levels i.e. from top level management to low level management. Management information system produces regularly reports based on data to middle and operational level managers to indentify and make appropriate solutions to the various problems facing the company. Decision support system on the other hand is computer program applications used by middle managers. They help store information which is important in decision making and problem solving. Executive information system is actually a reporting tool. It acts as a messenger as it provides summarized reports from all company levels and departments. Marketing information systems are generally used for managing marketing transactions. Enterprise resource planning enables easy flow of information between the different business units. The various rationales that accompany the use management information system involve the following functions: ABC Ltd will be in a position to know their strengths and weaknesses due to the available information at their disposal. This will enable the company to take appropriate correction measures which will enable the company to make the right progress in the business industry. The application makes the managerial function of planning easy. It further provides customer information to the managers hence they are able to make informed decisions concerning the customer requirements, due the ever changing consumer tastes and preferences. Use of management information system in reality makes work easier, effective and more efficient. 2.3 Integrated Accounting System This is a type of accounting software that enables accounting functions to be more effective and efficient. The software can be customized to suit various company requirements. The various roles played by the software involve the following functions: Financial management - this module enables the company to prepare company’s reports over a wide range of usage. It enables definition of accounting periods and tabulation of their respective actual position in the market, accruals, budgets, and efficiently the resources should be allocated. Through the module the company will access the function of the Financial Report Writer. The Accounts Receivable module assists businesses in the control of the invoices and the receipts. This ensures that accurate information is obtained concerning the amount owed and owned by the company. This software allows for online search for customers hence enables development of new products for their products. This will see to it that the company makes more profits from their sales. This application enables efficient transfer of transaction information. It further provides accounting information for various periods something that can be used for reference purpose. The Accounts Payable module enables easy management of the business accounts payable. This is achieved through the control and planning function of management. The application has the ability to handle recurring payments, manual checks, and the vendor’s information. The Fixed Assets module is specifically used for fixed assets and for calculating the depreciation or accelerated cost recovery amounts needed for bookkeeping. It enables informed decisions concerning the amount of tax to be paid, budgeting requirements, and effective and efficient transfer of assets between the different companies. The Inventory Control Module- this application helps in tracking down of inventory records over a period of time. This package enables transfer, use or disposal of inventory at a single time. This enables the company to be able to make informed decisions concerning the available resources at hand in terms of how they should be managed. The Sales Orders module solves the problems experienced during entering a series of sales. This package enables one to use one and two steps invoicing, compute price discounts based on quantity, and keep records. It can handle unfilled orders, prepare sales reports to enable easy track of customer information. The Purchase Orders module controls purchase of inventory and expense items. This enables online purchase or export. 2.4 Cost of Installing an MIS in the company Research was conducted to determine the essential components that are needed in efficient MIS software in the market currently. The argument was based on: features and capabilities of MIS for then Supply Company. Capability and compatibility of the MIS was also focused. MIS functioning was observed focusing on: accounting capabilty,estimating, raw and finished material inventory, electronic job ticket, data collection, budgeted hourly rates and production standards of the company, operating systems, network capabilities, price range and the internet interface. According to the 2012 MIS survey carried out by Dillon Mooney and Dr. Mark Bohan, the following findings were obtained from the different companies that offered the services in America. The cost of installing the software varied from one company to another, different specifications of the software, amount of work at the industry and the efficiency of the software in its operations. It was assumed that the prevailing costs will change hence are subject to change periodically. It was also assumed that the company will serve 6-20 million customers, annual targeted sales will range from 1-10 million US dollars and the software will support commercial business. Operating system to be used is Win 7 Mac OS-X Win XP. The software training was done both online and off-line and took a period of one to three weeks on average. The software that will support the company efficiently will cost the company 20,000 us dollars, and will need support services costing 15% of the initial cost. The software will only support a single language, i.e. English. 2.5 Discussion ABC Ltd made sales in cash and other sales on credit with a payback period of thirty days. The accruing amount were at times difficult to handle as they poor management of information. This has resulted to the firm making low profits which low beyond the expectation. The company faced the challenge of internet usage and adoption of new technologies as was discovered. This made the company vulnerable to competition from the new entrants into the market. In way of establishing itself in the market, there was need to incorporate use of management Information System and an Integrated Accounting System which made the company to be in a position to handle its operations most effectively and efficiently. There was a problem in managing staffs as there was inadequate competent personal something that dragged the company behind, this was noted when the directors failed to make a decision on strategies to use. Training of employees on regular basis was also absent a matter that made adoption of new technology a bit difficult. A close comparison of the current state of the firm and the expected state in case of an adoption of the new technology that will link Management Information System with An Integrated Accounting System was seen to work better as compared to the current state. This was because the new technology was promising and gave better returns. Management Fig. 1 showing components of modern decision support system Information System seems to manage information better, allocation of resources to achieve the set objectives in the most efficient way possible. Customer service Quality customer service is the most essential thing in management of any business. Providing quality customer service provides value to the business. It actually plays a huge role in the customer preference in choosing a company from which to buy their products from. The service brings a lot advantage to the company such as: increased customer loyalty makes the customer to value the company’s products more as they believe that the products satisfies the customer needs to the fullest. It further increases the sales made by the company through the increased number of customers. This means more returns for the business. 3.0 Conclusion Management Information System provides information that organizations need in order to effectively manage their businesses. Despite the expenses that come with the investment of this new technology, it is apparent that there are more benefits than the cost incurred. This will mean more profit, good handling of information, and good handling of records to make easy follow up or future forecast. It facilitates strategic and operational activities in an organization. Management Information System performs a series of activities which includes the following: decision support system, resource management and human resource management, enterprise performance management, customer relationship management, supply chain management, database retrieval applications and project management. ABC Ltd faced problems of staff management even at the top level and this will be solved by application of the package. The rationale for this type of management involves the following: ABC Ltd will be in a position to know their strengths and weaknesses due to the available information at their disposal. This will enable the company to take appropriate correction measures which will enable the company to make the right progress in the business industry. An Integrated Accounting System is a type of accounting software that enables accounting functions to be more effective and efficient. This will serve better than the manual process of the same and thus fastening the process. This type of package was found to be essential as it performed various a series of function using different accounts which involved the following: financial management, management of the account receivable and the account payable, management of the fixed assets, inventory control management and the sales account. This is made possible by generating a series of periodic reports used in strategic management. The Michael porter’s generic strategy should not be left behind for effective management of the organization. This strategy focusing on competitive advantage and competitive scope will enable the organization to make strategic decisions. This strategy will see to it that managerial information and data are managed accordingly. In conclusion, linking the two systems will be the best decision that the firm will ever do as the systems incorporates all managerial functions required by any manager. This will make the company operate at optimal level. In order o improve the efficiency of their accounting services, there was need to up-grade the accounting system of the company. This will mean serving more customers within a limited time period hence make more profits. According to the survey, it was evident that despite the high initial costs that accompany the installation programmed, the returns obtained far outweigh the expenditure. For instance, it costs 20,000 US$ to install the program me with an annual service charge of 15%. In return, the company’s operation are performed more efficiently and obtain a profit income of about 1-10 million US$. 4.0 Recommendations From the findings and discussions made there was need to make better strategic decisions to run the business. This led to a conclusion that the decision to adapt the new system that linked the Management Information System to An Integrated Accounting System was the best strategic decision for the company could take to make better improvement. The following recommendations were made for the ABC Ltd: ABC Ltd should adopt the new system of technology in order to be able to compete better with its competitors. There should be regular staff training to make the staff members competent for their job. Michael Porter’s generic strategy that focuses on competitive advantage and competitive scope should be implemented at ABC Ltd. Introduce IT system in the business. This should apply to all departments of the company which include; sales department, accounting department, human resource department, purchases department. It was recommended that the company should have a quality customer service as it plays the huge role in dictating the customer tastes and preference in choosing from where to buy their products from. Bibliography Harsh, B. (1997). Managemen Information System . New York : Michagan State University Publisher . Harsh, Stephen B. J. Corner, and G. D. Schwab. (1981). Managing the Farm Business . New Jersey : Prentice Hall, Inc.Englewood Cliffs . Lauden, Kenneth C. and Jane Price Lauden. (1998). Managenment Information System: New Approaches to Organization and Technology. New York: Prentice Hall. Raymond M. and Schell G. (1998). Management Information Systems . New York : Prentice Hall. S., K. (1997). Information Technology Project Management . NewYork: Course Technology. Turban, Ephraim McLean, and J. Watherbe. (1999). Informaion Technology for Management: Making Connection for Strategic Advantage. New York : John Wiley $ Sons . William, C. (1983). Decision Support Systems - A Data-Based, module -Oriented User Developed Discipline . New York : Petrocelli Books, Inc. Appendix Appendix I: Components of modern decision support system Project management Gantt chart Task Time in weeks 1 2 3 4 5 6 7 8 9 10 11 12 13 A - Do a preliminary company analysis B – Develop preliminary project objectives C- Do a preliminary MIS study D – Evaluate and select the best software Packages available E – Staff training F – Install the MIS package to different sections of the company, link MIS to an integrated accounting system G – manage MIS operations H – Control and evaluation I – Feedback Read More