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THE ROLE OF INFORMATION SYSTEMS IN PERFORMANCE MANAGEMENT Information systems more generally were covered in detail in Module 2. This module discusses information systems from the perspective of performance management. Balanced scorecard {or similar] performance management systems collate and report information about customers, suppliers, employees and business processes to supplement nancial performance measures. Therefore, organisations need to capture information from their marketing, purchasing, production. distribution and HR activities. Information about key factors such as customer satisfaction, cycle times. quality, waste and ontirne delivery need to be part of an information system. Data collection in many organisations takes place as a by-product of transaction recording through computer systems. For example, retailers make extensive use of electronic point of sale {BF-US] technology, including barco-de scanning to price goods, printing a cash register listing for the customer. reducing inventory. and calculating and reporting prot margins. Taking advantage of new technologies can improve productivity and reduce the ratio of staff to sales value, a common performance measure in retailing. The outputs from EPUS include busineSs volumefor ertar'nple, number of customers, number of items soldsales analysis, product protability and inventory reorder requirements. Sales and prof itability reporting can be generated by store and time of day. Additional benets of EPCIS include information about: . peak sales times during each day * products that may need to be discounted - sales locations that may need to be expanded . time taken to scan a customer's basket of goods. Even small businesses like restaurants can take advantage of modern PEI-S terminals that are relatively inexpensive, enabling them to monitor customer seating by time of day and day of week, generate orders for the kitchen. price goods and calculate bills. and provide detailed management reporting on inventory and sales trends. This information can be used for management accounting purposes to improve inventory management, reduce wastage, enable staff rostering to the busiest times and identify the most protable products. For larger organisations, an enterprise resource planning {ERPi system helps to integrate data flow and access to information over the whole range of a company's activities. Examples of these systems are the relational databases provided by SAP and Gracie. ERP systems take a whole-ofbusiness approach. They typically capture transaction data for accounting purposes, together with operational data and customer and supplier data. which are then made available through data warehouses from which customdesigned reports can be produced. ERP system data can be used to update performance measures in a BSC and can also be used for: * activity-based costing . shareholder value - strategic planning . customer relationship management * supply chain management. Cloud computing has enabled access to larger sources of data and made it easier to analyse data from any location. It relies on sharing resources through the internet to achieve economies of scale. 1|Iilr'ith cloud computing. end users access applications through the internet. with both software and data stored on servers at remote locations. Large volumes of information are now available from public sources. The term 'big data' refers to very large and complex data sets. which can be seen in the massive data resources of the intemet and the results provided by search engines such as Google or data held on Facebook. Organisations are able to access (for a fee} this information to enable targeted marketing. According to management consultants l'vchinsey. big data will become a key basis of competition, underpinning new waves of productivity growth and innovation {McKinsey Global Institute EDIE}. The Australian Taxation Ofce accesses multiple sources of data to identify potential targets for tax audits based on spending patterns. Retail stores such as Woolworths [ as mentioned previously} target customers for special promotions based on their individual spending habits recorded through its 'Everyday Rewards' card system. which collects data on customer purchases at the P03. The ability to collect vast amounts of performance information means that it is important but increasingly complex to report management information in a concise and decision-useful way. Approaches to reporting management information include graphical presentation of key performance data. As mentioned, trafc lights {redfamberfgreenl draw attention to those aspects of performance that: . are meeting their target {green} ' are in need of urgent attention [red] . need to he considered because they are borderline {amber}. A *drill-down' facility may also be used to cascade down from highly aggregated performance data to a more specic and detailed levelfor example. customer. product or service. or business unit. Organisations need to determine what performance information is important from the volume and variety of information that is ncnv available. Big data requires specialist computing power and software tools as the volume and variety of data is beyond the capability of relational databases. Examples of such specialist software include lIZeracle's 'Big data appliance' and *Hadoop', which is an opensource platform for consolidating. combining and transforming large data volumes. Linking platforms to analyse big data and the organisation's own relational database provides what l[eracle refers to as a '36tllsdcgree view' of the organisation