Money Management

Strategic alignment of IT resources – A case study in Grocery industry (Part 1)

Strategic Alignment of IT Resources

Grocery Industry

Introduction

 Grocery Industry Introduction

• NAICS 445110: Supermarkets and Other Grocery except Convenience Stores . This U.S. industry comprises of establishments generally known as supermarkets and grocery stores primarily engaged in retailing a general line of food, such as canned and frozen foods; fresh fruits and vegetables; and fresh and prepared meats, fish, and poultry.
• Previously , grocery stores dominated their regional markets, however today, they are evolving into the global market at increasing rate.
• The top 15 global supermarket companies account for more 30% of the world supermarket sales (72).

Sales in billions

 

Global & Regional Players

Global & Regional Players

Industry & Firm Characteristics

Ideals of Openness, transparency Vs confidentaility, secrecy

Effect of customer satisfaction on funding of e-Government initiatives

From experience of Congress itself, it should be maintained that funding of e-government projects are driven by customer satisfaction. Is this correct? I believe this is correct based on concepts that is already learned since past weeks and from this week’s learning. The main reason being – any e-Government initiative is targeted and centered on participatory democracy where citizen (as the customer of the services) has a greater role in policy and decision making. Citizens are the ones who utilize the e-Government services and need to be satisfied and motivated to use a particular type of e-Government service model/technology.

As Homburg states e-Government needs to be ‘responsive to societal needs’ – means it has to satisfy the customer’s (citizen’s) current and changing information/services consumption needs. As he aspires a participative democracy, the resulting technology funding needs to be made to support interaction and collaboration that leads to sufficient acceptance of service delivery medium and technology. Customer orientation is essential and is important success factor for any type of informational, consultative or participatory e-Government model, which calls for more demand driven services rather than supply oriented services.

e-Government systems have grown to such a level where it has given power to the customers to hold their representatives accountable of their votes and choices by their active participation in policy making and collaborative functioning. Service delivery and eDemocracy mediums such as e-Voting and e-Deliberation requires that users/customers need to be motivated in order to realize maximum usage with least margin of error and inviting customers to actively participate in democratic process. Customers – including Cyber citizens or Pragmatic citizens – form more than half of total citizens who care about usage of e-Government services. These customers are highly motivated and prone to be more confident in using those technologies if the inherent service models are user friendly, intuitive and leading towards greater e-Democratic setup where his voice is heard and feedback received in a timely manner. To this end, customer satisfaction is an adequate criterion for funding of e-Government initiatives.

Bibliography

1. Homburg V. (2008). Understanding E-Government -Information Systems in Public Administration. Chapters 5,6. Routledge

2.Shark A.R., Toporkoff S. (2008). Beyond e-Government & e-Democracy – A Global Perspective. Ch. 3, 16,18, 19, 21, 22. Public Technology Institure & ITEMS International

Article copyright (c) 2010 – 2020 – Deepesh Joseph (deepeshjoseph@yahoo.com)

Is there a more effective strategy for helping developing countries increase the computer and information literacy of their children?

Intel’s Maloney’s words – “It’s about the Web more than anything. I have young kids …….. doesn’t have access to the Web is overwhelming” – is very striking. OLPC efforts might be an answer to this concern. Strategy and plan alone doesn’t work when we are talking about reforming developing nations, cost effective infrastructure is also important. I would suggest that manufacturing information processing devices such as the XO should be done to reduce the TCO as low as possible.

OLPC website at http://www.laptop.org/en/laptop/ describes the OLPC efforts in detail, their mission, vision and even hardware, software specs. The cool part that I liked is that they are using Open source tools and solutions to build the system. This will open up new realms to introduce and support Linux based Open-source systems into schools and other educational institutions which are looking for cost effective methods of increasing the computer and information literacy of the students.

Article copyright (c) 2010 – 2020 – Deepesh Joseph (deepeshjoseph@yahoo.com)
Get all articles from www.getallarticles.com. Be informed and gain knowledge. Good resource for research and reviews.

What can be learned from educational experiences where all students in certain school districts have been given computers?

The lesson learned should be lack of effective direction and control in implementing the plan. I remember from IST 601 that we should control technology, reverse should not happen. As wise users of technology, we should devise clear plans as how technology will be used, especially when it is to be used by kids. If we would have done that, things would have been far better.

I would suggest XO model laptops which are tailor made with the specific usage in schools and by kids. There should be restriction on the kind of websites or URLs that could be visited using the limited web capability of the device (A firewall which allows only listed websites, is a good choice). I am not going into detail how we can secure the unintended usage of web and multimedia.

I was just hearing the news on TV which showed a school in US that encourages students to use drugs and do sex. If the standard in schools drop to this level, there is no surprise that there is no proper control over usage of laptops which were intended for academic purposes. What I mean here is that it is the facility or the management or the party who implement the technology program, should make sure that it is well utilized.

Article copyright (c) 2010 – 2020 – Deepesh Joseph (deepeshjoseph@yahoo.com)
Get all articles from www.getallarticles.com. Be informed and gain knowledge. Good resource for research and reviews.

Applying NPV, ROI – An example to guide IT strategist to evaluate IT investments

Case Study:    

Opportunity A:   Your bank is looking at an optical character recognition (OCR) system to further automate the check processing function. Check processing is a time sensitive function. If outgoing checks miss daily clearing deadlines, the bank looses use of the money for one day. Since your bank clears over one million checks per day, this can be a substantial amount. The current system, based on magnetic ink character recognition (MICR) is reliable, but labor intensive. It requires large numbers of relatively low-level employees to encode each check with magnetic ink. The cost of this process is very high and scheduling the right number of people to meet fluctuating volumes is challenging.    

The initial investment for the OCR systems is estimated to be $1,250,000 for hardware, $450,000 for packaged software, $300,000 for customized modifications to the software, and $200,000 for training. Additional ongoing costs over a five (5) year system life are estimated to be: Hardware Maintenance: ($200,000 per year for 5 years); Software Maintenance: ($250,000; $200,000; $175,000; $200,000; $175,000); Supplies: ($200,000 per year for 5 years).  Benefits over the five-year system life are estimated to be: Salary Reductions due to Staff Cuts: ($1,000,000; $1,100,000; $1,200,000; $1,300,000; $1,400,000);  Increased Revenue Due to Faster Check Collection: ($450,000 per year for each of the 5 years).    

Opportunity B:  Your bank is looking at installing a new credit card processing system to
replace your aging mainframe system. Not only would the new system be less expensive to operate, but also there appears to be an opportunity to sell processing services to other banks that are looking to outsource this function. Your analysis of the credit card market suggests that there will be a continuing concentration in the industry as many small banks sell their portfolios to larger companies. You feel that a modern credit card processing system is essential if you are to compete effectively in this market.    

The initial investment for this credit card system is estimated to be: $1,250,000 for initial software licenses;  $200,000 for customization of software; and $250,000 for training.  Ongoing costs over a 5 year life are estimated to be: License maintenance fees: ($110,000 per year for 5 years) and Software maintenance: ($550,000; $600,000; $650,000; $650,000; $700,000).  Benefits over the 5 year system life are estimated to be: Salary Reductions due to staff cuts: ($450,000; $500,000; $550,000; $600,000; $650,000) and New Revenues from Outsource customers: ($400,000, $450,000, $600,000, $700,000, $3,500,000).    

Which alternative will you present to the IT Steering Committee and why?    

::Analysis::   

 

 

   1.3 Justification for the right alternative       

“Cognitive Dissonance” and how to ease it

Cognitive dissonance is an insecure feeling, or lingering doubts, consumers sometimes have after making large purchases. One way to reduce Cognitive dissonance (CD) is to introduce full money back guarantee on dissatisfaction within a stated time period, say 2-3 weeks after purchase. Another way to reduce CD is by allowing product evaluations where the user is allowed to use the product for a limited time period and then has the option whether to buy it or not. As a marketing manager of a desktop software, I will make the trial version of the software available for free download over the internet. Users can freely download, test, evaluate and then extend the trial period if they wish to, by purchasing the product. This way, the users are devoid of any dissatisfaction after purchase, since they have evaluated the software fully.

Article Copyright – Deepesh Joseph (2003-2020)

Research Reference:
1. Williams C. (2007). Management (4th ed., ). Thomson South Western.

Simple NPV & ROI calculation (Example 001)

Case: A company invests $15000 and receives a $11000 cash benefit at the end of the first year and a $12100 cash benefit at the end of the second year. (Assume Cost of Money = 10%)

Calculation:

NPV = Σ P = 10000 + 10000 – 15000 = 5000
ROI = NPV/Initial investment = 5000/15000 = 33.33%

Accounting Vs Financial Management

Accounting can be considered as an information system that provides various tools to summarize financial performance or economic activities of an individual, family, organization or any other entity. The reports generated from an accounting system, aids the interested individuals, management, owners and creditors to make intelligent decisions in allocating resources. Financial management is the discipline which deals with management of money and assets, while Accounting is thus the tool used by a manager to manage and control finance. For example, the NPV or Net Present Value calculation (accounting tool) aids in deciding what kind of investment on which resources is most profitable (management decision) for the company in the long run.

Article Copyright – Deepesh Joseph (2003-2020)

Research Reference:

1. Williams C. (2007). Management (4th ed., ). Thomson South Western.

Spend Money or Loose It

Viscione’s article (as in Refernce section) pictures out how important is designing and implementing a continuously improving budget process, for any business firm to survive. He warns all business firms either small or big to build its budgeting system right from the beginning of first year of its inception. He suggests many helpful hints that a manager should consider to build and maintain a healthy and long-term budget system to manage money. The basic steps towards this are to allocate time and resources for formulating and evaluating targets of expenses and revenues, summarize the targets and increase the likelihood that the targets will be achieved (means targets should not be viewed as a “forecast” but something that he has to make happen), develop alternatives to each target, apply control measures to monitor progress each month or quarter and take corrective action if its deviates from the original goal of achieving profits from the targets (Viscione, 2000 ). This is the basic regulatory feature of any control process. In this case, we regulate and control the use of money.

My experience with directly involving in the budgeting process is very little, but I can easily relate what I understood from the article to one of my previous employer where I worked as a Project Leader. The organization structure was highly Bureaucratic in nature with the Governor on top followed by Chief Minister, then Secretaries for each specialized state department and the whole bunch of bureaucratic positions such as Directors, Joint-secretaries, Under-secretaries, Project Managers and other employees.

For applying the above mentioned steps to the fullest potential, the manager (the officials till the Under Secretary level, where I worked) should have strong support from his top management to oversee and delegate the budgetary responsibility. The responsibility and commitment should be clearly defined so that each budget category (sales, new product development, departmental projects, employee training for latest technology usage, facility improvement etc) is assigned to an appropriate manager who has full faith in the control process. The state budgeting process is greatly influenced by political and interest groups (citizens, industries, project agencies). This indirectly builds in top level support for the budgetary process. The budgeting process should not make everyone feel that he is the controller, even the manager. There should be generally one controller such as the President or CEO or sometimes a designated official called CFO. In my organization, the IT secretary was the person who had the powers to deal with budgets in the IT department. He devises the strategies for the department and allocates budgetary provisions for each department functions and for various projects. The IT mangers or the directors are given responsibility to set the targets and establish timeframes to achieve them. The idea is that the strategic planning and delegation should always come from the top level. The role of the manager is to make sure that the targets are achieved as assigned to him and take actions when budgetary system warns of a crisis.In this effort, it is useful for him to be aware of the various stakeholders who are either involved in execution of the budgetary process or who are affected by it.

The internal stakeholders include the President, CEO, IT Secretary (in my organization) and CFO (I assume he is who is referred to as “controller” in the article) at the top level who develops and oversees the overall budgetary strategies. Down the levels, we have the individual managers (my IT Manager) who actually “operate” and implement the targets and the employees (including me) who execute the individual tasks towards target achievement. The external stakeholders include company shareholders (are interested in the ultimate profits that budgets brings in, for e.g. the interest groups who have influenced the State budget), banks (are interested in the amounts invested or borrowed), customers or citizens (interested in value addition and prices tagged to the products and services that the company deliver during that budgetary period), budgetary consultants (e.g. CPA who consults on imparting knowledge on building and reshaping budgeting strategies), market environments (that determine the target areas of improvement and thus amount of money to be allocated) and competitors (for benchmarking).

In my opinion, the bureaucratic or hierarchical structure, similar to the one which we had in the IT department, will tend to be more structured as far as setting up and controlling the budgetary process than a flat organization structure where everybody tries to (or sometimes has to) control. Also the manager will have clear responsibilities and boundaries to commit to. The IT department where I worked had department budgeting system which was integrated with the state wide Budget Information System. Each manager can login to the system wherein they can view the budget information for each project that they are handling, summarized target and timelines, monthly, quarterly and yearly projections of money usage per project, drilled down to project tasks. The system can also track progress as the project goes on through its life cycle and can warn him if the resource allocation deviates from the budgetary provisions and thus take corrective actions.

References:
Viscione J.A. (2000). “Small Company Budgets: Targets Are Key”. Harvard Business Review.

(c) Deepesh Joseph, 2006
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