Perceptions on Information versus interpretation
Generally, information is considered an important factor in running successful business. Hence, many companies have been investing heavily in improving their information system by replacing the old system with a new one that is believe can help improve ef
Once the enterprise resource planning (ERP) system is installed, companies assume that users will be able to utilise the system for better decision-making and increase productivity as expected. Unfortunately, a lot of information generated by the system cannot help deliver fruitful results. There is wrong perception or misunderstanding about information utilisation as follows:
l Information must be generated for users’ decision-making: This depends on the nature of the information. Reporting sales numbers compared to forecast is nice to know but not enough. After a while, users who get used to receiving such information can easily ignore it.
l Information must be complete and correct: This is what all users expect, but it needs to be presented at the right time. Some companies can distribute last month operating results after 15 days, which is too late for any necessary actions to response to the market.
l Information will be used by users: Reports designed by the generators without consulting with the key-users is useless. Some reports may not match with what users are looking for due to an incomplete format or missing key information. It can result in users creating an additional report that will satisfy their own requirements.
l Information is confidential and cannot be shared with others: Confidentiality is important but sharing information among team members is also critical in running the business successfully. The balance between keeping information and sharing it can determine the effectiveness of the business.
Once users obtain necessary information, they should read it, or know how to read it. Then they should try to understand what important message is being told or disclosed by the reports. Unless an analysis was done thoroughly, the information will not trigger proper action in response to a changing environment.
Specific reports can be more valuable than the general report format that fails to identify problem areas that need specific attention. For example, the production station that generates higher than standard scrap cost, excess headcount numbers in a particular section, the long-outstanding account receivable over the standard days, the slow-moving inventories that should be moved out of the warehouse. All these exceptions should be clearly conveyed to users. From the timing perspective, reports can be generated on a daily, weekly, monthly basis. However, generally, a weekly monitoring report may be suitable for routine management.
For complex organisations, it may not be totally correct to assume that after users get training on how to use reports, they will be able to understand the information properly and will be able to take appropriate actions. To a certain extent, the management may need someone to help analyse and explain the information shown in the reports. Moreover, it can be more productive and efficient if generated information can be analysed and discussed among concerned people. The interaction among team members by sharing ideas, contributing through suggestion and comment, and finding the solution or the right action will be the real benefit of the information and the system that generates it.
No matter how expensive an information system might be, the important thing is how users can practically use it in an efficient manner. Thus, once information is generated, it is not the end of the reporting cycle. Instead, it is the start of the discussion cycle for better business management.
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