02. Business Measurement Systems: Information Relevance

Pertemuan 03-04

Matakuliah : Manajemen Kinerja Sistem KomputerTahun : Feb - 2010

02. Business Measurement Systems: Information Relevance

01. Decision Using Accounting Information

Strategic Environment

• The strategic environment of a business is comprised of longer-term external environment factors such as consumer tastes and preferences, demographics of the customer base, technological developments, and social, regulatory and cultural factors.

Operating Environment : Business Decision Model

• Figure 2.1 shows a stylized and discrete operating decision model comprised of six steps that implement the long-term strategy each period.

02. A Model of the Firm, Its Business Process, and the Business Measurement

System

Core Process

• Core process are activities for which the firm has a competitive advantage-those activities that the firm can do better than, or at least as well as, any competitor.

Support services• For must businesses, support services include procurement

and management of materials for production and sale of goods and services, human resources, and process technology and design services.

Business Measurement System

• The business measurement system routinely measures a firm's transactions, events, and conditions day to day they occur. It includes the accounting system, nonfinancial measurement system, and compliance system.

• Figure 2.2– In Figure 2.2, the three business processare surrounded by the

internal control process that helps` people within the organization achieve their effectiveness, efficiency, and compliance objectives.

System Integration : Enterprisewide software

• Accounting transactions-based records are measured or denominated in monetary units (dollars,francs,yen) and reflect a related (and varying quantity).

• SAP R/3 is based on 12 application modules that track most business process and allow inquiries and continuous updating of a central database.

Figure 2.3

• Figure 2.3 part A, shows an outline of SAP as implemented by Prairie Home Corporation. It shows the client/ server/ database nature of the application and typical reports, or "views" of the same data for a particular order by different users.

The accounting system as an Information Model

• Because Of its importance as a source of information and control for both management and external decisiion makers, let's consider the accounting system as an information odel of a firm, its business processes.

• This analysis will allow a better understanding of the value and limitations of accounting as an information and control vehicle.

Figure 2.4

• Figure 2.4 diagrams a typical accounting system and some compliance system component comprising a major part of the measurements for the accounting information model representing the real-word core business and support process of figure 2.2.

03. Relevance Enhancement Services: Decision Relevance Analysis

Context Improvement

• A complex business decision such as a merger or whether to enter a foreign market has many dimension -- too many for one person to be informed about all of them, and may exceed the knowledge and expertise of the staffs of most companies.

• Other context improvement services include helping the decision maker make sense of available information and navigate through available information to determine its relevance.

Decision-Specific Information

• Some information may be sensed, measured, summarized, and displayed for only the particular decisionat hand (decision-specific information).

Figure 2.5

• Figure 2.5 illustrates a four step process by which the decision relevance analyst can customize historical accoting data.

Figure 2.6

• Figure 2.6 also shows that financial statements record expenditures for employee attitude improvement well before any benefit in revenue measurements, thus discouraging store managers' investment in employee attitudes. Measurement of non-financial variables may encourage such investment.

Business Measurement System Design

• Business measurement system design is a complex task because3 it requires consideration of how best to measure systematically many possible characteristics of all possible real-word conditions that might occur.

• Design choices encompass what to measure, how to measure, when to m3easure it, and how to store and retrieve the result.

Figure 2.7

• Figure 2.7 diagrams the decision activities of segment and central managers and a schedule of the resulting bonus possibilities.

04. Disclosure of Information Relevant to Others

02. Business Measurement Systems: Information Relevance