What is Management Information System Control

Management control system

Seal of approval valid until 2022

The Management Control System (MCS) helps all managers to plan and control in an integrated manner. This improves company-wide coordination and the holistic achievement of goals.

According to the different information to be supplied, an MCS is divided into three subsystems: Management accounting + pre-control + early warning.

In every organization, a distinction must be made between different management levels (content management levels) because fundamentally different questions have to be answered in them (see controller dictionary, p. 192):

Fig. 1: Management levels and management control subsystems

Early warning

Early warning should recognize opportunities and threats in the corporate environment, structure them and, as far as possible, make them measurable. Early warning signals arise in all environmental areas, e.g. new technologies and materials, changes in behavior in competition, in consumption, in the world of work, in mentalities, in law or in politics and above all in the natural environment.

As management partners, (specialized) controllers, together with marketing, research, production and human resources specialists, should determine early warning signals for the future of their own organization so that they can be incorporated into corporate and strategic planning. From this are measurable or at least assessable Early warning indicators derive. Examples are: sales developments of competitors in important product areas, changes in the purchasing decision-making factors for end consumers, emerging changes in distribution channels, raw material availability, supplier capacities, but also mentality shifts with regard to work-life balance, propensity to consume and avoidance of environmental damage. The data required for this can only be found outside the company. They often require surveys or in-depth analyzes. In order to keep the number of early warning indicators to be observed manageable, it is advisable to represent the relationships between the company and its environment in networks.


In order for strategies to be successful, potential for success must be built up in the company in good time. Examples are: cheaper production, sales and distribution through continuous increases in effectiveness and efficiency in all functions, sufficient management capacities to cope with growth, result-oriented project management, special abilities and skills in production, service and research and development.

It's about planning and managing the successful development of your own functional areas in the medium term. In contrast to the early warning, the necessary data must be obtained in the company itself and often already available in a suitable form. They form an important input for medium-term planning. We speak of piloting indicators because this information controls the actual planning (Fig. 2-4).

Fig. 2: Examples of input control variables in cost centers

Fig. 3: Examples of feedforward variables in sales / distribution / marketing

Fig. 4: Examples of pre-control variables in the production area

Most of this data is already recorded in management accounting and ERP. It is important that feedforward parameters are provided as time series when the operational planning has to be revised.

Leadership-relevant management accounting

Accounting for Management is designed to help all managers make well-informed decisions. What do managers decide about? It's always about quantities, time consumption, services, prices and investments. Costs and revenues are the result of these decisions, be it in planning or in control. If management accounting is to be of use, it must therefore also be based on quantities, services, etc. and disclose which deviations from the plan have arisen so that corrective measures can be used to improve. Following the management process, it should show every manager which services, costs and revenues they are directly responsible for. The appropriate instrument for this is management-oriented cost, performance, revenue and profitability accounting (KLEER). It must be set up in such a way that it is possible to identify which costs and revenues were caused by the manufactured and sold products and which costs were justified by management decisions (budget decision on the capacities to be maintained).

The planning process is completed with the annual budget. As a result, the planned values ​​(quantities and values) become target values, which the responsible persons are responsible for achieving. This applies to quantities, services, costs and revenues.

This consistent decision-making process requires the application of the well-known cost cube (cf. controller dictionary, p. 146). It shows the three decision-making and responsibility-related dimensions that have to be mapped when designing the KLEER:

• The prop. Costs (PROKO) are caused directly by the manufactured units, all fixed costs (STRUKO) are consequences of management decisions.

• Influencing the level of costs is a question of the time available and the decision-making authority of the person responsible.

• All costs (and revenues) should be planned and recorded on the lowest level, where they can be clearly assigned as individual costs, since this is where responsibility has to be borne.

Fig. 5: Three control-relevant cost dimensions (see controller dictionary, p. 146

Management accounting relevant to leadership

In accordance with the IGC and ICV's guiding principles for controllers, as management partners, controllers should make a significant contribution to the sustainable success of their organization. In particular, they should

• accompany the management process of target setting, planning and control,

• ensure that all managers consciously deal with the future,

• Combine the goals and plans of all those involved into a coordinated whole and

• Develop, build and maintain the systems required for this.

This gives them the legitimacy to design and operate the management control systems for all management levels. The clients are the executives. They expect decision-relevant and responsible information for their internal planning and control. External reporting is of secondary importance.

Controllers enable management control!



IGC controller dictionary, International Group of Controlling (Ed.), 4th edition, Schäffer-Poeschel, Stuttgart, 2010

Rieder, Lukas; Management control system, integrated planning and control, Schäffer-Poeschel, Stuttgart, 2020

First-time writers

Dr. Lukas Rieder

CZSG Controller Center St. Gallen

Engelaustrasse 25 | CH-9010 St.Gallen

Tel. +41 71 2449 333

Homepage: https://www.controlling-controller.com | Mail: [email protected]