Management information systems have existed for more than a couple of decades now with different evolutions. They have been in different forms and provided different information. But its unstructured, free form, people centric, dynamic, flexible and adhoc. Can this be fitted into a structured framework with help of technology. Can this be accessed by the ‘higher end ‘analyst’ type of business user and not just the transaction user?
Let’s step back and think about the business software (like transactional business process systems)
Back in 80s, there were several software systems primarily focused on General Ledger (for accounting/finance) and Inventory ledger (for stores, goods receipt, shipping etc.), homegrown systems using database, languages programmed by people(through software projects vs. integrated products) to suit each companies needs. These systems were disconnected, but addressed good extent of automation. So the ERP evolved (more prominent in 90s) where SAP (which also started as financial accounting software) and other companies started looking at integrating these systems, and getting the financial impacts (postings) back into General Ledger. Now as these systems started to evolve, ERP focus moved to manufacturing, supply chain, sales & distribution, and they started be the core of ERP vs. financials. This further evolved with more specialties built into the different areas through Supply chain optimization, customer relationship management, supplier relationship management, to handle the ‘Execution’ part more comprehensively. This is because the businesses became more complex, with different types of process/transaction requirements to be covered for various functions, and then to industries. Also there were many transactions there that needed to record the details in the individual details (called as sub ledgers/solutions), and post the financial impacts of that into the General ledger (many times at an aggregate level), to understand the financial performance of the business.
When we look at management information systems, we can clearly see the same pattern emerging over the many years and into the future. Management information systems (currently evolved into performance management solutions) also started in the same way as transaction systems – beginning from financial reporting and analysis, primarily driven by external reporting needs. There were also other silo operational reporting to cater to sales, manufacturing, operations etc. If you take the planning systems, we can see that it all started with financial planning (similar to the ERP general ledger systems) and we can see that there were other planning solutions, purpose built for sales, work force and/or operations. So in the performance management space we have seen ‘financial’ performance management being the driver or you came across few analytics which were available in pockets for other functions. But as a natural progression ( similar to ERP) would be that the performance management or ePM would get significantly beyond finance planning or performance – since this is where there are more complexities and diversities cutting across different business scenarios and industries. Also its important that the management information or performance management systems are integrated across the different functions, but eventually having a link to financial performance management at a summary level – same as ERP is for transactions. So the important trend that we would see in the next decade would be how ePM would evolve to become the ERP for management, covering the strategy, risk, planning, analytics and optimization.
ePM would essentially become an integrated solutions across various functions (line of business) and purpose built by industries.
ePM over the next decade would be the ERP for management.