Data and analytics for performance - MIS/ERP and information...

Learning Outcomes

After reading this article, you will be able to explain the functions of Management Information Systems (MIS), Enterprise Resource Planning systems (ERP), and information flows as they relate to organisational control. You will be able to differentiate MIS and ERP, describe the qualities of good management information, outline how information systems support decision-making and control, and understand the main risks and control procedures in information flows.

ACCA Performance Management (PM) Syllabus

For ACCA Performance Management (PM), you are required to understand how modern information systems and analytics support performance measurement and control. This area includes:

• The role and main characteristics of Management Information Systems (MIS) in organisations
• The objectives and features of Enterprise Resource Planning (ERP) systems
• The importance and features of effective information flows in performance management
• The requirements and qualities of good management information for control purposes
• The use of MIS/ERP to support planning, control, and decision-making
• Controls and procedures for securing information flows and supporting data integrity in MIS/ERP

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. Which term describes a system that collects, processes, and reports data across various departments to provide integrated, real-time information for the whole business?
   1. Management Information System (MIS)
   2. Enterprise Resource Planning system (ERP)
   3. Executive Information System (EIS)
   4. Transaction Processing System (TPS)
2. Which TWO are qualities of good management information required for organisational control?
   1. Accurate
   2. Delayed
   3. Cost-effective
   4. Irrelevant
3. What is the primary purpose of feedforward control using information flows in a business?
   1. To react to historical results
   2. To increase the volume of information
   3. To allow action to be taken before adverse results occur
   4. To ensure only senior managers have data access

4. Briefly explain why access control is essential in MIS and ERP environments.

Introduction

Modern businesses depend on efficient, secure, and timely information flows to plan, control, and measure performance. Management Information Systems (MIS) and Enterprise Resource Planning (ERP) systems are at the centre of these processes. Effective information flows ensure that relevant managers receive accurate data on time to identify performance issues, support decision-making, and implement controls across the organisation. Understanding the structure and control mechanisms of these systems is essential for effective performance management.

Key Term: Management Information System (MIS)
A computer-based system that processes data into meaningful reports to assist managers in planning, control, and decision-making in their areas of responsibility.

Key Term: Enterprise Resource Planning (ERP)
An integrated software platform that manages data and processes across all main functional areas of a business—such as finance, supply chain, HR, and sales—in real time.

Key Term: Information Flow
The movement of data and processed information within and between parts of an organisation to support planning, control, communication, and decision-making.

MIS/ERP SYSTEMS AND PERFORMANCE MANAGEMENT

Information systems have become critical for monitoring operational and financial performance against targets.

Functions and Characteristics of MIS

An MIS provides routine reports to management that summarise key business metrics, such as sales, costs, production output, or customer service data, drawn from the core transaction processing systems. Good MIS will:

• Convert raw data from operations into actionable information
• Enable comparisons with budgets, targets, or previous periods
• Support control by highlighting variances, trends, and exceptions
• Produce timely and relevant reports for different management levels

Key Term: Good Information
Information that is accurate, complete, timely, relevant, accessible, cost-effective, and easy to use.

MIS plays a key role in variance analysis, budgeting, and performance reporting. It is usually designed with internal controls to ensure the reliability of information for decision-making.

Enterprise Resource Planning (ERP) Systems

ERP systems extend beyond the traditional MIS by providing a single, integrated database and set of processes for the whole organisation. Key features include:

• Real-time, company-wide data sharing
• Seamless processing of transactions across all departments
• Single source of information, eliminating duplication and inconsistencies
• Standardisation of business processes and reporting

ERPs support rapid identification of business trends, compliance reporting, supply chain coordination, and complex performance measurement frameworks. Large organisations use ERP to break down data silos and link operational, financial, and strategic information.

Key Term: Data Integrity
The accuracy, consistency, and reliability of stored data throughout its life cycle, maintained by controls and validation checks.

Information Flows for Organisational Control

Information flows connect parts of an organisation vertically (between strategic, tactical, and operational levels) and horizontally (across departments or business units). Effective information flows allow:

• Monitoring of performance against benchmarks
• Prompt identification of variances requiring management action
• Up-to-date knowledge for planning and resource allocation
• Communication of changes in targets or policies

Information must possess the attributes of good information, especially timeliness, relevance, and accuracy, to serve its control function.

Types of Information Flows

• Vertical flows: Transmit information between senior management and operational levels—for example, targets, policies, performance reports.
• Horizontal flows: Enable coordination between departments (e.g. purchasing and production).
• External flows: Connect with suppliers, customers, and regulators using technologies like extranets or EDI.

Control of Information Flows

Strong controls are essential to prevent data breaches, financial misstatement, and operational errors. Suitable controls include:

• Segregation of duties for data entry, validation, and reporting
• Logical access controls (user roles, passwords, permissions)
• Audit trails tracking all changes to key data
• Input validation (range, completeness, and reasonableness checks)
• Encryption for sensitive or confidential information, particularly when transmitted externally
• Regular backups and contingency planning for business continuity

Modern ERP systems often include built-in controls and allow the design of workflow approvals and automated alerts to enforce organisational policies.

Data Security and Risks

Increasing interconnection and accessibility in MIS/ERP expands the risk of unauthorised access, manipulation, or data loss. Controls to manage these risks include:

• Firewalls to separate internal systems from external threats
• Regular update and patching of system software
• User awareness training regarding phishing and social engineering
• Activity monitoring and anomaly detection

Loss or corruption of information can damage performance measurement and undermine control systems. Therefore, the safeguarding of information flows is a fundamental aspect of performance management.

Data Visualisation for Performance Reporting

MIS and ERP systems typically provide data visualisation tools—dashboards, line graphs, bar charts, and KPIs—that enable managers to quickly assess performance, identify trends, and drill down into variances. Well-designed dashboards present:

• Real-time status of key performance indicators
• Exceptions and alerts for immediate action
• The ability to drill down from aggregate to detailed levels

This graphical capability is critical for managing large datasets and supporting quick management response.

Worked Example 1.1

A manufacturing company uses an ERP system to track production and financial data. The finance manager notices an unexpected increase in raw material costs reported in the monthly dashboard.

Question:
What steps should the finance manager take within the ERP to investigate and control this variance?

Answer:

• Use the dashboard's drill-down function to identify which product line or department caused the cost increase
• Analyse transaction records for data entry errors or irregular orders
• Check user access logs to ensure only authorised staff are generating or approving purchase orders
• Verify supplier price changes and compare to contractual terms
• Communicate findings to relevant managers and implement corrective actions
• Update access permissions or approval workflows in the ERP if gaps are identified

Controls and Procedures in MIS/ERP Environments

Typical controls in MIS/ERP

• Access control: Only authorised personnel can enter, edit, or access specific data sets.
• Input validation: Data entered must meet predefined criteria (e.g. range, format).
• Audit trails: Every transaction or change is recorded, showing the user, time, and nature of the action.
• Data backup: Regular backups reduce the risk of data loss from system failures or cyberattacks.
• Encryption: Important for protecting confidential employee, customer, or financial data, especially in remote or cloud-based systems.

Exam Warning

Do not rely solely on ERP/MIS automated controls without periodic manual review. Systems may contain configuration errors or gaps which, if left unchecked, can result in control failures or incorrect performance data.

Summary

Effective performance management depends on reliable, secure, and timely information flows. MIS and ERP systems provide the structure and control environment for capturing, processing, and reporting business data for planning, control, and strategic decision-making. Good information flows, backed by robust controls, safeguard data integrity and ensure accurate measurement of organisational performance.

Key Point Checklist

This article has covered the following key knowledge points:

• Define Management Information Systems (MIS) and Enterprise Resource Planning (ERP) systems and their role in performance management
• Describe the key qualities of information used for control
• Explain the importance of information flows in supporting planning, control, and decision-making
• Identify typical controls used in MIS/ERP environments to secure and validate information
• Describe common risks to data integrity and the need for regular system monitoring
• Recognise the use and benefits of data visualisation tools for performance control

Key Terms and Concepts

• Management Information System (MIS)
• Enterprise Resource Planning (ERP)
• Information Flow
• Good Information
• Data Integrity