Planning and Control Systems

The systems for planning and control are found in the upper part of the pyramid If we assume that in an integrated concept, both operational and disposition systems are in place, then the next logical step in the further development of industrial information processing is to use the system, and especially its data, for planning. To this end, planning systems are developed that can be considered a continuation of the disposition models embedded in information processing. However, there are the following differences:

1. Decisions proposed by disposition models or made by information systems solve well structured problems, whereas planning models are for solving poorly structured problems.

2. Disposition models assist in decision-making related to high-volume and routine problems that usually occur in relatively short, repetitive intervals (such as planning of production processes). Planning systems, in contrast, are normally used for decision-making tasks that occur at greater intervals, and sometimes irregularly (for example, planning of capital investments or a production program).

3. Disposition systems tend to fall into the responsibility areas of middle managers, whereas planning models have been developed for top managers.

4. Operational systems work with databases in which all changes are stored in real time and in detail. Planning and control systems, however, are built on the basis of data warehouses, which contain summarized data and information that remains constant over a longer time period.

5. While disposition systems can often run fully automated (consider material requirements planning, for example), planning systems require more involvement of the user, so that human-computer interaction is the norm. Involving the human element in planning models is necessary primarily to allow enough scope for decisive entrepreneurial action, in order to correct developments that would arise if processes (such as the lifecycle of a product) were left to themselves.

Control systems are the counterpart of planning systems. Their job is to monitor adherence to the plan, and to provide indicators as to whether corrective measures should be taken. In the ideal situation, they function something like a medical problem with the sequence of events: “symptom recognition – diagnosis – proposed therapy – prognosis” (Mertens 2004, pp. 13-16).

Current practice tends heavily toward standalone solutions for the various planning and reporting tasks. Whereas day-to-day business transactions can be handled just about completely using operational systems (also called online transaction processing systems (OLTP systems), such as SAP R/3, PeopleSoft®, Oracle®, or J. D. Edwards®), most are still far from such a complete integration of data and functions for planning, budgeting, and Performance Measurement in complex organizations.

Symptomatic for this state of affairs is having numerous spreadsheet files, presentation files, and word processing files “roaming around” in different versions. Even dedicated management information systems (MIS) usually cover only limited areas. An important milestone on the road to creating some order in management information has been the introduction of central data warehouses and data marts that are coordinated with each other, in conjunction with online analytical processing systems (OLAP systems). However, this alone has not been enough to achieve an integrated solution for strategic and operational enterprise management. What are still missing are fully-developed functions for coordinating planning and Performance Measurement.