Wal-Mart - Projected Costs for the Business Requirements - Example

BUSINESS REQUIREMENT ANALYSIS OF WAL-MART Wal-Mart is one company that has determined that its e-Business functions are not “cutting edge”. Such that this company believes that due to this, their organization is losing its competitive edge. Hence, in the year 2000, Wal-Mart established its own e-business exchange which is called RetailersMarketXchange.com that aims at serving the convenience store market. The Wal-Mart’s business development department has done some preliminary market and competitive intelligence research. Two business projects that should be investigated have been identified, such as (1) Enhanced EDI system that receive requirements or orders from large customers and send requirements or orders to vendors; and (2) Enhanced m-business capabilities to existing Internet infrastructure. Business Requirement 1: Enhance an EDI System that Receive Requirements/Orders from Large Customers and Send Requirements/Orders to Vendors Wal-Mart has productively put into operation Electronic Data Interchange (EDI) system in the current years. The advantages have been accounted to be noteworthy. In this case, the EDI system will be further develop and implement in Wal-Mart in order to receive requirements or orders from large customers and send requirements or orders to vendors. The objective of enhancing Wal-Mart implementation of the EDI system is to make more efficient handling of purchase orders. Wal-Mart may slash the company’s purchasing expenses by putting into practice an EDI system. EDI system can radically lower down administrative cost. Less manpower will be involved using the EDI system. Less administrative handling will require manpower. The computer will be utilized in handling the transactions. This type of system will allow Wal-Mart to receive purchase orders from more customers and send the orders to vendors. EDI system will greatly improve rapidity as well as preciseness of the Wal-Mart in handing over documents. Aside from this, lowered costs will be achieved as a result of decreased document managing as well as better client-service levels. Carrying out business by electronic means can be a costly scheme for suppliers to big enterprise such as Wal-Mart. Suppliers of Wal-Mart get to comply with the EDI requirements of Wal-Mart. Via the EDI system, Wal-Mart established that computerization and technology enhancement are essential in the success and increased profit in a company especially in the current time. EDI system is likewise important in order to endure the present highly competitive business environment. Integrated communications software works with information exchange software (Harding, 1994). Currently, numerous EDI Personal Computer software packages are being introduced in the market. Through these packages, EDI system can assist more companies. EDI is affordable. Templates, formats or overlays are available. The EDI formats are created to comply with the prerequisites of enterprises such as the Wal-Mart as well as the small suppliers of the Wal-Mart. Through the EDI system, these suppliers can transact trading or business electronically with Wal-Mart. Figure 1. Use Case Diagram in Handling Inventory Business Requirement 2: Enhance m-Business Capabilities to Existing Internet Infrastructure According to Shankar (2007), Wal-Mart has opted to adopt an asset-trailing wireless application. This wireless asset-tracking are being done by Wal-Mart by utilizing RF tags. According to the Wal-Mart officials, they have been enjoined by the outcomes of their initial testing. Hence, the Wal-Mart is anticipating this wireless application to enhance the supply chain efficiency. The expected improvement will be on the international supply chain visibility, on-shelf merchandise availability, detection of robbery or shoplifting, and self-checkout at Wal-Mart stores (Shankar, 2007). However, there is a need for the Wal-Mart deal with possible transmission troubles with the RF tag, the cost of the RF tag as well as the competitiveness of the employees who reads the RF tag. Approach engages the option of the things to do and the things that should not be done. The Internet enhanced the prospect as well as intricacy in strategic decision-making. Mobility assures to intensify as the industry and application boundaries turn out to be more permeable. Wal-Mart can utilize investigative structure to come up with a tactically easily understandable objective for spending on mobile solutions. Figure 2. Use Case Diagram in Supply Chain TECHNOLOGY PROJECT PLANS Using the detailed Business Requirements Analysis, a solution design was developed consisting of both software and hardware recommendations for the Technology Project Plan. Technology Plan for Business Requirement 1: Enhance an EDI System that Receive Requirements/Orders from Large Customers and Send Requirements/Orders to Vendors I. Databases In the first use case, the role that the database would play is very critical. The use of databases cannot be keep away from when operationalizing with EDI files. This is due to the fact that EDI is the exchange of information between computers. These databases are where the computers keep their data. Both an EDI file and a database contain data aside from the information about the data they contain. The format of an EDI file is an efficient storage of data for transport while a database is a container of data for storage. Even if similarities exist between these two technologies, databases and EDI, the format of their file structure is different. This makes it difficult for new EDI users to interrelate the two technologies. EDI can be considered an uncomplicated system and easily comprehensible. II. Programming The first use case would require software to facilitate ordering, invoicing, payment, and others. III. Networks Use of the Internet, extranets, and intranets would be employed into this solution design. As the international information superhighway is advanced, it is a must that the Wal-Mart networks must be connected directly to it via the internet in order to be more All partakers must have fair access to this communications network. However, interconnection speeds as well as the kind of connections may differ but the services offered must be available to all partakers. If there is a need for numerous networks to be put up, they must act as a lone network for all partakers. Effect of the Solution 1 to Internal and External Stakeholders The use case is a technique for capturing system requirements. Use cases are scenarios written in regular or non-technical terminology to describe how a system interacts with a user or another system. The use cases that an Information Technology Department of the Wal-Mart would need to know will be very important in order to analyze and design technology solutions for the requirements. Adoption of Solution 1 will have an effect on inside as well as outside stakeholders. Through the enhanced EDI System that receive requirements or orders from large customers and send the requirements or orders to vendors, internal stakeholders, such as employees and management, and external stakeholders, such as suppliers, vendors and the customers will have ease and convenience due to the resulting positive improvement in productivity. In terms of document processing, its speed, quality and efficiency will increase. There will be higher speed in the transaction rate since software and hardware will be of great contribution with regards to better productivity. Both the internal and external stakeholders will be satisfied with the benefits of EDI technology. Manual processing which usually takes minutes to accomplish manually will now take a few seconds to process electronically using the EDI system. EDI decreases the number of claims rejected one or more times by 30 percent. This solution will also attract more external stakeholders due to the improvement in transacting with the Wal-Mart. More happy customers would mean more earnings. Increased profits can also be translated to higher remunerations to employees and management of Wal-Mart. Business Risks in Solution 1 There are business risks in this proposed Solution 1. The main risk is in terms of new and additional expenses in software, hardware, systems installation, training and development of manpower. This added cost will mean millions of dollars considering the wide scope and numerous market outlets of Wal-Mart. This business risk will be mitigated through improvement in the quality of service and products which can be translated to higher profits. Waiting time for transactions to be completed drastically declines by more than fifty per cent. This will mean the number of transactions that can be done per day will at least double. This means more income for the company. This risk will also be offset by the radical decrease in the administrative cost by computerizing business conventionally carried out manually. The utmost prospective for expense cutbacks rests in the electronic translation of transactions, compliances, accounting and disbursements. Security Risks in Solution 1 There are also security risks in this proposed solution. That is, hacking can be a problem. Since the system will be more mechanized and computerized, there is the risk of sabotage. This risk will be mitigated through stricter security. Security measures will be drafted, regularly assessed and proper implementation should be observed. Screening of staff to be hired and trained will be stricter. Alternatives and contingency measures should also be put in place. Data and files should have back-ups. Financial Plan for Solution 1 The financial plan for Solution 1 is shown below: Table 1. The Financial Plan of Business Requirement 1: Enhancing an EDI System to Receive Requirements/Orders from Large Customers and Send Requirements/Orders to Vendors. Projected costs for the business requirements 1 Estimate costs for human resources $50,000,000 Estimate costs for hardware $80,000,000 Estimate costs for software $150,000,000 Estimate costs for training $30,000,000 Estimate costs for marketing $100,000,000 Estimate programming cost (initial cost and maintenance cost $35,000,000 NPV of future cash flows for the Business Requirements 1 Metrics will be used to measure the performance or outcomes of Technology Project Plan 2. These metrics met the conditions below, such as: 1. Assessment of the strengths and weaknesses of the software and hardware selected 2. Assessment of the potential challenges that might arise as a result of each 3. Assessment of the limitations of the use cases 4. Assessment of the potential challenges to receiving buy-in from all key stakeholders 5. Assessment of the feasibility of mitigating all risks 6. Assessment of the reliability of the projections 7. Evaluation of the strengths and weaknesses of the identified metrics. Technology Plan for Business Requirement 2: Enhance m-Business Capabilities to Existing Internet Infrastructure I. Databases In the second use case, databases are essential. It is in the databases where the data are kept. It contains data and information about the data it contains. Database is a container of information, statistics, facts or records for storage. II. Programming The second use case would require software to facilitate tracking asset, etc. III. Networks Use of the Internet, extranets, and intranets would be employed into the solution design. The use cases aids in the Systems Analysis and Design process. Effect of the Solution 2 to Internal and External Stakeholders Solution 2 will have an impact in the internal and external stakeholders. Through tracking assets through wireless application, there will be improved quality of service and products will be assured as a result of fast and efficient tracking system. This will lead to satisfied inter and external stakeholders. The internal stakeholders, the management and staff will undergo series of training, seminars and workshops in order to work comfortably and effectively in m-business-based company like Wal-Mart. This can be, however, very expensive for this company. But these company’s people will benefit from this continuous education as added knowledge, skills and credibility. Business Risks in Solution 2 There are business risks in this proposed Solution 2 which is enhanced m-business capabilities to existing internet infrastructure. One main business risk is in terms of additional investment to be infused to support this business solution. This will require high investment cost to support the capital and staffing requirements, support infrastructure and back-up system. This business risk will be mitigated through high business returns to be generated. Security Risks in Solution 2 There are also security risks in this proposed Solution 2. These risks will be mitigated. Hacking can be a threat. Since the system will require computerization, there is the risk of computer sabotage. This risk will be mitigated through observance of stricter security measures. Alternatives and contingency measures should also be put in place such as data banking and backing-up of files. Financial Plan The financial plan is shown below: Table 2. The Financial Plan of Business Requirement 2. Projected costs for the business requirements 2 Estimate costs for human resources $80,000,000 Estimate costs for hardware $50,000,000 Estimate costs for software $100,000,000 Estimate costs for training $100,000,000 Estimate costs for marketing $40,000,000 Estimate programming cost (initial cost and maintenance cost $20,000,000 NPV of future cash flows for the Business Requirements 2 Metrics will be used to measure the performance or outcomes of Technology Project Plan 2. These metrics met the conditions below, such as: 1. Assessment of the strengths and weaknesses of the software and hardware selected 2. Assessment of the potential challenges that might arise as a result of each 3. Assessment of the limitations of the use cases 4. Assessment of the potential challenges to receiving buy-in from all key stakeholders 5. Assessment of the feasibility of mitigating all risks 6. Assessment of the reliability of the projections 7. Evaluation of the strengths and weaknesses of the identified metrics. References Harding, Elizabeth U. EDI eases oceangoing inventory control; PCs at small suppliers are focus of vendors' efforts - TSI International's Electronic Data Interchange services for retailers - Field Report. Software Magazine, March, 1994. Shankar, Venkatesh, Tony O’Driscoll, Tony and Reibstein, David. 2007. Rational Exuberance: The Wireless Industry’s Killer “B”. Strategy-Business. Booz Allen Hamilton Inc. Read More