1. Business and IS Performance (IS 6010) MBS BIS 2010 / 2011 30 th September 2010 Fergal Carton (f.carton@ucc.ie) Accounting Finance and Information Systems

2. Last week Course objective –Organisational goals, goal setting, driving performance –Using information systems for performance control Study of organisational performance not new –How to co-ordinate activities across different functions –What information to provide managers about those activities –Standardisation, centralisation and specialisation of skills –Uncertainty and information processing Managers not concerned with technical constraints (seen as IS problem) Assessments –In class assessment based on case studied in class –Cases suggested by class (eg. Google, Unilever, EMC,...)

3. This week Organisational goals Soft versus hard goals Types of data Example of organisational metrics – UCC An integration framework Class exercise

4. Breakdown between terms Term 2 objectives (Derry Cotter) –Reading financial statements –Understanding financial performance Assessments –Breakdown between two terms to be decided –Exam divided between terms 1 and 2 (eg. 3 questions each)

5. Business and IS performance Definition of organisational goals and conflict across functions The influence of shareholder priorities on goal setting How are organisational goals translated into reality? Use of Key Performance Indicators (KPI’s) and constraints Setting budgets for expenditure and targets for income Understanding the different types of performance information Data collection constraints influence performance measures Integration and the challenge for real-time reporting The role of business intelligence tools in reporting Understanding the limitations of control systems

6. Organisational goals Sales and marketing Order processing Production planning Warehouse management Manufacturing Distribution / logistics Customer Service Accounting and Finance Information Systems Human resources

7. Goals constrained by time and cost Sales Revenue target achievement within budget Order processingBooked orders within sales period Production planningMinimise inventory levels but avoid stock outs Warehouse mgtRight product available at right time and right place ManufacturingFulfil production schedule with available resources Distribution / logisticsDeliver on time / complete with available resources Customer ServiceCustomer repairs, and on site service within budget Accounting /FinanceRevenue targets within expenditure limits Information SystemsApplication and server uptime with resources Human resourcesAdequate resources available with right skills

8. Soft versus hard goals Performance goals are soft (flexible) –“Stretch” goals –Eg. revenue to increase by 5% (target) –Unpredictability of demand creates uncertainty –Target gets “harder” when promised to markets Control systems requires hard data –Sales orders drive revenue reporting –If actual orders recorded have increased by 4.5% Is the goal missed or achieved?

9. Bail out of Anglo Irish How much is required? –4 billion –29 billion –34 billion Uncertainty arises from demand –Value of commercial property plummeting Is this information hard or soft? –What is hard data based on? –What is the agenda behind the reporting?

10. Types of data 1 Volume data (production) consumption data (raw material, packaging…) personnel data maintenance data time related measurements productivity data … All form the basis of the calculations used to monitor manufacturing activities

11. Type of data 2 Primary data: –taken straight from the floor (input and output) –e.g. production, consumption, labour, maintenance –ad-hoc reports - e.g. accidents, defects Secondary data or calculated data: –allocated costs –productivity –pay bonuses –variances High level data: –investigations of variances –soft information about staff morale etc...

12. Type of data: soft information Data collection - –Grapevine –factory tours (talking and observing) Data storage - –managers’ minds –special reports Data usage: –ad-hoc basis –decision making

14. Student Dashboard

15. An integration framework

16. In class exercise Pick a business idea Describe customer requirements How can these requirements be met? What performance criteria will be applied –Financial –Operational What type of control system will be used?