Introduction to Business Information Systems - CMP Ltd - Case Study Example

Introduction to Business Information Systems Name: Tutor: Course: Date: Executive Summary The aim of this report is to provide an understanding of application of business data and information in corporate strategic decisions based on Strategic Business Information Systems. The paper explores spreadsheets as an important tool in analysis and forecasting in which its results are critical in decision making. Knowledge management and business intelligence have been identified as issues vital in business information systems as they highlight both the data and the process of understanding business trends, processes and company position. The first section of the report is an analysis of CMP Pty Ltd business data on its sales, profitability and brands to help in maximizing revenue and reducing costs such as overheads and variable costs. The report also utilizes the tools used in conducting environmental analysis such as the Porter’s Five Forces Model to identify and assess the powers of suppliers, customers, and competitors while evaluating the effect of substitutes and new entrants. In the second section, the report highlights the use of social media in marketing CMP Ltd milk products by looking into the social media as not only an advertising tool but be able to track sales and profitability. On security and data mobility, the report discusses how CMP Ltd can be prone to internal and external risks owning to difficulties of controlling company data. It suggests or recommends some ways in which the company can mitigate or reduce some of the risks mentioned. Finally, the report looks into system customization as two pronged. It suggests that CMP Ltd has an option of procuring an off-the-shelf Time and Attendance system or building an in-house system. An appropriate option is provided for CMP Pty Ltd in the report. Table of Contents Executive Summary 2 1.0 Knowledge Management and Business Intelligence 6 1.1 Recommendations 6 Figure 1: Medium term forecast of CMP Ltd profitability 7 Figure 2. Quantities sold in CMP Ltd and forecast for 2015-2016 8 2.0 Porter’s Five Force Model 9 2.1 Recommendations 10 3.0 Website, Social Media and Sales and Marketing 10 3.1 Barriers 10 3.2 Recommendations on Social Media 10 3.3 Recommendations on Web Metrics 11 4.0 Security and Mobility 11 Table 1: Data Threats and corresponding Actions 11 5.0 System Customization 12 Reference list 14 List of Figures Figure 1: Medium term forecast of CMP Ltd profitability 7 Figure 2. Quantities sold in CMP Ltd and forecast for 2015-2016 8 List of Tables Table 1: Data Threats and corresponding Actions 11 1.0 Knowledge Management and Business Intelligence Hameed (2004) defines Business Intelligence (BI) as a set of methodologies and theories capable of handling large quantities of information and data to be used in decision-making by organizational managers. On the other hand, Knowledge Management (KM) is regarded as a process that captures, stores, retrieves and distributes knowledge among individuals in a business. The essence of KM is to distribute information across the firm where other employees in the business can use it to improve efficiency, quality and informed decisions. Combined Milk Product Pty Ltd (CMP) faces a challenge in which senior managers are not capturing and distributing information on quality, production processes, sales, marketing and advertising to various departments in the company. Consequently, company employees have not been able to improve their comprehension of their specific areas of interest. Moreover, CMP Ltd has not gained adequate insight and understanding of its own experiences. By adopting Knowledge Management methodologies, the company is able to acquire, store and use knowledge in areas like decision making, strategic planning, dynamic learning and problem solving (Barney, 1991). 1.1 Recommendations 1. Employees across the company should be encouraged to create, retrieve, store, analyze and distribute any unstructured or structured information. 2. Make use of news, web documents, spreadsheets, e-mails, databases and business documents to communicate and inform company stakeholders on its operations and strategies. 3. Utilize applications and technologies on knowledge and content to help extract, organize and search value from information sources for development and research activities. On Business Intelligence, CMP Ltd requires data on target market, sales performance, competitor brands and pricing, and mode of advertising. Sales trends for instance, are generated as data objects from a repository so that it can be organized and validated for decision making objectives (Chang & Shaw, 2009). The graph below shows the sales forecast for 2015-2016 in CMP Ltd. Figure 1: Medium term forecast of CMP Ltd profitability In the graph above, CMP Ltd Company anticipates increased sales performance in the next two years. This means that the company has to invest in advertising, marketing, production and human resource to handle the increase in the level of business performance. The forecast above will help CMP Ltd to prepare employees for increased brand quality through training and partner with suppliers (farmers) to increase milk quantity and quality. For example, use of information from production such as quantities of milk products produced as shown in the graph below will help the company in making informed decisions. Figure 2. Quantities sold in CMP Ltd and forecast for 2015-2016 From the graph above, the company is able to use Knowledge Management of captured sales performance of each milk brand and help in forecasting. The company will be able to know that Whole Milk and Reduced Fat Milk sells more than Dried Milk and Cheese. Armed with this knowledge, the company can decide to increase production of Whole Milk or increase more outlets for the highly selling brands. These strategic decisions will also affect employees since they will need to be informed on the required milk quality, quantity and understanding of processes. The company will also be able to understand and benefit from information systems such as Enterprise Resource Planning (ERP), Customer Relationship Management (CRM) and Management Information Systems (MIS) given that forecasted information is captured and relayed to the strategic managers to make strategic decisions. The MIS system will enable senior managers to determine which milk brands have a growing market share, what competitors have in the market and whether to undertake vertical or horizontal market integration (Nonaka, 1994). 2.0 Porter’s Five Force Model Porter’s five force model will help analyze CMP Ltd internal performance with respect to its rivals in the industry (Nonaka, 1994). The major factors are buyer power, threat of entrants, and threat of substitutes, supplier power and effect of competitors. Buyer power is high owing to the value attached in purchase of different milk brands in CMP. Milk customers are loyal and have little intention to switch products. For example, customers of Whole Milk have higher power and influence than that of Cheese. Supplier power is low. This is because farmers from East Gippsland have limited option in selling milk. Since its highly sensitive and perishable product, suppliers have to play by the rules of the processors. Suppliers instead choose to partner with the processors for consistent supply and regular payments. Milk processor rivalry is very low given the capital intensity and higher cost of advertising. Since 1963, the company has been growing steadily without being edged out by competitors despite the low efficiency of production and sales. For example, in the profitability graph, CMP Ltd has higher market share in Whole Milk and Reduced Fat milk than its competitors. Entry barriers are high. For example, CMP Ltd has taken more than 50 years to attain the status it is at present. High capital costs to purchase equipment, comply with health and safety and high cost of land limits activities of new entrants. Besides, handling mixed-products requires experience and specific level of knowledge. Threat of substitutes is low. Milk is a composite product with great nutritional value. Since close substitutes include bottled water and non-milk beverages, these are not true substitutes. CMP Ltd milk brands like whole milk are also used in making tea and coffee. Customers find a difficulty in substituting milk despite increases in prices. 2.1 Recommendations 1. Install enterprise, decision support, sales and management information systems to increase efficiency and reduce production costs hence making CMP products more competitive in the market. 2. Build on efficient and documented business processes as well as intellectual capital, employee competence and internal relationships 3. Differentiate milk products using superior packaging, new advertising technologies and documentation of each business process. 3.0 Website, Social Media and Sales and Marketing 3.1 Barriers Social media marketing may limit access to a larger base of traditional customers (Lock, 2014). For example, many families and institutions relying on traditional advertising mediums may not find social media useful in checking new products, prices and trends. Media platforms like Facebook, twitter and Instagram may be great for social conversations and obtaining information and may offer little key performance indicators for CMP Ltd to measure buying trends in social media. Finally, it is difficult to determine the capacity of penetration or buy in social media. For example, in Facebook, clicking on ‘like’ is not enough to conclude that the customer has bought the product. 3.2 Recommendations on Social Media 1. CMP Ltd can create a page and not a profile on Facebook to gain landing page apps. The company can build online milk stores or customize tabs 2. Share product links in social media status updates. For example, CMP Ltd can post links in reports and other communication that takes fans directly to the product on social media sites. 3. Encourage sharing. CMP Ltd should encourage its followers or fans to share, repin or retweet. For example, the company can start contests in which if they share news on milk products they can win two packets of Yoghurt. CMP Ltd current website has more to do with contact list, product advertising and less on marketing. The company may realize that it is spending more on web advertising with minimal impact on sales since it cannot measure or determine web traffic (Cenfetelli & Bassellier, 2009). The Company requires using the web for purposes of referrals, links and rankings to analyze strategic marketing metrics and develop a roadmap to success. 3.3 Recommendations on Web Metrics 1. CMP Ltd can utilize free analytics such as Google Analystics and Webalizer. The company is able to find full features and track its Return on Investment (ROI) by using keyword on ad position and Adwords. Webalizers can be used in default log analyzers in different servers within the company. 2. Exploit search Engine referrals from Google to measure contributions of the search traffic from each search engine. For example, using this referral system, CMP Ltd can be able to compare performance versus market share, obtain visibility on potential drops, and uncover strategic value. 4.0 Security and Mobility Data used in the company for purposes of sales, employee, production, competition, market research and finance should be kept confidential and accessible to authorized persons within the company (Rud,2009). For example, data on employee performance, academic achievement and activities should not be shared with other employees. Some of the threats to CMP Ltd data for its business processes, workforce and departments are; Table 1: Data Threats and corresponding Actions Threat Recommendations Data breach CMP Ltd should understand how information leaks whether from within or through cyber criminals. Lost laptops, human errors and lost mobile devices Each time an employee exits the company, the management should attempt to retrieve company property from them. They should also reduce prevalence of human errors and loss of data equipment. Insecure business process, corporate espionage and leaked paper records CMP Ltd has a huge task in regulating use and disposal of paper records. Authorized must dispose or shred paper records as well as authority to remain or edit data from the business Illegitimate use of data by company employees CMP Ltd should control utility and flow of information in and out of the corporate network. By using a Data Loss Prevention (DLP) software that is built on content awareness, the solution is able to track employees who attempt to e-mail sensitive data, copy on a USB stick or burn to a disk. Malicious intent Confidential data can be pulled off the secured database and leaked to the public domain. CMP Pty Ltd should encrypt its e-mail information or lock down its USB drives. Attack by Trojan horses and viruses Data is susceptible to online viral data especially when the systems are continuously connected to an external network. Susceptibility to viruses makes CMP ltd to lose vital data existing in Office Applications. It is important that the company installs a firewall or frequent updates of anti-viruses such as Norton, Karspesky and Avast among others. CMP Ltd stakeholders such as management, suppliers, buyers, customers, regulators and the community may want to check and transact with the company online in different places of the globe. It will be important that CMP Ltd establishes m-business to connect with its online users. To embrace m-business CMP Ltd can undertake the following activities; 1. Use of SIM card applications with product or user identification in which one is able to send payments of milk delivered or order through the mobile phone devices. 2. Provide instant connectivity to its buyers and suppliers by being reachable and accessible at any place and time. For example, when some members of the management are out of the business, they can monitor activities through new application and functionalities unique to mobile infrastructure and devices. These functionalities include data access from core organizational systems such as Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), calendars, shared applications and synchronized phonebooks (Gruhn et al. 2007). 5.0 System Customization Using CMP Ltd employees to build on Time and Attendance system reduces on costs of hiring external employees to develop the system. The employees are able to build on local and internal knowledge to reduce time lags and delays in transportation. For example, internal employees understand the challenges in milk delivery into and out of the company and would work on the best time and attendance system that controls delays and time lags. Moreover, CMP Ltd employees will be motivated and satisfied with owning a system developed in-house. This will boost their innovativeness, sense of ownership and creativity in handling internal systems and processes. Finally, challenges and queries are resolved easily owing to availability of system administrators and developers within the company. Efficiency and effectiveness will be increased in resolving queries and issues arising from the prototype and its applications. However, it is difficult to find internal employees who have the knowledge in system development (Thong, 1999). On the other hand, an off-the-shelf system purchase can be cheap and integral with many applications that may not have been requested by the company. Also, there are no direct costs of paying employees per hour on system development. However, it would be very difficult for CMP Pty to lodge complaints or queries since the system has no guarantees. The system may also fail or become inadequate in addressing arising issues that are unique to the company (Scheraga, 1998). For instance, the system may not be able to estimate the time taken to pick milk, drop containers or clean the refrigerated trucks. Regarding the customized system for CMP, the company can hire system developers and provide with all the information it requires included. The developers are specialized system developers and are able to develop a superior system with all the customer specifications and requirements included (Rausch, et al. 2013). The company will hold them liable if the system fails or malfunctions. However, custom developers charge expensive fees with delays increasing on the direct costs. There is also a possibility of hiring incompetent persons or quacks that may be out to fleece the company. Based on the efficiency and requirements of the Time and Attendance System, it will be advisable that CMP Ltd purchases the customized system off-the-shelf because it will save on time and benefit from the expertise of the competent system developers instead of building an in-house system. 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Rausch, P, Sheta, A, & Ayesh, A 2013, Business Intelligence and Performance Management: Theory, Systems, and Industrial Applications, Springer Verlag U.K. Rud, O 2009, Business Intelligence Success Factors: Tools for Aligning Your Business in the Global Economy. Hoboken, N.J: Wiley & Sons. Scheraga, D 1998, Knowledge management: competitive advantages become a key issue, Chemical Market Reporter, Vol. 254 No. 17, pp. 3-6. Thong, J 1999, An integrated model of information systems adoption in small businesses, Journal of Management Information Systems, Vol. 15 No. 4, pp. 187-214. Read More