Management Information Systems

Steps To Implementation

Four Key Stages

For many businesses Management Information Systems (MIS) are mission critical. Even those businesses that only use computer-based, accounting systems to automate book-keeping operations soon become dependent on the continuing good operation of sales order processing, sales ledger, stock control and purchases ledger. It is therefore essential that businesses acquire and implement MIS that are appropriated to their businesses and are dependable.

There are four key stages in the acquisition and implementation of MIS:

1. Specification
2. Selection
3. Acquisition and
4. Implementation

Specification

Most MIS are modular and are built around a core of traditional accounting modules such as sales ledger, purchases ledger, nominal (general) ledger etc. Businesses then need to consider the extra modules needed for their specific businesses such as Job Costing, Routing and Capacity Planning, HR Systems, Reporting etc. Payroll is normally a separate module.

However the devil is in the detail. The most serious conflicts between business owners and the suppliers of MIS arise because the business people assume that key aspects of their business will be handled by the software. Not necessarily so! Unless you actually specify key software features the suppliers are under no obligation to supply the features within the price quoted. Worse still, businesses do not normally discover the discrepancies until the implementation stage, by which time the supplier has received the bulk of the payment.

The solution is to start with very detailed checklists of requirements and add to those lists the specific features you need. When all the features have been listed in detail you issue Invitations To Tender (ITTs) based on your specific requirements. The completion of detailed system specifications is time-consuming and is best left to someone with detailed knowledge of the features that the MIS should contain.

Selection

When you have arrived at a shortlist of potential suppliers you should ask for references. It is best to visit the reference sites alone or talk to the references face-to-face, without the suppliers in attendance. The next step is to do detailed testing. Sit down at the computer with the supplier’s staff and work through the specification, so that they can show you the key features you need actually working in their systems.

When you are satisfied with the various systems shortlisted, ask for Best and Final Offers (BAFO). The best offer for you will be a mixture of capital and maintenance costs, service levels, implementation assistance etc. More complex purchases should be evaluated using Discounted Cash Flow techniques.

Acquisition

The chosen supplier will probably have a standard purchase order or contract. Read it carefully and modify it to suit your needs.

The agreed purchase contract should include:

  • the capital costs of the hardware and software or the leasing costs
  • the annual hardware and software support costs
  • increases in the support costs over a period (what index will you use?)
  • service levels (agreed times for response to specified levels of problems)
  • charges to be made for “mods” (modifications to the software)
  • off-site and on-site training during implementation, including training documentation assistance with the change over from existing systems e.g. dumping and electronic loading of existing data system manuals etc.

If your current processes are non-standard or you envisage implementing new processes, the costs of modifications can increase alarmingly. Agree a discounted per day rate before you buy the system. Better still, agree an arrangement with the supplier whereby you specify new features and help the supplier test and debug them after development, at little or no financial cost to you. (Though there is a hidden cost in management time.)

Implementation

There are a range of considerations, technical and human. Will the changeover to the new system be “Big Bang” or module by module? If the latter, in what order do the modules need to be implemented? You will need to design a nominal ledger structure suitable for your reporting needs. How are you going to code your stock items so you can get suitable reports? Similarly how are you going to classify your sales and customers e.g. different product groups, different geographical areas, different target sectors etc.?

More sophisticated systems tend to have a wide range of “flags” to be set, so the software can be configured for different types of business. You should have a test system as well as a live system, to train staff and to enable you to explore the impact of the different flag settings and different codes chosen for stock and sales in particular.

Finally remember the human aspects. Many people dislike change and their reactions to it range from fear to outright sabotage. You need to “Manage the Change”. You need to keep staff informed of the changes to come and explain the benefits to them of the changes. You need to win their support. If redundancies are likely to follow the implementation this must be addressed openly and fairly at an early date.

Contact

If you need assistance to acquire and implement Management Information Systems please contact:

Declan Kelly

dkelly@focusbusinessadvisers.com