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Home » Articles » Reporting Solutions » How Good are Your Information Systems?

How good are your information systems?

The knowledge revolution is here. Businesses are in a transition, a transition from product oriented to more knowledge focused. The assets that today's organizations have are the wealth of knowledge represented by their people, innovation and superior processes. The rapidly changing business landscape is keeping executives on their toes demanding smart decision making to steer their organizations. Organizations have invested large resources to establish data collection, processing and reporting systems to provide business leaders with insights into their businesses and assist decision making.

Information Systems and their evolution

Information system is a framework for collecting, processing and sharing data by converting them into invaluable information. It comprises of Hardware, Software, Networks, Data and Business Logic and includes manual or automatic processing of data. The concept of financial information systems can be traced back to the evolution of electronic processing in the 50's and 60's and the need for information support for business functions. The need for decision support systems (DSS) and strategic support systems (ESS, TPS etc) during the late 80's help rapid development in the field of Information Systems. In the 90's with increased pace of information technology growth Financial information systems have closely integrated with business and have become an integral part of business function today.

Types of Information Systems

  • Office Information Systems: An OIS uses machines, software and a network to improve communication between employees. It also helps file sharing, messaging and other such productivity tools to enhance workflow.
    • Transaction processing Systems: A TPS manages financial and business transactions. Some of the tasks are like registration, orders, payroll and other such day to day actions.
  • Financial information systems: MIS evolved from Transaction processing systems and is a tool for managers to get information for decision making. It takes internal processing data and converts them into reports for various levels of management.
  • Decision Support System: DSS is a system used by decision makers to arrive at the best alternative when a situation arises. It comprises of tools and techniques to gather relevant information, analysis and provide the best alternative available. Decision support system handles huge data processing and provides answers through "what-if" scenarios.
  • Expert Systems - A system which can simulate human decision making scenarios with the help of a knowledge database and logical reasoning module.
  • Knowledge Management Systems - These systems exist to create and share knowledge. Using a collaboration tool, Knowledge Management Systems capture knowledge available with employees and share it across the organization to save learning cost, achieve co-ordination between teams and competitive advantage. This system has advanced categorization and indexing functionalities and also accepts and disseminates information in various formats.
  • Executive Support System - An ESS is designed to help senior management make strategic decisions. It gathers analyses and summarizes the key internal and external information, designs Key Performance Indicators and presents them as Dashboards. Mostly for senior management, this helps them to track the constant progress of various entities of business.

A Case Study

Banks require merchants to receive an authorization before accepting a card for purchase. Banks lose millions by allowing credit which should be declined, whereas denying genuine requests results in a loss of credibility with their customers and merchants. Authentication processing requests are handled by an automated system which using algorithms track spending patterns and return authorization. A small percentage of these requests are handled manually with very short turn around times. Each agent had to look up with almost 12-15 databases to get the relevant information. The bank decided to install an Expert System to assist these agents. Expert Systems are Information Systems that support professionals in their work. The system uses 800 simulations of decision making of experienced credit agents thus reducing 80% of the time spent by agents on authorization. A classic example of how Information Systems can streamline processes with efficiency and better accuracy.

Information Systems and Organizations

Information systems help organizations solve business problems like automating manual functions, manage knowledge, manage customer relationships and better decision making. Companies have invested enormous amounts into their financial information systems and as a result executives have access to massive data, and sometimes more than they require. Information systems, intended to give a competitive advantage have transformed into cost centers in most situations.

Efficiency of Information Systems

A financial information system traditionally compiles and provides reports for various stakeholders of your business but unfortunately these systems do not give enough insights to the management. Internal financial reporting, in fact can be controlled and formatted according to the needs of the organization. The metrics for performance can be decided completely by the executives based on the organizational needs. The real benefits of a Financial Information System can be only realized when stakeholders can get their needs satisfied. Executives look for performance indicators from financial data, where as middle level managers look at cash flow, sales and costs. Other professionals may use the system for just inputting and daily transactions. A good system should be able to fulfill all these needs through collaboration, excellent reporting and with ease to use.

Outsourcing Information Systems

Many organizations have shifted their business strategy from diversification to focusing on their core strengths. Business leaders realize that the only sustainable competitive advantage is what you do well and do it better. The focus on core services demanded moving peripheral and non core activities to a vendor who has economies of scale and expertise to manage their financial information systems. The biggest benefits of partnering with an outsourced company are access to the best technology and experienced manpower. Outsourcing also helps in distributing investment into core business strengths, reducing fixed costs of demand peaks and a great accountability with SLA's (Service Level Agreements). T&A has experience and technology to support you in your outsourcing needs. We as your business partners adhere to the systems you follow to spearhead your business into its deserving ranks.