An Executive information system is a crucial type of Management Information System that provides the necessary reports and tools that are essential in the decision making process of any corporation. The users need to analyze the data found in these systems in order to ensure that they are meeting the strategic goals that have been put in place for the firm. Trends are analyzed and management identifies any opportunities or problems so that the firm can effectively respond.
Perhaps the most important function that is performed using the Executive Information System is the creation of the budget. Once the data for the firm has been analyzed and the strategic goals have been set, a budget needs to be created. The intended purpose of the budget is to map out how a firm should ideally perform on the condition that the proper resources have been allocated to meet the goals for the time period.
An example of Budgeting, planning, and forecasting software:
According to budgetingforcastingprocess.com the process of creating a budget can be summed up in four steps:
Set Business Targets:
This process involves a corporation setting strategic goals for a period of time (i.e. quarter, fiscal year, etc). These goals are generally performance related and can include increasing sales, reducing costs, entering a new product market, etc. Past areas of concern are examined and goals are set to fix the problems or take advantage of potential opportunities.
Accumulate Historical Data:
In order for a corporation to set goals and allocate resources to achieve those goals, they need to have historical information to determine how the firm will likely perform based on how they have performed in the past. This is accomplished by comparing financial statements such as: prior year income statements and cash flow statements. The executive information system provides the user with easy access to the necessary information in the budgeting process.
Prepare Business Plans and Strategies:
It is nearly impossible for the executives to have all of the necessary information about each division of the company to create a comprehensive budget that allows the company to achieve its goals. For this reason, each division of the firm (i.e. Sales, Marketing, etc), is required to set their own goals that coincide with the firm’s strategic goals for the period. Once the various divisions have determined their strategies to meet the firm’s needs, a budget is created and approved by the managers of each department.
Compile into Master Budget:
The finance manager collects and analyzes all of the budgets that have been created by each department and incorporates them into the master budget. After the budget is complete, it is forwarded to senior management to be approved and implemented.
After the budget has been created and implemented, it is necessary for the company to review its performance and make sure that that all departments are taking the necessary steps for the strategic goals to be accomplished. If a particular strategy is not working, adjustments need to be made to fix any issues. More often than not, a firm will need to adjust its approach to reach its goals.