Impact of Information and Communication Technology (ICT) on financial management practices

Explain the nature of decision support system.(DSS) A DSS is a set of related computer programs and the data required to assist with analysis and decision-making within an organization. DSS provides information to managers who must make judgements about particular situations and vitally supports decision-makers in situations that are not well structured. Each of these unstructured decisions are non- recurring by nature and are most difficult decisions to make, e.g. When a Financial Manager want to assess the most profitable project to finance given options amongst several projects that a firm would want to venture into, e.g, exploring a new mining site vs expanding into an existing.

Nature of decision support system.(DSS) Cont.. In Strategic Financial Management DSS would help Management to score and Prioritize Investments. E.G, a DSS generate information from Transactional systems and from the outside e.g. market interest rates, excess cash from operations and then help on the type of market to invest based on the excess cash available and risk of investments A DSS can range from being a system to answer simple queries that allow a subsequent decision to be made, to a system that provides detailed querying across a spectrum of related datasets. More complicated systems directly ‘answer’ questions as opposed to providing static information, in particular high level ‘what-if’ scenario modelling, e.g... In Banking rating credit worthiness to new clients based on their lifestyle

2. Identify decision support models and software used in financial management practice. Models in Financial Management: Break-even analysis - DSS used to determine when your business will be able to cover all its expenses and begin to make a profit. (Apache Open office, Excel) Cost-benefit analysis – DSS used for assessing the monetary social costs and benefits of a capital investment project over a given time period. ( Excel, Oracle Hyperion, Microsoft Dynamics) Financial budgeting - DSS used to plan details projections on incomes and expenses on a long-term and short-term basis(SAP Business Planning and Consolidation (BPC), SAGE 1000) Return on investment – DSS used to evaluate performance of an Investment (e.g TGI ROI Calculator) Price determination – DSS used to determine market price of a product based on market forces (SalesForce.com)

3. Explain application packages in financial management. Application packages in Financial Management are software programs that are used to capture, process, manipulate and report Financial Information. They are used to Analyze Financial performance, Provides Dashboards that can help Management to make adhoc decisions pertaining financial operations, tactical and strategic. These may include, Stand alone packages like, Pastel 2009, 10, 11, 14, Or ERP Systems like SAP, Oracle EBS, Sage 1000,

4.Explain some of the applications relying on decision support system and relevance to financial management. ERP - Consolidates all the functional areas financials and use that to allocate financial resources based on the departments. RISK based Applications – Used to automate risk calculations in investments, new projects SAP Business Planning and Consolidation (BPC) – Used for budgeting and controlling within an organization SAP Strategy Management – Used to prioritize projects based on Corporate level strategy to ensure customer needs are met on time

Benefits, wide variety, 24/7 buying, Define some relevant information and communication technology terminology relevant to financial management.- E- commerce, Electronic Data Interchange (EDI)- costs and benefits, Electronic Funds Transfer (EFT), Financial Electronic Data Interchange (FEDI), Internet, Intranets and extranets, E-Banking, E-Commerce: It is trading in products or services using computer networks such as the internet. Benefits, wide variety, 24/7 buying, Electronic Data Interchange: The computer to computer exchange of business documents in a standard electronic format between business partners. Cost and benefits include Speed Accuracy JIT Cash flow management Electronic Funds Transfer (EFT): It is an electronic transfer of money from one account to another. It uses computer systems to move funds without the need for paper documents. 24/7, less risky

Cont…. Financial Electronic Data Interchange: It is the electronic transmission of payments and payment related information in standard formats between companies and or their banks. FEDI includes electronic formats for invoices, payment initiation and remittance information processed through a financial institution

FEDI illustration….

Cont….. Internet: It is a global net work of computers which may be server or client that exchanges information. Intranets and Extranets: Intranet is a private network accessed by members with an organisation or a company. An example is Chinhoyi University Student Portal. Extranet is a private network that can be partially accessed by users outside the organisation to enable exchange of information in a secure way. Both use the internet.

Cont…… E-Banking: Also known as online banking. It is an electronic payment system that enables customers of a financial institution to conduct financial transactions on a website operated by the institution, such as retail bank, virtual bank, credit union or building society.

6.Financial reporting in an ICT environment In an IT environment as transactions are Captured, the Journal, Ledgers, the relevant books of original entry are automatically generated as information is being captured once the take on balances and various accounts set in the accounting system. The generation of Financial reports is automatic: Balance sheet, Cash flow statements, Trading, Profit and loss account, Business Intelligence Systems Help generate Adhoc reports for Executives, Dashboards for analysis are also generated on demand which help management to make quick decisions.

References Chaffey, D. (2009), E-Business and Management E-Commerce, Strategy, Implementation and Practice, Prentice Hall, UK. Loshin, P. & Vacca, J., 2009. Electronic Commerce, Scheneider. G. (2011). Electronic Commerce, Course Technology, Cengage Learning, US https://dvithal77.wordpress.com/2011/01/17/n ature-of-decision-support-system-dss- structured-decisions/ http://searchfinancialapplications.techtarget.com /definition/cost-benefit-analysis-software