ACCA PM Syllabus A. Management Information Systems and Data Analytics - Internal and External Sources - Notes ^{1 / 4}

Management information comes from multiple sources. The challenge for a business is to capture and use relevant and reliable information and the benefit of such information must exceed the cost of obtaining this information.

Modern IT systems have reduced these costs significantly but skilled highly-paid staff is required to run these information systems.

Accounting records are a prime source of internal information. They detail the transactions of the business in the past, which may be used as the basis for planning for the future (e.g. preparing a financial budget or forecast).

Daily books such as sales day book, purchase day book and cashbook can provide useful information to management.

The accounting records are primarily used to record what happens to the financial resources of a business. For example, how cash is obtained and spent; what assets are acquired; what profits or losses are made on the activities of the business.

However, accounting records can provide much more than financial information. For e.g., details of the products manufactured and delivered from a factory can provide useful information about whether quality standards are being met.

Data analysed from customer sales invoices provides a profile of what and to whom products are being sold.

Internal information connected to accounting systems

Most internal information is connected to accounting systems - but is not directly part of them. For e.g.:

1. From the payroll system, records of the people employed by the business (personal details; what they get paid; skills and experience; training records)

2. Data on the costs associated with business processes (e.g. costings for contracts entered into by the business)

3. Data from the production department (e.g. number of machines; capacity; repair record)

4. Data from activities in direct contact with the customer (e.g. analysis of calls received and missed in a call centre)

Internal information is also provided informally. For example, regular meetings of staff and management will result in the communication of relevant information. For e.g. minutes of board meetings may include future strategies on new products and markets.

This is information that is obtained from outside the business. Such external information tends to be more relevant to strategic and tactical decisions rather than to operational decisions.

Sources of external information

• Government publications such as monetary and fiscal policies,

• Press releases such as newspapers, technical magazines, journals which provide information about share price, technological developments and information on competitors and their products.

• Banks can provide information on potential customers and on nation markets.

• Financial statements of other businesses provide useful information to the company.

• Correspondence received from suppliers, customers and tax authorities etc.

• Internet websites, social networking sites, forums etc.

• Databases held by public bodies and businesses e.g. providing online information on money market interest rates and foreign exchange rates.

• Data warehouses which contain data from both internal and external sources. They store current as well as historical data and are used for creating trending reports for senior management reporting such as annual and quarterly comparisons.

There are many advantages of using the internet to obtain information: - it offers loads of information which you can acquire efficiently and quickly.  It is relatively inexpensive to acquire information from the internet.  But the quality of this information cannot be guaranteed. This will be discussed in more detail later on.