MANAGEMENT REPORTING SYSTEMS AND TECHNIQUES

• Document Type: CREST
• Collection: NGA Records (Formerly NIMA)
• Document Number (FOIA) /ESDN (CREST): CIA-RDP73T00325R000100120013-6
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 17
• Document Creation Date: December 28, 2016
• Document Release Date: June 13, 2008
• Sequence Number: 13
• Publication Date: January 18, 1965
• Content Type: REPORT

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? AMA Orientation Seminar No. 6295-04
January 18-20, 1965
Management Reporting Systems and Techniques
The Design of Reporting or Information Systems: Outline
E. I. Riegelhaupt
American Can Company
1. Common problems with existing reporting or information systems.
2. Information systems need to be consciously designed; design of the
product line.
3. The objectives of the company, or task force, in undertaking the
information or reporting system development project.
4. Parallel design and development problems for management.
5. The new or modified reporting system in operation; the performance
specification for the design.
? 6. The system which is required to design and develop the management
reporting system.
7. Administration of development.
8. Dividing the information system into convenient sub-systems.
9. Program for planning the information or reporting system; total systems
approach.
10. Evaluation of alternative plans for the reporting system.
11. Obtaining the decision to implement the plan.
12. Execution of the plan.
13. Searching for subsequent problems.
14. The continuous job of R & D on company reporting systems.
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1. Common Problems with existing reporting or information systems
- Traditional stockholder reporting as a basis
- Legal requirements vs operating requirements
- Piecemeal growth of reporting system over years
- Information technology has not kept up with production, product,
or marketing technology
- Real-time systems vs accounting systems
- Accounting of transactions vs information for decisions
- Operating decisions vs development decisions
2. Information Systems Need to be Consciously Designed
(a) An information or reporting system is just another system, which
is a facility, having the elements of a generalized system including
within itself
-objectives
-outputs
-facilities
-operations
-inputs
? (b) This reporting system or facility must be designed to meet certain
operating specifications or needs; the objectives of the system.
Similar to any product design problem from identifying the users.
needs, to specifying the performance specifications of the product,
designing the components, specifying raw material inputs.
(c) Benefits of the organized process of design as seen in the high
technology industries such as aircraft, missiles, nuclear power
plants, electronic systems- from the product point-of-view;
application to design of information systems.
(d) The process of design is not one to be left in the hands of a single
group of technical specialists; individual steps, however, may be
worked on by such specialists. The importance of the participation
of the report or information user, during the design process- from
the Chairman of the Board to the production line foreman. The
design process is a dialogue between the "designers" and management
at all levels, at all stages of the project.
(e) The process of design and implementation should be an explicit and
formal program; not piecemeal, casual projects; perseverance in the
program until the last step of checking performance against objec-
tives- management needs.
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(f) The design of the information system is tied closely to management's
view of the business and the company's business objectives.
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3. The objectives of the company, or the company'task force in undertaking
the Information or Reporting System project:
(a) To provide information necessary for
i. Planning of operations and development
ii. Signalling for control of operations (and development)
iii. Accounting of the business transactions
iv. Mandatory reporting to stockholders,. government, trade
associations, and other external organizations.
(b) To develop the information system to produce these types of
information effectively and efficiently (at lowest cost).
(c) To develop the company's capability to develop and maintain such
an information or reporting system.
? 4. Parallel or Analogous Design and Development Problems for Management:
- the development of the company reporting or information system
- the development of international operations in a new region,
or in a company primarily in domestic field
- the development of a new product line
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4.
Parallel System Design Problems
A.
Management Reporting
B.
Development of
C.
Development
or Information
Company
of New Product
System
International
Operations
Line
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5. The new or modified Reporting or Iriformation System in operation
(a) Assumption that the new or modified system is an improvement
over the previous or existing system.
(b) Picture of the new system in operation as a means of starting
the design-to-specification process in substantially improving
or building a new reporting system. Focus on key problems or
failures as start; deficiencies or areas not covered.
(c) The types of users, the "customers" or managers; what demands
will the system be serving; what benefits will the system be
providing.
(d) The reports each user will be receiving-- the "product line".
What outputs of the system will be provided at what costs.
- information content and quality; accuracy.
- form of information; reports, charts; oral, visual.
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- when will the information be supplied; prescribed
intervals; when key element signals need; upon demand.
Exception reporting; real-time control.
(e) What operations will be supplying these output reports; what
kinds of data processing. will be required: measurements, com-
putations, checking, consolidations, conversions, communication,
display, auditing, etc.
(f) What machines and staff will be performing these operations--
what facilities will be operating in the report system.
(g) What data will be secured for processing-- counts, instrument
readings, tabulations, logging, plant operating data, field sales
data, industry data, basic accounting, reporting etc. What inputs
to the report system will be obtained-- by measurement, by estimate.
(h) Initial projection of the operating budget for the information
system; (revision- see 9 (j)).
(i) Comparison of the brief view or sketch of the required information
system- operating- to the existing system. Common outputs,
operations and input data; points of divergence. Comparison
of costs; costs vs benefits..
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6. The System required to design and develop the Management Reporting
System
(a) The group or department responsible for R&D on information
systems; not a contradiction to the participation of manage-
ment at all stages of development.
Group serves as pace-setter, catalyst, research arm for new
requirements, and reservoir of specialized skills in the
development of reporting systems.
(b) Manager whose responsibility is stated in terms of providing
right information for management at optimum cost; focus on
information.
Full-time responsibility
Staff, from within company, familiar with operating and
development problems
(c) Use of outside services of- salesmen of EDP equipment, con-
sultants, data-processing service companies.
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(d) An explicit plan, having the approval of management.
(e) A development budget; developing or modifying the information
system will require commitment of people, facilities, funds.
Separate from the cost of implementing plan, the cost of
developing the plan.
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7. Administration of Development
(a) Obtaining the participation of members of the company (and outside
vendors or consultants) during the design and development process.
An approach to problem-stating involving objectives, counter-
objectives or revisions, proposals or plans, and decisions to
go ahead-- in each sub-part of the program.
Approach. will be used in determining report objectives, design
of information outputs, selection of processing requirements or
equipment. A generally useful "planning dialogue".
(b) The use of a formal plan and time schedule; determining all of
the tasks that will make up the total program.
Simultaneous and critical tasks; PERT in the design of information
systems as in product design. Plan for the commitment of people
and other resources during the program.
Final result of the program is somewhat more abstract than physical
product development projects; insurance that we actually reach our
objective vs coming to a halt with a half-finished system. A
road-map.
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A succession of decisions for management: from the decision to
study the company's information needs through the decision to
buy or lease equipment and hire. operators. Management must
participate in these decisions.
(c) Importance of written-documents to mark the progress of the
development program.
More than just the systems or controllers department is involved.
Common language as a first step in integrating the final product.
Participation of operating executives through foremen in stating --
for elements of the program
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- the objective
- the plan or proposed way of achieving the objective
- the resulting instruction- which implements
- the progress report- which reports on the satisfaction
or failure to perform
(d) Attention to the maintenance of healthy relationships with operating
management and other parts of the environment--
- selling the system to top management
- participation of operating management
- outside factors: auditing firm; the union.
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8. Dividing the Information System into Convenient Sub-Systems
The need to break the larger problem into sub-parts so as to
get started;.to divide the work among responsible staff members.
Initial handle on the reporting system problem.
(b) Many alternative points-of-view. Tied closely to company manage
ment's view of "what business are we in", organization, key
operating, development, and competitive problems.
Business needs of the company should determine the framework in
which the information system is set; vs up-dating of systems,
or crash program cost savings, or desire to utilize equipment
previously purchased not in framework of total plan.
(c) Characteristics of the Company which Suggest Sub-Systems
- types of business or divisions such as consumer products,
.industrial products, market-product group A, market-product
group B, etc.
- types of operations or functions such as marketing, production,
procurement, distribution, engineering, etc.
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- company organization structure (not represented, above) such
as sales department, manufacturing group, construction
department, research committee, product group, field sales
region, etc. Areas of responsibility.
(d) Characteristics of the Reporting System which Suggest Appropriate
Sub-Systems
- types of information. users e.g. foremen, sales managers,
capital budget analysts, president, stockholders, etc.
- types of uses, i.e. investment decisions, field sales decisions,
plant operating decisions, distribution or transportation
decisions,;-staffing decisions, equipment replacement or
maintenance decisions, advertising decisions, etc.
- Element of the Reporting System from functional point-of-view
- planning system (operating and development decisions)
- signal system; calling for control
data processing system
data measuring system
(e) The advantages of a uniform and modular system which will allow
? management to take varying cuts or views of operations.and plans,
consistently, at a reasonable cost.
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9. Program for Planning the Information or Reporting System
9.1 Define the demand for information; the information output objective.
(The analysis of your "market" and its uses of the "product")
(a) The information output objective as a document to be used by
specialists in designing output of reporting system, data
processing, input measurements, etc. The output objective
described by managers and task force.
Define by focusing on end-uses of report or information
- Has the need for planning and control been recognized in
each company area; what are the existing expressions of
performance; return on investment, gross margin, monthly
sales vs quota, standard variable cost, variances, cost as
sales, net profits as % sales, equipment utilization hours,
days receivables, inventory level vs standard, etc.
- The planning and control decisions that are made to achieve
the above expressions of performance: field sales decisions,
plant operating decisions, staffing decisions, advertising
decisions, investment decisions, equipment replacement
decisions, product design decisions, production control
decisions, warehouse decisions, etc.
- Other uses of.information by company- paying taxes, information
returns to Internal Revenue, reporting to industry and govern-
ment agencies, etc.
Define by focusing on the users of information: the type of respon-
sibility and the number of each type, e.g., president, vice
presidents, functional department managers, field sales super-
visors, plant managers, product engineers, capital budget
analysts, foremen, SEC. Bureau of Internal Revenue, stock-
holders, etc.
Resulting information output objective: the information's objective
to be accomplished by the manager and the reporting system.
(b) Techniques of defining the Report.System Objectives
- Interviews with managers
- Formal agreement as to the uses of the information he requires
- Focusing on basic ideas in drawing up objectives such as return
on investment, other performance measures, the objects or
physical things in his decisions
- Analysis of information he is currently using-- formal reports
received; informal sources of information;-relative importance
of his personal contacts to system.
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- The comparison. of information objectives within functional
areas and up and down organizational elements; consistency;
do the objectives. of sub-managers compose into the objectives
of other managers etc..
- Opportunity to integrate and evaluate standards of performance;
expressions of performance; amount of planning and control
that is actually taking place.
- Participation of managers in interview and joint development
projects communicate reporting system objectives to the
specialists and begins to assist managers in learning to
use information system fully, properly, with respect to
company performance objectives.
9.2 Design the output of reports, data, etc. to satisfy the "demand" as
expressed in the information output objectives. Design.of the
"product line" of the. information system.
- The information content required: subject, units, accuracy.
- The form of.the information or report defined: charts, tables,
reports, written information vs orally presented information.
(meetings); use of newer display devices; management information
.centers; production control boards; automated production manage-
ment- refinery display systems; computer register runs.
- The timing of information and reports; frequency; exception
reporting; need for real-time reporting (process control);
information upon demand; specific needs of operations with
respect to control-- product development progress reports vs
manufacturing control or daily.auditing of bank balances.
- Testing the design of the reporting system element or group of
reports, or part of control system; example reports; refining
of these with managers. Effect on performance.
9.3
Define the data input required to the reporting system; the "raw materials"
required to produce the "product line".
- The physical and non-physical items which must be measured or
estimated: product, customer, workforce, cost elements, etc.
The units in which this must be measured: number of products
sold; the dollar-value of products sold; location from which
products are sold; number of units of cost elements expended;
cost in dollars; number of staff; hours worked by staff;
dollar cost of staff ...etc.
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- Types of data, currently gathered; major changes requires.
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9.4 Design the operations to produce the output reports or information
from the input dTa ;at design the data processing required to obtain
the reports required.
This will require the writing of data logging, computation, tabulation,
and consolidation systems and procedures; development of computer
programs to obtain desired output from accounting, field sales,
and production systems;
Development of instruction manuals for the preparation of analytical
reports; procedure descriptions covering information content, com-
putation techniques, tabulation and presentation (form of communication)
methods, and timing of information flow or intervals.
Use of EDP and systems specialists; How to obtain output with lowest
cost data processing operations. The designed operations should not
preclude other reports and information outputs; over-automated systems;
over-sophisticated or single-purpose accounting and data processing
procedures which may be inflexible with regard to future analytical
problems.
Will the data processing for signalling the. need for control, provide
for the information required for planning.
9.5 Design the facilities to perform these operations at optimum cost.
- Selection of the hardware: computers
punch card equipment
printers
leased wires
auxiliary equipment
office facilities etc,
Selection by means of evaluation of alternatives; specification as a
means of inviting bids from equipment vendors. importance of the
performance specification developed by systems specialists.
- Selection of, design of
System Operating
- Instructions
the software:
Manuals; training and reference.
Programs
Other operating instructions
Price books, charts, tables and other
Storage methods of storing data
codes, file patterns, charts of accounts
Identification and other means of taggr data for
processing, storage, retrieval,
display,
- Planning & Control Tables of processing time, parts of above
? of System manuals, and other means and data for
planning and control of information.
system, itself
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- Selection of the staff; design of the appropriate organization
to carry out the. required operations;
Organization Plan
Staff: from key punch operators
through analysts, chartists,
forms designers, managers.
Educational program for the operating
staff; change-over from old jobs;
new technology; relationships with
operating management.
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9.6 Design of the program for the education of managers and all other
users of the output reports; to have effective decision making--
improved performance; to effectively use the reporting system.
9.7 Establish a healthy relationship between the information system and
its environment of managers, government agencies, trade associations,
stockholders, auditors, etc.
9.8 Costs; Investment-
(a) Estimate of the cost to design and install system:
capital and expense.
(b) Estimate the cost of operating the reporting system;
comparison to existing system.
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10. Evaluation o#`; ternative Plans for the Reporting System
(a) Estimate,krte probable results of the plan
physical, e.g. number of reports per day; availability of
data on time, etc.
- financial; costs of operating; benefits in control and
planning.
(b) Evaluation of the probable results vs the objectives
will it work; is it physically feasible; dependable;
accurate; timely .. in relation to operating and
planning performance objectives
Pre-supposes that company has developed performance
evaluation standards, procedures for planning, control,
etc.--- performance standards for system.
- will the benefits in improved profits exceed the costs.
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(c) This evaluation is a continuous reconciliation during the
design and development stages of the performance specifications
for the reporting system.(the "demands" of the "customers") vs
the probable results of. any specific proposal: e.g. machine vs
clerical operations, centralization vs decentralization, one
set of reporting intervals vs another, one piece of equipment
vs another, one form design vs another, etc.
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11. Obtaining the Decision to Implement the Plan
The strategy of selling top management is a balance between:
(a,) Enlisting their participation in the development process;
their decisions initiate action.... and
(b) Giving them a finished or semi-finished product-- partial
or full output of reports for planning and control...
particular orientation to their decision needs.
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12. Execution of the Plan
(a) Installation of the system
(b) Operation of the system until reliable and reproducable
are obtained; the breaking in period; debugging.
13. Searching for Subsequent Problems
Feedback of signals indicating that redesign
required-
(a) During development and installation
(b) During operation
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14. The Continuous Job Required of R & D on Company Reporting Systems..
Responsible manager or department to insure that the information
needs of management are being met at optimum cost,
(a) Is the system delivering the "product line" of information on
time, with the proper quality, at the lowest cost.
(b) Are we getting the most out of the facilities we have.
(c) Do changes in the needs of managers and company call for.
changes in the system; changes in facilities; investment'.
(d) Are the types of skills required being supplied to adequately
maintain and develop (improve) the system; Is the organization
proper to handle the operations. Is it changing with changing
technology and demands on the reporting system.
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