mis english complete manual

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Regent School of BusinessManagement Information SystemsUnit 1 - Identify and Source Information NeedsAs a manager you are an important creator and manager of information. Yourcompetency in:

Identifying Acquiring Analysing Utilising

appropriate information plays a significant part in the efficiency, effectiveness andcompetitiveness of your team and your Ministry s organisational performance. Bythe end of this module you will be able to:

1. Identify and source information needsa. The information needs of individuals / teams is determined and the

sources are identifiedb. Information held by the organisation is reviewed to determine suitability

and accessibilityc. Plans are prepared to obtain information which is not available/

accessible within the organisation.2. Collect, analyse and report information

a. Collection of information is timely and relevant to the needs of

individuals/teamsb. Information is in a format suitable for analysis, interpretation and

disseminationc. Information is analysed to identify and report relevant trends and

developments in terms of the needs for which it was acquired.

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3. Use management information systemsa. Management information systems are used effectively to store and

retrieve data for decision making.b. Technology available in the work area/organisation is used to manage

information efficiently and effectively.c. Recommendations for improving the information system are submitted to

designated persons/groups

4. Prepare business plans/budgetsa. Individuals/teams are involved in business plan/budget preparation in a

way which uses their contribution effectively and gains their support for

the outcomes.b. Business plans/budgets are prepared and presented in accordance with

the organisation's guidelines and requirementsc. Contingency plans are prepared in the event that alternative action is

required.

5. Prepare resource proposalsa. Resource planning data is collected in consultation with colleagues,

including those who have a specialist role in resource management.b. Estimates of resource needs and utilisation reflects the organisations

business plans, and customer and supplier requirements.c. Proposals to secure resources are supported by clearly presented

submissions describing realistic options, benefits and costs.

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Unit 1Section 1 - Identify and source information needs.This section focuses on the expectations and needs of managers in your Ministries inrelation to information.

Section 1 will focus on:

Identification of needs and sources of information The suitability and accessibility of existing information sources Planning to obtain information currently unavailable

What is an information system?Information is a critical tool of managers. We are bombarded with large amounts ofinformation every day. A key skill of managers is to filter the useful information frominformation that does not contribute to you, your team or Ministry achieving itsobjectives.

Information systems organise and distribute information. A good information systemshould provide accurate, current information that meets the needs of the user.

A good information system should provide the right information at the right time tothe right people.

Information systems can vary in size, type and complexity. They can vary frominformation gained informally in the canteen to written memos, financial charts andcomplex computer-based Management Information Systems (MIS).

Information systems are a key planning and decision making tool for managers.Without accurate, relevant and current information both effective planning and

decision making are difficult to achieve.

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The interlinking of informationThe information you and your team use may come from within your department butoften the origin of the information is from another department or from an externalsource.

There are also many occasions where you and your department supply informationto other departments.

ACTIVITY - Information SystemsWhat information systems (at least two) do you use to assist you in planning and

decision making?

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

What information do you obtain from the information systems identified:

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

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Type of information Within department From anotherdepartment Externally

ACTIVITY - Interlinking of InformationBased on the information systems you identified in the last activity, identify threeof the examples of information you use from each of the information systems and

where it originates - either within your department, from another departmentwithin your Ministry or externally.

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Information breakdownAs a manager you require a wide range of information to plan, make decisions andmeet your department s performance targets. There are however a number of

factors that may result in information breakdown.

The breakdown can include:

information not being provided when requested unavailability of required information information not arriving on time incorrect information unusable information other causes of information breakdown .. ..

ACTIVITY - Information BreakdownType of information breakdown Example of information breakdownInformation not provided whenrequested

Unavailability of requiredinformation

Incorrect information

Unusable information

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Types of informationThe examples of information you have identified are probably presented in a number ofcommon forms including:

printed reports presentations meetings graphs and charts observation team discussion statistics email messages phone messages photographs, video or DVD other types?

While each of the types of information identified above can be very useful there aremany examples of where managers and other users of information would prefer theinformation to be presented in a different way.Type ofinformation Example Usefulness Alternative Type

None Veryuseful 1 2 3 4 5

Printed reports

Presentations

Meetings

Graphs andChartsObservations

Teamdiscussions

Statistics

Email messages

Phone messages

Photographs,video, DVD

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The reason for Information SystemsEffective Information Systems are often referred to as the key factor in organisationsgaining the competitive edge over competitors. In many organisations this importantfactor is overlooked and the frustrations of being presented with information subject totime delays, incorrect or useless detail or complete lack of relevant informationcontributes to the stress level of managers and staff and effects the companies 'bottomline".

Good information systems take raw data and organise it in a systematic way whichallows it to be formatted into an output that provides a useful summary, comparison oranalysis of raw data. A good Information System processes raw data into a useful

product. On its own, raw data is not very useful but when processed it can providefeedback and input which can be used by managers and staff to achieve performancetargets.

Ideally, information systems should be designed to take large amounts of raw data that,in its original form, is useless or time consuming for the user to extract and convert itinto a single targeted report.

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ACTIVITY - Useful Information1. Choose an information system you identified earlier in this section and identify it

below:

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_____________________________________________________________________

_____________________________________________________________________

2. Identify and provide evidence of the raw data that is input to the informationsystem:

_____________________________________________________________________

__________________________________________________________________________________________________________________________________________

3. How useful is the raw data in assisting you in decision making?_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

4. Identify the source of the raw data and find out much the staff who collect thedata know about how the data is used by you or your staff

__________________________________________________________________________________________________________________________________________

_____________________________________________________________________

5. What value adding does the information system provide in converting the rawdata into useable information?

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_____________________________________________________________________

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6. When was the last time there was a review of the information system and itsrelevance to your needs?

__________________________________________________________________________________________________________________________________________

_____________________________________________________________________

7. What suggestions can you make for updating the information system to fit thecurrent purpose of the system?

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

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Information overloadRecent advances in technology have resulted in huge amounts of information, fromwithin and external to the organisation, being available to managers. There is asignificant danger that managers will be swamped with information overload and losetrack of the key outcomes they are expected to achieve.

The number of emails received each day continues to grow, new reports constantlyappear in the in-tray, the number of meetings is often on the increase and the demandsfor information from other individuals and departments seems to increase each year.

With this flood of information, managers need to develop skills to select, analyse,diagnose the information they require to do their job more effectively. They need tofilter out the interesting but unimportant information.

Peter Drucker puts information into perspective in the statement:

Advanced data-processing technology isn't necessary to create an information basedorganisationthe British built just such an organisation in India when 'informationtechnology' meant the quill pen and barefoot runners were the telecommunicationssystem.

(Peter Drucker, 'The coming of the new organisation', Harvard Business Review,Jan/Feb. 1988)

What Drucker is highlighting is the fact that information has always been available - itjust took longer and required more staff to process it in the past. The availability ofinformation in itself is not the objective, it is simply a tool to assist managers withdecision making and should always remain a servant rather than the master of anorganisation.

The trap is that managers can easily become the servants of information. Managers whobecome dependent on information are described well by Robert Heller:

"Managers are to information as alcoholics are to booze. They consume enormousamounts, constantly crave more, but have difficulty in digesting their existing intake".

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Management Information NeedsThere are three types of information that managers need:

1. Strategic Information2. Tactical Information3. Operational Information

1. Strategic InformationStrategic Information is used to assist managers, usually senior managers, in makingmajor decisions, usually one-off, which influence the future direction and strategy oftheir organisation or company. These decisions require information that will assist

managers to follow trends and developments that may impact on the futureopportunities or even the very survival of the organisation or company. Much of theraw data used in Strategic Information Systems is from external sources includinglocal and national government, or non government organisations (NGOs).

In recent years many organisations have developed Strategic ManagementInformation Systems (SMIS) which provide useful information in relation to trendsand emerging opportunities and threats relevant to the organisation.

Examples of areas in which Strategic Information may be useful for example inindustry, includes decisions in relation to:

Whether to establish a new factory? What new product lines should be introduced? How should the organisation restructure? Whether to take over a competitor? Should a price war be started? Where to outsource the delivery of product?

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The diagram below, based on private sector business is equally valid for public sectororganisations.

It identifies the key factors that must be considered in any strategic decision makingincluding:

The Company/Organisation itself - information in relation to its capability in relationto critical success factors

Competitors - information about their future plans, volume or profit driven, price warpotential/capability, investment program, level of risk taking, market share,organisational structure

Customers - information in relation to segments, trends, service costs, demographicsEconomic and Political Environment - information on Gross National Product,Inflation, Trade Deficit, Interest Rates, Tariff Levels, Trade Agreements, RawMaterials availability and prices

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2. Tactical InformationTactical information is normally targeted at providing middle managers withinformation to assist them in tactical decision making. The information source can

be either external or internal and is used to develop new tactics to deal with tacticalissues like fluctuating demand patterns, meeting peak capacity periods.

Examples of areas in which Tactical Information is useful includes decisions inrelation to:Changing the marketing programIncreasing the flexibility of working hoursExtending plant operating hours

3. Operational InformationOperational Information provides detail about the 'nuts and bolts' areas ofoperations. The source of the information is usually internal and it is used bymanagers in day to day decisions affecting the operations of their department orsection. Operational information is required in relation to resource usage, staffinglevels, inventory levels, problems, complaints.

Examples of areas in which Operational Information is useful includes decisions inrelation to:

How many extra staff are required in peak periods of activity? What can be done to improve productivity?

How can power use be reduced?

Whether the information is Strategic, Tactical or Operational to be useful it needs to be:

Timely Accurate Useful Accessible

In addition to the above basic requirements of any information system other

considerations in relation to developing a good information system include:

Understanding the type of decisions the information will provide input to Which is the best source of the information - external and/or internal? How often is the information required?

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Type of decision Information system(s) Utilised Source (internal/external/both)

Strategic

Tactical

Operational

ACTIVITY - Decision Making InformationIn the table below identify an example of Strategic, Tactical and Operationaldecisions you make at work and the main information system(s) used to assist indecision making. In addition, indicate whether the source is internal, external or acombination of both.

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Determining the information needs of usersSupply DrivenIn many organisations managers and other staff requiring information are provided withthe information in a format determined by the supplier of the information. This 'supplydriven' method of developing information systems assumes the needs of the users whenin fact the information may only meet some, if any of the user's needs. The 'supplydriven' information may also lack the basic requirements of a good information system- timeliness, accuracy, usefulness, easy accessibility.

Complex computer based Management Information Systems are often sold (at greatexpense) to organisations based on the claim that they meet all the information needsof organisations. There are very few organisations that have identical information

requirements to others, and even within an organisation the needs of each departmentand individuals varies. Unless an 'off the shelf' system has the capability of beingsignificantly customised it is likely to prove to be a poor purchase decision.

Managers who are subject to 'supply driven' information systems often complain that:

They receive too much information Information is not tailor-made to their individual needs Information is not presented in the most suitable form for them Information is not provided when it is needed.

Demand DrivenSuccessful organisations are very likely to have a secret weapon - Demand DrivenInformation Systems. Organisations that recognise the need for users to determine theirinformation needs are likely to have more efficient and effective staff who do not sufferfrom stress and information overload.

Demand driven information systems are developed or selected by initially identifyingthe information needs of individuals, sections and departments and the most effective

and efficient information system - manual or computerised - that will satisfy the needs.Often a simple manual system will meet the user's needs much more effectively andefficiently than a sophisticated and expensive computer system.

Demand driven information systems are developed on the basis of what is possiblerather than what is available. This approach can result in significant productivityimprovements by providing information previously unavailable to support a managers'gut feeling' about a particular process or activity.

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An effective way of developing a good demand driven information system is by using aDecision-Making Analysis Technique (DMAT). This system requires a manager todetermine, as much as possible, the future decisions he/she will be required to make.The information required is determined by the decisions to be made. The raw datarequired is then established based on the information required.

A commonly used DMAT system is the Critical Success Factor Method. This methodidentifies the critical factors required for the organisation, departments, teams andpossibly individuals to achieve success. The process usually involves several meetingsbetween the provider of information and the user:

Session 1 - Managers goals and underlying critical success factors identified

Session 2 - Review goals and critical success factors identified in Session 1 andtable possible measures and report formats.

Session 3 - Finalise possible measure, report formats, frequency and comparewith existing reports received by the manager, make necessaryadjustment.

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ACTIVITY - Determining the information needs of users1. Identify a major workplace decision that you were required to make in the

last month:

__________________________________________________________________

__________________________________________________________________

__________________________________________________________________

2. Write down all the information you needed to make the decision:

__________________________________________________________________

__________________________________________________________________

__________________________________________________________________

3. How important was the information you obtained in making your decision?

__________________________________________________________________

__________________________________________________________________

__________________________________________________________________

4. What information systems did you use in making your decision?

____________________________________________________________________________________________________________________________________

__________________________________________________________________

5. Is the current information system you use Demand or Supply Driven?

__________________________________________________________________

__________________________________________________________________

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Misuse of InformationOften information received to assist with decision making can provide a distortedpicture of the factors influencing a decision of managers. Over reliance oninformation can result in managers expecting the information will provide answersfor the required decision.

For example, a manager looking for ways to improve productivity on a roaddevelopment infrastructure project may obtain information that provides data onprogress per day. The information may indicate that the progress in one part of theroad project is 20% below the average for the other areas. Further research mayindicate that there are three Ministry staff regularly assigned to this one area.

From the information the manager may make a decision that the three staff shouldbe replaced to improve productivity - hopefully by 20%.

The manager may have failed to obtain sufficient information that indicated thatregular preventative maintenance was conducted Thursday night and often themaintenance staff were failing to complete the maintenance on time, resulting inthe Friday shift starting work up to 2 hours late.

It is important that information is verified and backed up. In this case theinformation provided enough detail to identify where and when a productivityproblem existed but further information was required to determine the cause of theproblem rather that assuming it was the staff. Different information needs to beobtained as managers 'drill down' to the root cause of a problem rather than

making decisions based on initial information and assumptions - it is important toseparate the person(s) from the problem or risk significant declines in staff moraleand subsequently, productivity.

On occasions, in many workplaces, information can be misused by unethicalmanagers and staff to influence or persuade a decision to be made in a particulardirection. The withholding or distortion of information is one of the key factors inunethical business behaviour. As a manager you need to be aware of the everpresent risk of unethical behaviour and ensure that the information you receive iscomplete and accurate and if in doubt, seek additional information from alternativesources.

It is important to assess the credibility of the information. The level of credibility willvary from 'highly credible' for official statistics to possibly questionable or stronglybiased for information aimed at promoting a particular cause or project.

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Activity - Unethical use of informationCase StudySopheap is the manager of the finance section at a garment manufacturingcompany in Phnom Penh. His company has just merged with a similar companyin Sihanoukville and as a result there will only be a need for one financemanager for both factories. Rachana is the finance manager of the factory inKandal province and has a national reputation as a leader in financialmanagement. She lectures part time at the National University of Managementand is a board member of the Kampuchea Institute of Certified PublicAccountants & Auditors.

Prior to the merger, Rachanas company had requested that she travel to HongKong for 2 weeks to become familiar with a new financial system and itsapplication in similar garment factories there. In the merger negotiations it was

agreed that the new financial system should still go ahead and that Rachanashould still visit Hong Kong. It was also agreed that Sopheap would act asmanager for both factories until a decision could be made in relation to whowould be the new finance manager for the merged companies

Immediately after Rachana departed to Hong Kong, Sopheap met with thefinance section staff at both factories and indicated that due to the merger therewas only a need for one finance manager and that it was likely that Rachanawould be surplus as a result of the merger. He also indicated that he wouldprotect the employment of finance staff at both factories (this was despiteSopheap being aware of an executive decision to reduce finance staff numbersby 50% following the merger and introduction of the new finance system. Inaddition Sopheap spent time with the managers of each section at both factoriesand played golf with the new CEO, in all instances convincing the managers andCEO that, unfortunately, Rachana was surplus to the new organisation s needs.

When Rachana returned from a very successful visit to Hong Kong, she wasasked to meet with the CEO, only to be told that, unfortunately, she was surplusto the new organisation s needs and would be given assistance in finding a job inanother company.

1. Can you think of a similar situation that you have experienced?2. Provide your views on Sopheap's business ethics.3. How has information been misused by Sopheap in this case study?4. If you were in the position of the managers Sopheap influenced, what

information would you have requested to assist you in making a decision?

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Routine and Non Routine InformationMost decisions made by managers are routine, that is, they are regular daily,weekly, monthly or annual decisions in relation to production, sales, cash flow,

marketing. These decisions require similar information sources and successfulorganisations develop information systems that are readily accessed and provide theexact information requirements for users.

There are many 'one-off' decisions that managers need to make. These are callednon-routine and involve things like purchase of new equipment, replacement,software updates, launch of new initiatives, expansion of facilities etc. Usually theinformation required is not immediately available in the organisation's informationsystems or requires an adjustment of the output from raw data. Managers will needto determine the most reliable and useful source of information to assist in making

non-routine decisions, either from existing data bases or new 'one off' sources.

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ACTIVITY - Routine and Non Routine informationIdentify the routine decisions you make each week_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

What information do you use to assist you in making routine decisions?

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How easy is it to access the routine information?

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Identify the non-routine decisions you have made in the last month

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How useful was the existing information systems to you in making the non-routine decisions?

_____________________________________________________________________

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What additional information sources did you need to identify?

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_____________________________________________________________________

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Unit 2 - Collect, analyse and report informationThis section focuses on the ways that managers can collect information, effectivelyanalyse the information and compile useful and user friendly reports

Section 2 will focus on: Collecting information, that is relevant to user needs, in a timely manner. Accessing information that is presented in a format suitable for analysis,

interpretation and dissemination.

Analysing information to identify and report relevant trends and developmentsin terms of the needs for which it is required.

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Sources of informationThere are a number of sources of information that can be useful to managers in decisionmaking. A number were identified in Section 1. Many of the sources of information areformal but there are also very useful informal sources of information.

The availability and accessibility of information varies between organisations. In someorganisations information is very strictly controlled by senior management and is'trickled down' to staff on a selective and restricted basis. Many successful organisationsadopt a much freer approach and have more open access to, and exchange of,information with the exception of information that is confidential (human resourceinformation), or may effect competitiveness.

Examples of successful companies with open information systems can often be found inthe electronics and information technology industries. In most situations there is open

access to information, except in relation to information about key components orproduction processes that provide the company with a competitive edge.

Formal sources of informationFormal sources of information are available internally and externally to an organisationand relate to information that has been identified as useful to users within theorganisation and incorporated into the official information systems.

Internal formal sources of information include:

Electronic systems Letters Contracts Meeting minutes Memos Financial records Production reports Annual reports Strategic plans Customer surveys Inventory records Asset register

External formal sources of information include: Industry magazines (local, national and international) Non industry magazines with useful information Internet

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Demographic statistics Survey companies Marketing companies Futurologists

Informal sources of informationWhile most information comes from formal sources officially recognised and supportedby the company, there are many informal sources of information that can provide usefulinformation.

Internal informal sources of information include:

Staff room conversations 'Management by walking around' Intranet (could be formalised) Information provided by new staff - particularly from competitor organisations Training workshops

External informal sources of information include:

Family and friends Travel - in country and overseas Social and sports events Mass Media - news, documentaries

Shops - particularly those selling beverages

The diagram on the next page summarises the internal and external informationenvironment

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Internal and External Information Environment

ACTIVITY - Formal and Informal sources of informationList the formal internal sources of information you currently use:

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

List the informal internal sources of information you currently use:

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

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What other formal or informal internal sources of information can you identify that

may assist you?

________________________________________________________________________

________________________________________________________________________________________________________________________________________________

List the formal external sources of information you currently use:

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

List the informal external sources of information you currently use:

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

What other formal or informal external sources of information can you identify that

may assist you and your team with decision making?

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

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Sources and reliability of informationThe previous activity required you to consider the formal and informal, external andinternal sources of information that currently assist you and your team in makingdecisions. In addition you were required to identify other formal and informal sources ofinformation that could assist you in future decision making.

One of the weaknesses of establishing formal sources of information is that managers andstaff become solely reliant on this information in decision making. Often the formalinformation sources were established several years ago and the information may now beonly partly relevant. A number of new sources of information may have becomeavailable and many previously uneconomical sources of information may now beavailable as a result of technological advances (scanners, remote sensors, internet etc). Itis important for managers to continually search for new and better ways of sourcinginformation relevant to the decision making process.

There are also many cases of organisations and managers making decisions based oninformation that, in hind sight, proved to be unreliable. The increased use of the intraand internet increase the risk of using unreliable information that appears, on the surfaceto be valid and reliable.

It is important that as a manager you thoroughly check the source of the information toverify its validity and currency. A useful strategy to reduce the risk of obtaining out ofdate and unreliable information is to obtain information from a variety of sources.

Manual or Electronic Information SystemsThe advances in information technology in the past decade have meant that manyorganisations have moved towards becoming 'paperless offices'. Most organisations stillhave manual as well as electronic information systems.

Many staff, particularly those who have grown up before the 'information technologyage' still prefer to use manual information systems. In many instances they are identifiedas 'dinosaurs' by fellow workers who have adapted easily to the electronic informationsystems.

Both manual and electronic systems have advantages and disadvantages. Considerationssuch as cost, portability, access speed, reliability, accuracy, ease of use must beconsidered before replacing a manual information system with an electronic system.Some organisations that moved from manual systems to electronic ones early in thetechnological revolution found that they had purchased extremely expensive systems thatrequired extensive training, were difficult to use, inflexible, expensive to locate andmaintain and were only available to a limited number of staff due to lack of portability or

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networking. Because of the high initial investment it is often prohibitive to purchaseupdated systems that are much more efficient and effective.

Information source Manual System Electronic System Preferred System Why Preferred

ACTIVITY - Manual or Electronic Information SystemsOn the table below identify three types of information that you require for decisionmaking (you may refer to ones you identified in Section 1). Indicate the manual andelectronic system that can provide you with that information. You also need toindicate the system you prefer to use and why.

ACTIVITY - Checklist for an Electronic Information SystemOn the following page, develop a checklist that you could use to evaluate theusefulness of an Electronic Information System in providing you with informationrequired for effective and efficient decision making.

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Checklist________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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Locating informationMany managers complain about the lack of information provided to assist them inmaking decisions. Often the information is available within the organisation or externallybut managers are unaware of where the information is located or how they can access it.In most cases the manager is unaware of the where and how because of lack ofcommunication and/or effective training. Often highly sophisticated and effectiveelectronic information systems are purchased without consideration of 'selling' thesystem, and its capabilities, to staff or providing training.

Successful organisations ensure that the budget for the purchase of a new ElectronicInformation System includes extensive pre purchase consultation with potential users aswell as post purchase 'selling', training, and support to ensure that all users are aware of,and skilled, in the use of the new system.

Many organisations demand that electronic systems purchased are 'user friendly' to theextent that they require minimum training and are 'idiot proof'.

Recent advances in technology, particularly the intranet and internet have potential toprovide managers with continuous updates of information rather than waiting for daily ormonthly reports before making decisions. Variances can be immediately identified andadjustments made. For non- routine decision making the sources of both internal andexternal information have expanded significantly as providers of information upgrade thecapabilities of their systems and new providers of information emerge.

In the previous section you were required to identify locations currently used to obtaininformation. This may be an example of 'not knowing what you don't know' - that is,there may be many other locations of information that you are currently not aware of . Inaddition, the locations you currently use may have a number of features that you are notaware of, but could very effectively utilise, to improve your decision making capability.

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Expert Information Systems

ACTIVITY - Identifying New Locations and Better Utilisation of ExistingLocationsFind out if there are any new locations that you could utilise to obtain useful

information. In addition find out if there are additional features of the locations youare currently using that could provide you with additional useful information. Recordyour research in the table below.

New Location Useful information available

Existing Location Additional useful information available

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Many organisations are significantly affected when a staff member resigns or retires. Inmany cases the staff member, particularly a long serving one, has accumulated a largeamount of information relevant to them effectively and efficiently performing their jobbut the knowledge of the information is held in their head. Once they leave theinformation leaves with them.

Successful organisations recognise the significant 'invisible resource' contained in theexpertise of each staff member and have strategies in place to record the expertinformation of each individual. This is often incorporated into Standard OperatingProcedures or in a dedicated Expert Information System that can be added to andupdated on a continuous basis. Without such a system a company risks the continualdrain of a high value resource - expertise and experience of its people.

ACTIVITY - Expert Information SystemsIn the table below identify the information in the area you manage that is important

but is currently not in documented form - i.e. 'only in someone's head'. Also indicatethe ideal location for the information and the strategy to record the information in theideal location.Information currentlynot documented Current person (s) whohave the information Ideal location for theinformation Strategy to record theinformation

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The cost of losing informationWhen important information is stored in someone's head the retirement, retrenchmentor resignation of that person can result in a significant cost to an organisation. The lastactivity identified several examples of information that is not documented but insomeone s head. In each example identified there is a potential cost associated with theloss of the information to your Ministry.

ACTIVITY - The cost of losing information

Select, from the last activity, one of the examples of information that is notdocumented. Calculate the potential cost to your Ministry of losing this information ifthe holder of it resigns, retires or is retrenched.

Explain how you arrived at your answer

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Minimising loss of information through SuccessionPlanningAll organisations, including government ministries, have a dynamic human resource

base. Staff are promoted, change jobs and locations within the company, move tocompetitors or other companies, retire or are retrenched when restructuring occurs.Successful organisations minimize the disruption and loss of information when a personshifts from a current job through succession planning, particularly in key areas.

Succession planning is a formal strategy to minimise the disruption and potential cost ofa key person shifting from an existing position. Effective succession plans are integratedinto performance management systems and identify potential replacements for eachperson in a key position. Strategies are developed to ensure that the information andexperience that each key person has is transferred to one or more staff, usually junior,

who have shown the potential to effectively perform the job of the key person. Throughplanned transfer of information and expertise to potential successors the risk of loss ofinformation and the associated costs to the organisation are minimised.

Current succession planning practices are based on developing a learning organisationin which there is flexibility and multi-tasking built into Human Resource ManagementSystems from recruitment through performance management, training and development.

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Current holder of undocumentedinformation Succession plan currently in place Suggested succession plan wherenone exists currently

Activity - Succession planning and Information transferIn the Expert Information Systems activity you identified the current holders on non-

documented information. For each of the people identified indicate the successionplan that is currently in place. If there is none, suggest a possible plan that should beimplemented.

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Barriers to accessing informationIn most organisations there is a large amount of information available but there areoften accessibility barriers. This can be caused by a number of factors including:

lack of sufficient training of all potential users of the information system location of the information level of security unavailability of the 'gate keepers' of the information lack of sufficient computer terminals incompatibility of software systems between departments or plants lack of available catalogue of information systems available within the

organisation and the detail held in each system. lack of awareness of usefulness in job lack of user manual or help menu lack of Standard Operating Procedures (SOP) lack of secure original of manual information lack of borrowing recording system

Possible strategies to eliminate barriers include:

establishing a larger network of computer terminals training programs for potential users help desk user manual/help menu reducing unnecessary security barriers formalising the 'gatekeeper' system and including back up gatekeepers library style borrowing system one to one advice on job application of information

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Existing information barrier Description of barrier Strategy to eliminate barrier

Activity - Information BarriersBased on the barriers identified above or others you are aware of, identify two exampleswhere you experience barriers to easily obtaining information. Describe the barrier andthe strategy to eliminate the barrier. Once you have completed this activity you maywish to continue a similar activity in your department as a workplace improvementstrategy.

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Information researchThe gathering of information requires good research skills to source the most usefulinformation in the easiest, quickest and most cost effective way. Research skills that canassist in obtaining the best information include:

Identifying clearly the objective of obtaining the information Identifying the best sources for obtaining accurate, complete and up to date

information Checking possible other users who may already have similar information Developing an action plan outlining how to obtain the information most efficiently Once the information is obtained and applied, reviewing its usefulness Identifying continuous improvement strategies to further refine the information

gathering process

The sources of information are classified as either primary or secondary sources. Primaryinformation is new information that does not currently exist. Primary information can begathered in a number of ways including direct measurement (units manufactured perminute, cost per module, sales per area, growth per month), questionnaires, face to faceinterviews, direct observation, sampling.

Secondary information is information that already exists either within the organisation orexternally. Secondary information may not be specific enough to provide sufficientinformation for decision making. It often needs to be supported by primary information. Anadvantage is that it is usually readily available and cheap to obtain and may be in a formatsimilar to that required by the user.

Researching for information will include obtaining qualitative and quantitative information,both primary and secondary.

Qualitative data is based on observation or obtaining opinions. It is commonly used inmarketing and its usefulness is largely determined by the skills of the researcher indesigning the information gathering plan to ensure that the information collected is asobjective as possible.

Quantitative data is based on developing techniques to accurately measure the informationrequired and to produce information that is presentable numerically with a high degree ofcertainty. Quantitative information is relatively easy to obtain in relation to technical,financial, scientific, biological and production information. It is less common in the areaswhere people, and their complexity and diversity, in relation to things like opinions, tastes,feelings, experiences, wealth, location, age and cultures, are involved.

A number of statistical tools have been developed in an attempt to convert qualitativeinformation into quantitative information with a reasonable degree of accuracy. Statisticsare referred to in more detail in Unit 4 of this module.

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Unit 3 - Use management information systems.This section focuses on the how managers can select and use a management system in

planning, decision making and performance monitoring and improvement

Section 3 will focus on: The efficient use of management information systems to store and retrieve

decision making information The use of available technology to efficiently and effectively manage

information Developing and submitting recommendations for improvements of the

information system.

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Information System: __________________________________________________Key Feature Performance Score Reas

1 2 3 4 5 6 7 8 9 10AccuracyUseful informationReliable sourcesUp to dateEase of accessUser friendlySecureRegularly updatedGood housekeeping

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Key Feature Implement Strategy

AccuracyUseful information

Reliable sources

Up to date

Ease of access

User friendly

Secure

Regularly updated

Good housekeeping

ACTIVITY - Information system featuresUnless the system is perfect it is likely that you have scored some key features atless than a perfect score of 10. You will also have indicated why you haveallocated that score. This section of the activity requires you to identify possiblestrategies to improve the effectiveness of the system in the key features youidentified as being less than perfect.

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Changing from a manual to an electronic informationsystemIn the previous sections it was indicated that many people, for various reasons,

prefer to use a manual system rather than an electronic system. In many instancesthere is no objective analysis of the features and benefits of each type of system, thedecision to remain with a manual system being based on familiarity, fear oftechnology, insufficient time to retrain, cost etc.

ACTIVITY - Changing from a manual to an electronic informationsystemChoose an information system you use that is currently in manual form(whiteboard, filing cabinet, hand recorded) and rank its key features (you mayhave already done this in a previous the previous activity - Information SystemFeatures). Identify an electronic system that could possibly replace the manualsystem and rank its key features. Indicate your decision in relation to which systemyou would prefer to use in the future. If it is the electronic system suggest strategiesto replace the manual system.

One of the important stages in decision making is consultation. In relation to thisactivity it is important to consult with key stakeholders. You are required to

describe the consultation process used to assist you in making a decision.

Note: The information system you are assessing does not need to be large - itcould be meeting minutes, daily diary etc.

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Manual system auditKey Feature Performance Score Reason for score chosen1 2 3 4 5 6 7 8 9 10

Accuracy

Usefulinformation

Reliablesources

Up to date

Ease of access

User friendly

Secure

Regularlyupdated

Goodhousekeeping

Alternative Electronic System auditKey Feature Performance Score Reason for score chosen1 2 3 4 5 6 7 8 9 10

Accuracy

Usefulinformation

Reliablesources

Up to date

Ease of access

User friendly

Secure

Regularlyupdated

Goodhousekeeping

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ACTIVITY - Changing from a manual to an electronic informationsystem (continued)Strategy to implement electronic information system (if selected)____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________Consultation process used_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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Selecting an Electronic Information SystemIn the previous activity a manual and alternative electronic system were comparedusing the key features required for a good information system. This section focuseson electronic information systems. There are a number of addition features thatneed to be considered in relation to comparison of the suitability of electronicinformation systems including:

Ease of use How easy is the electronic information system to use, particularly for users with

little or no previous computer awareness.Capability Can the system hold all of the information currently required? What additional information is the system capable of holding? What is the capacity to expand the system as needs and amount of information

expand? What is the user capacity of the system? How many terminals will the system

support? How many users can access the system at the same time? Is the configuration compatible with existing systems? What type and how many computers can the system support? Intra and internet capacity and speed ReliabilityConfiguration How many workstations are required and where? How many printers are required? What type? Where? What size and type of screens are required?Output What type of output is required - graphics, text, data?

How often is output required and in what quantity and quality?

Support What training is provided with the system? What help desk support is there? How detailed and useful is the help menu? What is the reputation and history of the supplier?

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Upgrading Are regular upgrades available? Does the system have the capacity to accept upgrades How easy is it to add additional enhancements (scanners etc)Cost What is the purchase cost? What is included in the purchase cost (training, set up etc)? What are the running costs (Power, repairs, upgrades)? What are the costs to expand the system later? What are the costs of ancillary equipment (printers, desks, scanners etc) What are the set up costs (installation, cabling, internet connection etc)

Compare these features with the checklist you developed in Section 2.

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1. Conduct an audit of an existing electronic system you currently useSelection criteria Performance Score Reason for score chosen

1 2 3 4 5 6 7 8 9 10

Ease of useCapabilityConfigurationOutputSupportUpgradesCost

Activity - Selecting an electronic systemBased in the selection criteria identified above EITHER conduct an audit of anexisting electronic information system you currently use OR use the selection

criteria to compare alternative electronic systems that may be available toreplace a manual system or existing electronic system you are currently usingbut would like to replace in the next 12 months. Check with your IT Supportstaff to see what criteria they use.

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2. Compare alternative electronic information systems to replace existing manualor electronic information system (you may wish to copy the tables if there aremore than two systems being compared).System 1Selection criteria Performance Score Reason for score chosen

1 2 3 4 5 6 7 8 9 10


System 2Selection criteria Performance Score Reason for score chosen

1 2 3 4 5 6 7 8 9 10


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ACTIVITY - Selecting an electronic system (continued)1. Replacement system recommendedWhy?________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

2. Provide the trainer with evidence of the selection criteria used by IT supportstaff

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

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Presenting InformationThere are several key considerations in relation to designing the way in whichinformation is presented to ensure that it provides the user with the most 'userfriendly' format. Information may be presented in a number of ways but shouldalways include the following key characteristics:

Layout Positioning on page/screen Major and minor headings Emphasis on key points Easy find indexOrder/Categories By postcode, alphabetic, receipt number, plant, department Straight line or by category - eg A, B, C Customers, Product RangeOutput Computer Screen/Touch Screen Hard Copy (paper) CD rom Computer diskFrequency of updates/Volume Continuous, hourly, daily, weekly, monthly, annual updates Number of printed copies related to number of users - some frequent, others

occasionally.

Utilising new technology higher speed extended terminals portability (mobile phones with internet capability) wireless networking lower cost/greater capability

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Information System: ____________________________________ PresentationCharacteristic Performance Score Reason for score/suggestedchanges

1 2 3 4 5 6 7 8 9 10

Layout

Order/Categories

Output Medium

Frequency ofupdates/volume

Introduction ofNew Technology

ACTIVITY - Presenting InformationSelect an information system you frequently use. Audit the quality of presentationin relation to the above categories by scoring on a scale of 1 (poor) to 10(excellent) and comment on the reason for your score and suggested changes

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Maintaining an Information SystemSome organisations still purchase 'off the shelf' information systems on the basis ofpurchase price. As indicated earlier, there are many factors, in addition to price,that need to be considered in relation to the overall cost of an information system.The benefits the organisation will gain from introducing a new system or updatingor maintaining an existing one need to be considered.

The following ongoing considerations need to be addressed in relation to allinformation systems:

TrainingAs indicated previously, a sophisticated, expensive and potentially very valuableinformation system may fail to meet part or any of its potential unless a training planis included in the initial setup and ongoing upgrading of an information system. The

cost of training can be significant if indirect costs (downtime of staff andreplacement) are included. Systems designed to require minimum training ,although expensive compared to other 'discount' systems may be cheaper in thelong run if they incorporate features that minimise the training required.

SupportSome 'discount' systems are sold by 'fly by night' sales staff and when even a basicquestion requiring clarification is raised the sales staff or other companyrepresentatives are difficult or impossible to contact. Reputable information systemsproviders have dedicated help lines or provide good training to internal IT servicestaff. Support considerations include the speed at which it is possible to accesshelp, either internally or externally. If there are 1000 staff requiring internal IT helpand there is only 1 phone line/support person the information system can grind to ahalt. Similarly, if there are millions of users of a major information systemworldwide and only one contact point with only two or three lines, immediateassistance is unlikely - but you may be able to listen to many tunes!

MaintenanceHow often is maintenance required? How long does it take? When is it done? Forany information system to run efficiently and at full capacity it is necessary to

maintain both the hardware and software. Identifying peak and trough use times isimportant as well as having IT support that is efficient and follows a programmedpreventative maintenance plan.

UpgradesTechnology changes very rapidly and information systems that do not have thecapacity to be upgraded will rapidly become obsolete. Again, discount 'off theshelf' systems may not have capacity or capability for upgrades, or there may be a

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high cost attached to them - a cheap purchase price compared to other systems mayquickly be eliminated when the first upgrade is required.

Where there is a cost of upgrading it is important to include the costs in the originalbudget for the information system otherwise upgrades will be missed and the system

will rapidly fall behind that of competitors who have budgeted and implementedregular upgrades.

SuppliesIn addition to the hardware and software there are a number of consumables thatneed to be included in the budget for an information system, in many instances,with the potential to add significant costs to the budget. Consumables includeprinter paper, printer ink, disks. Many organisations expect that when theyintroduce electronic information systems the usage and costs of consumables willreduce significantly, only to find that the costs remain the same, or often rise due tostaff demanding paper copies of the greater volume of information available.Training and policy guidelines are needed over a period of time to reduce the'natural' requirement of many staff to have everything copied onto paper.

Another consideration is the availability of supplies. Some cheaper systems requiresupplies only available from the original manufacturer, usually at a significantlyhigher cost and more restricted availability than international standard supplies thatare cheaper and usually available immediately from a local distributor.

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Maintenance Factors Performance of existing information systemTraining

Support

Maintenance

Upgrades

Supplies

ACTIVITY - Maintenancea. Identify the information system you are undertaking the maintenance auditon._______________________________________________________________________________________________________________________________________________________________________________________________________________b. Maintenance audit (see below)

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Needs based storage of informationSome information only has a short 'shelf life' and little requirement to store it. Mostinformation however, needs to be stored to provide input to weekly, monthly orannual reports, or for legal reasons. Whether an information system is manual orelectronic it still requires an efficiently planned, organised and maintained storagesystem. The advantage of electronic systems is that the large amount of spacerequired for manual systems has been eliminated. There is however, still a case formanual storage of some information, particularly when it is received in manualform.

There are several key factors that should be included in any information storagesystem including:

AccessibilityMost information required by managers needs to be easily accessed. This requiresthe information to be stored in a way that minimises the time or distance required toaccess it. A manager who relies on information available only on their manager'scomputer will possibly waste time walking to the managers computer, and evenmore time if the manager is unavailable. Manual storage systems are ofteninaccessible outside set opening times, particularly if they are archived files thathave a 'gatekeeper' who is not always readily available.

LogicManual systems are the most likely to be difficult to access if the filing system hasnot been set up in a logical way. Simple alphabetic systems often result in theoption to file information under several different letters. For example sales to acustomer in Siem Reap may be filed under C for Customers, S for Siem Reap, S forSales. Electronic systems can overcome this by providing cross reference capability.Agreed logical systems need to be established on a company wide (or at leastdepartment wide) basis to ensure ease of access.

AccurateIt is possible for decision making information to be stored in several separatelocations. If this is the case not all the required information may be accessed due tothe user not being aware of all the locations of the information. Simple errors,

particularly in a manual system, may compound if they are not identified andcorrected. An example could be where a key error resulted in the sales figures for aparticular area appearing with an extra digit - 100000 units instead of 10000. Whenaccessed for future planning this figure may result is significant problems,particularly if it is an electronic system that automatically programs production andthe error is only a small part of normal production. ( A good system would detectthe error).

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TimeEach time information is retrieved there is a cost based on the number of minutesand possibly hours required by one or more staff to allocate time to informationretrieval rather than some other productive task. Significant opportunities to reducecosts can often be identified in inefficient information retrieval systems where it is

difficult and time consuming to find and retrieve information.

Each of the above requirements of a good information storage system can be metthrough addressing the following questions:

1. What information needs to be stored ?2. What is the most logical way to store the required information?3. Who will need to access the information?4. How often will the stored information need to be accessed?5. How easy will it be to retrieve the information?6. What is the cheapest efficient way to store the information?7. What is the future storage capacity requirement?8. Who needs to know about where and how the information can be accessed?

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Manual storage system:Manual storagerequirement Performance Score Reason for score chosen/suggested changes

1 2 3 4 5 6 7 8 9 10

AccessibilityLogic

Accuracy

Retrieval time

Electronic Storage SystemManual storagerequirement Performance Score Reason for score chosen/suggested changes

1 2 3 4 5 6 7 8 9 10 Accessibility

Logic

Accuracy

Retrieval time

ACTIVITY - Information storage systemsIdentify the manual and electronic storage systems you currently use (refer toSection 1)Manual storage systems:________________________________________________

_____________________________________________________________________

_____________________________________________________________________

Electronic storage systems:______________________________________________

_____________________________________________________________________

_____________________________________________________________________

Select the main manual and electronic storage system and identify how well itaddresses the key requirements of a good storage system. For both the manualand electronic system chosen, identify changes that can be made to improve thecurrent system.

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Security of InformationThe value of information as a critical resource is often overlooked by organisations.Information systems and the storage associated with them represent significantinvestment which, if lost or stolen, could result in the failure of the organisation. Inearlier sections information was identified as the competitive edge of manysuccessful companies. The loss of information could result in the immediate loss ofthat competitive edge.

As with other resources, risk analysis, of the potential loss of information, should beundertaken by all companies. Good managers ensure that the analysis is undertakenand a risk minimisation plan implemented to ensure that the risk off loss isminimised or possibly eliminated.

The high levels of competitiveness in many industries has resulted in increasingindustrial espionage and sabotage. Recent world events have increased thelikelihood of electronic or direct terrorist attacks on key information storage systemsas a way of crippling companies or governments.

There are a number of threats to the security of information systems including:

Theft Sabotage Computer Virus Natural Disasters - Fire, flood, dust storm, cyclone Power surge or failure Programming errors System breakdown

There are several strategies that can be implemented to reduce the risk ofinformation loss due to one or more of the above factors including:

Physically securing manual or electronic information systems - monitoringsystems, locks of the system or room access, limited user access

Password access in electronic information systems and in storage locationsfor manual systems

Virus checking - at least daily with latest virus software

Back up - preferably in different location to the original stored information Security Policy and Procedures

As the methods used to penetrate security systems become more sophisticatedorganisations need to constantly update security. There is however the risk thatincreased security measures may result in reduced accessibility and availability ofinformation to genuine users. In designing effective security systems the objective isto achieve maximum security with minimum disruption to the users.

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GROUP ACTIVITY - Security AuditIn one or more groups undertake an information systems security audit for yourdepartment. The makeup of the groups will be determined in the workshop.

You are required to present a report that includes the following:A. The current security system in your department?

B. The information that is least secure in your department

C. Recommended strategies to improve security whilst minimising theinconvenience to users

D. Information that is low risk in relation to loss but is currently 'over secured'

E. Recommended strategies to reduce the security level for low risk informationwithout compromising the overall information system security.

Note: Due to the level of confidentiality this activity involves the final report to thetrainer requiring internal clearance from our Ministry and editing prior topresentation (a good example of a security consideration that could easily breachMinistry policy in relation to security of information).

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Unit 4 - Prepare plans/budgetsThis section focuses on the value gained from managers having the skills to effectivelyplan, implement and monitor budgets.

Section 4 will focus on: The involvement of managers and teams in planning and budget preparation and

the resultant benefits

The preparation and presentation of budgets in accordance with the requirementsof your Ministry

The development of contingency plans when there are variances betweenplanned and actual budgets.

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The manager's role in budget planningThe lack of planning is one of the key factors contributing to organisational failure.Budgets provide managers with a systematic framework in which to operate thebusiness or organisation.

A budget can be defined in monetary or non monetary terms as the means by whichan organisation plans to achieve its goals and objectives. These goals may be longterm or short term. To meet the long term goals it is necessary to develop short-termstrategies that are incorporated into annual budgets. A budget is not simply a meansof limiting expenditure or checking staff performance. It is a tool for planning andcontrolling the effective and efficient use of resources to ensure the daily activities ofeach department are contributing to the organisation's long term goals.

The development of an annual budget should be based on the organisation's Mission

Plan, Strategic Plan and Integrated Work Plan (IWP). Whilst the Mission Plan sets outthe long term (Up to 15 years) reason for the organisations existence, the Strategicplan sets the long-term policies and objectives (up to 5 years) and outlines broadstrategies for achieving the objectives. Objectives can include risk reduction, growth,community and environmental initiatives. The Integrated Work Plan has a focus of 1year and focuses on short term objectives, financial needs, operational policies andmedium term investment programs.

Budgets are the annual operational plans that are designed to achieve the strategicobjectives and include details of marketing, production, labour requirements, costs,profit.

The development of good budget plans provides a key performance reporting system.Responsibility reporting is often used in relation to budgets to provide performancereports in relation to the manager and teams of specific areas.

Budgets provide a number of benefits including: Planning identifying goals and strategies to achieve them. The development of

budgets provides an opportunity to consider and evaluate alternative approaches,make decisions and action them

Coordination Budgets allow the plans of the different sections of a business to bedeveloped in a coherent way with consideration for the other sections and overallbusiness.

Communicating A budget provides a clear source of information that can beused to inform staff of goals and activities and the role of each person anddepartment in achieving the organisational goals.

Motivation a budget provides staff with clear targets and the pathway to achieve

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them, particularly where they have been involved in pre-budget consultation. Staffcan think about their future and that of their department and the organisation.

Control Feedback through budget reports provides a way of continuouslyevaluating the actual outcomes in relation to the goals and objectives. Themonitoring of budgets provides the opportunity to identify problems and take

corrective action immediately.

Many successful organisations involve staff in the development of budgets, whilstothers determine budgets at senior management level. There are two mainapproaches to setting budgets:

Top Down senior management decides what the budgeted expenditure will be forthe next budget period and lower management are expected to set their budgets toachieve the targets set by senior management. This often allows for little staffparticipation and the possibility of unrealistic budget targets, resulting indeteriorations of staff morale.

Bottom Up individual budgets are set by the people responsible for achievingresults in their departments or areas. The budgets are consolidated into an overallbudget which is then reviewed by senior management.

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This approach can provide a greater opportunity for involvement by staff at all levelsprovided that managers are willing to invest the time in gaining input from staff.

There is a risk that staff involvement may result in budget padding. Staff mayoverestimate budget requirements, believing that costs will be cut.

Managers who involve staff in the planning of budgets will gain several benefits fortheir team and the organisation including:

Improved planning not necessarily more efficient time wise but moreeffective

Better understanding by staff of organisational goals Greater acceptance by staff of organsiational goals Stronger commitment by staff to achieving these goals.

There are several ways in which budgets are set including:

1. Incremental adding or subtracting a percentage from last year's budget2. Estimates this requires a `guess' at what expenses and revenue are

expected and required for the next year it does not rely on anydisciplined approach based on the strategies identified in this unit andapplied by successful organisations.

3. Zero based budgeting each budget is prepared from a zero base. Itrequires departments to develop the most efficient budget to achieveidentified targets and justify it.

4. Comprehensive budget this budget development strategy depends oneach department developing a budget that is then incorporated into theoverall budget for the organisation. The individual budgets are establishedalong broadly set guidelines (similar to the bottom up approach) and thecombining of similarly established budgets from different departments iscalled goal congruence.

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ACTIVITY - Budget PlanningWhich of the top down and bottom up methods of setting budgets is used in yourMinistry?______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

How much opportunity do (a)you and (b)your staff have in contributing to thebudget process______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

Which of the following methods of setting budgets is used in your Minstry and/ordepartment Incremental, Estimating, Zero Based, Comprehensive?______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

Identify the advantages of the budget planning strategy used

______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

Indicate any shortcomings of the budget planning strategy used.

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

Identify ways in which you can help improve the budget planning process

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

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Budget Flexed Budget Actual Variance

4000m2 5000m2 5000m2

Riel Riel Riel Riel

Paint 40000 50000 47040 2960

Labour 15000 18750 20160 (1410)Supplies 6200 7750 7720 30

Electricity 1900 2375 2280 95

Gas 700 875 820 55

Water 500 625 580 45

Salaries 1600 1600 1600 -

Total 65900 81975 80200 1775

Determining and implementing appropriate actionThe first consideration in relation to variance is to determine whether the variance isworth investigation on a `cost benefit' basis. This may be determined in several ways:

1. The size of the variance for example a minimum of 20,000R may be set this may vary between companies depending on size (although lots of smallvariances may add up to a significant figure)

2. Percentage variation. An organisation may set a variance of 5% or over asrequiring explanation and adjustment

3. Frequency of variation. A one off may not warrant investigation but should bemonitored for frequency and if it occurs again, the variance should beinvestigated.

4. The cost of investigating and remedying. Some variances may cost more ininvestigation and remedying than the benefits to be gained

Strategies to improve the corrective action stageThere are several strategies that can be used to improve the corrective action stageonce variances have been identified including:

1. Ensure that the assumptions, figures and calculations are accurate and

correctly recorded2. The use of performance reports contributes to developing a culture ofcontinuous improvement in the organisation, particularly where the variancedata is presented in a user friendly manner

3. Regular evaluation and improvement meetings can be held to analyse: The causes of the variances Implementing corrective action Progress of previous corrective action

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Expenses Budget Actual Variance Reasons Corrective ActionMaterials

Labour

Supplies

Fuels

Depreciation

Insurance

Rent

Phone

Postage

Other

NB: Some expenses may not be relevant to your department. Feel free to change or add expenses inthe empty rows to refle

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