Improving an existing CIS by examining customer decisions, development, and planing to increase the effectiveness for ISC and ISM

Sauer, Peter

Improving an existing CIS by examining customer decisions, development, and planing to increase the effectiveness for ISC and ISM

BWL - Unternehmensführung, Management, Organisation

Zusammenfassung

Inhaltsangabe:Abstract:
More and more companies apply electronic information systems in all their business areas. In the past, many of these systems pertained to one specific user group. However, due to high efforts and investments for maintaining these information flows, companies tend to increase the amount of attracted user groups. Thereby, the users must deal with more and more information every day. In addition, they must select the relevant information, which serves as a basis for their decisions, on their own. This procedure and the included irrelevant information generate high efforts due to re-work requirements. Therefore, users reject more and more information. All these conditions combined with a two-user group-oriented customer information system require output adjustments to the user-specific needs. Consequently, it is necessary to identify the users, their needs, and the potential effectiveness of specific information provided by a specific system.
This thesis refers to theoretical analysis models for generating an optimal concept. Thereby, it considers methods analyzing the original information system aim, user groups, their needs and the way the provided information flow can meet all these requests. These considerations represent actual conditions of Varta Gerätebatterie GmbH. Afterwards, this research compares the optimal with the actual situation in order to deduct appropriate improvement steps. Finally, this thesis suggests possible integrations and constitutes the related advantages and disadvantages based on cost accounting and information management theory.
The information flow analysis demonstrates the importance of finding appropriate methods and the key role of defining all users. Moreover, it emphasizes the significance of adjusting this flow to user needs in regular intervals due to the rapidly changing environment. The analysis of the information preparation and output indicates that communication plays a key role in exchanging information. The analysis of the optimal and the actual information system display several gaps, which VARTA should close. The actual situation analysis includes company conditions. Therefore, it is valid for practical implementation. These gaps pertain to the improvement procedure as well as to completely new integration issues.

Inhaltsverzeichnis:Table of Contents:
List of abbreviationsii
List of abbreviationsiii
Index of appendicesiv
List of definitionsvi
List of definitions […]

Leseprobe

Inhaltsverzeichnis

ID 5790

Sauer, Peter: Improving an existing CIS by examining customer decisons, development, and

planing to increase the effectiveness for ISC and ISM

Hamburg: Diplomica GmbH, 2002

Zugl.: Aalen, Fachhochschule für Technik und Wirtschaft, Diplomarbeit, 2002

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Peter Sauer

Diploma Thesis

Improving an existing CIS by examining customer decisions, development,

and planning to increase the effectiveness for ISC and ISM

Diploma thesis, Peter Sauer

Abstract

More and more companies apply electronic information systems in all their business

areas. In the past, many of these systems pertained to one specific user group.

However, due to high efforts and investments for maintaining these information flows,

companies tend to increase the amount of attracted user groups. Thereby, the users

must deal with more and more information every day. In addition, they must select

the relevant information, which serves as a basis for their decisions, on their own.

This procedure and the included irrelevant information generate high efforts due to

re-work requirements. Therefore, users reject more and more information. All these

conditions combined with a two-user group-oriented customer information system

require output adjustments to the user-specific needs. Consequently, it is necessary

to identify the users, their needs, and the potential effectiveness of specific

information provided by a specific system.

This thesis refers to theoretical analysis models for generating an optimal concept.

Thereby, it considers methods analyzing the original information system aim, user

groups, their needs and the way the provided information flow can meet all these

requests. These considerations represent actual conditions of Varta Gerätebatterie

GmbH. Afterwards, this research compares the optimal with the actual situation in

order to deduct appropriate improvement steps. Finally, this thesis suggests possible

integrations and constitutes the related advantages and disadvantages based on

cost accounting and information management theory.

The information flow analysis demonstrates the importance of finding appropriate

methods and the key role of defining all users. Moreover, it emphasizes the

significance of adjusting this flow to user needs in regular intervals due to the rapidly

changing environment. The analysis of the information preparation and output

indicates that communication plays a key role in exchanging information. The

analysis of the optimal and the actual information system display several gaps, which

VARTA should close. The actual situation analysis includes company conditions.

Therefore, it is valid for practical implementation. These gaps pertain to the

improvement procedure as well as to completely new integration issues.

Peter Sauer

Diploma Thesis

List of abbreviations

Admin

. Administration

ABC

Activity-based

costing

CCA

Customer

Cost

Allocation

CIS

Customer

Information

System

contribution

margin

opportunity

costs

CSF

Critical

Success

Factors

CuCo

Customer

Contribution

variable

costs

e.g.

for

example

EIS

Executive

Information

System

etc.

et cetera

fig.

figure

FCA

Fixed

Cost

Allocation

FSC

Fixed

Sales

Costs

i.e.

that

Information

Management

Information

System

ISC

International Sales Controlling

ISM

International Sales and Marketing

Min CuCo

Minimum Customer Contribution margin

Min Price

Minimum

Price

MIS

Management

Information

System

OIR

Objective

Information

Request

ovh.

overhead

price

Profit

Contribution

prop.

proportional

R&D

Research

and

Development

SIR

Subjective

Information

Request

VARTA

Varta Gerätebatterie GmbH

YTD

Year-To-Date

Peter Sauer

Diploma Thesis

Table of contents

List of abbreviations...

iii

Index of appendices...

List of definitions...

List of definitions (VARTA)...

vii

Introduction ... 1

1.1

Background to the research ... 1

1.2

Research problem, research issues and contributions... 2

1.3

Justification for the research ... 3

1.4

Delimitations of scope and key assumptions... 3

Methodology... 4

2.1

Research approach... 4

2.2

Information model criteria... 4

2.3

Procedure... 5

2.4

Reliability and validity... 8

CIS-model ... 8

3.1

Determination of influence factors... 9

3.2

Analysis of influence factors... 11

CIS status quo... 27

4.1

Hierarchy... 27

4.2

CIS information insert... 29

4.2.1 Insert application software ... 29

4.2.2 Insert sources ... 30

4.2.3 Information preparation and output ... 30

Gap-analysis ... 35

5.1

Customer status quo and estimated status quo ... 35

5.1.1 Improvements concerning insert and preparation ... 36

5.1.2 Improvements concerning layout output ... 43

5.2

Potential status quo... 43

5.3

Gap concerning pricing, deviation and benchmarking... 44

Practical improvements... 45

6.1

Pricing ... 45

6.2

Deviation analysis ... 57

6.2.1 ISC deviation methods... 58

6.2.2 ISM deviation analysis output ... 62

6.3

Contribution benchmarking ... 68

Conclusion ... 72

Appendix 1 Tables ... 75

Appendix 2 Figures... 89

Bibliography ... 103

Declaration of originality... 107

iii

Peter Sauer

Diploma Thesis

Table of appendices

Index of tables

Table 1:

IS requirements

Table 2:

Reporting models

Table 3:

Overview of different approaches

Table 4:

Survey on IS implementation

Table 5.1: Method areas

Table 5.2: Information side allocation

Table 5.3: Strategy allocation

Table 6:

Strategy evaluation diagram

Table 7:

IS categories

Table 8:

Operative business characteristics

Table 9:

Decision Analysis

Table 10: "6 W" method

Table 11: ISC process analysis

Table 12:

Insert, time, and preparation

Table 13: Direct-cost oriented pricing

Table 14: Full cost-oriented pricing

Table 15: Subsidiary-specific full-cost oriented pricing

Table 16.1: Marginal break-even analysis variable costs

Table 16.2: Marginal break-even analysis fixed costs

Table 17: Fictive customer

Table 18.1: ISC deviation analysis

Table 18.2: Deviation in sales volume

Table 19: Deviation in fixed costs

Table 20: Break-even analysis sales volume

Table 21: Break-even analysis net sales

Table 22:

Benchmarking information insert

Table 23:

Benchmarking report

Peter Sauer

Diploma Thesis

Index of figures

Fig. 1:

Research procedure

Fig. 2:

Four circle information model

Fig. 3:

Three circle information model

Fig. 4:

Communication flow

Fig. 5:

Meaning within communication

Fig. 6:

Relationship of SIR and OIR

Fig. 7:

Control loop

Fig. 8:

Management (MM) hierarchy

Fig. 9:

Management system

Fig. 10:

Database structure

Fig. 11.1: EIS screenshot

Fig. 11.2:

CIS screenshot

Fig. 11.3:

Customer Cost Allocation screen

Fig. 11.4:

Minimum CuCo / Price screen

Fig. 12:

ISM requests / three-circle model

Fig. 13:

Insert, time, and preparation

Fig. 14:

Pricing - influence factors

Fig. 15:

Price policies

Fig. 16:

Price ranges

Fig. 17:

CIS layout ("from-to" guidelines)

Fig. 18:

Layout for break-even analysis

Fig. 19:

CIS layout (break-even analysis)

Fig. 20:

CIS layout (CVP sensitivity analysis)

Fig. 21:

Benchmarking results break-even

Fig. 22:

Benchmarking results customer distance

Fig. 23:

Customer value portfolio

Peter Sauer

Diploma Thesis

List of definitions

ABC

a method of applying overhead costs to customers by

considering non-volume-related activities.

Additional costs

a variance between historic and current costs due to price

and sales volume changes.

Allocation

a method of channeling overhead costs to cost objects by

assuming causal relationships.

Avoidable costs

all costs, a company could avoid in the future.

Budget

a management-operating plan expressed in quantative terms.

Common costs

a cost not traceable or identifiable with a business segment

or cost object (ovh. costs, indirect costs, nontraceable costs).

Contribution margin

the difference between sales revenue and variable costs.

Cost Center

an activity unit to which costs are assignable (departments).

Cost driver

a basis for allocation within activities in activity-based costing.

Cost object

activities concerning products, customers, departments,

projects, for which costs are measured and assigned.

Direct costs

a cost directly traceable to a specific business segment.

Direct costing

a manufacturing accounting method charging a product only

with the sales volume-varying costs.

Direct tracing

a cost traceable to a cost object by causal relationship.

Driver tracing

a cost indirectly traceable to a cost object by causal factors

measuring a cost object's resource consumption.

Full costing

a manufacturing accounting method charging a product with

all fixed and variable costs (absorption costing).

Marginal costing

a method of deducting all variable costs from revenue.

Margin of safety

a decrease in sales before suffering a loss.

Relevant costs

costs affected by decisions and thereby avoidable.

Relevant range

the production volume range a company expects to operate.

Standard costs

costs incurring under efficient operating conditions and

forecasted before the manufacturing process begins.

Sunk costs

in the future unavoidable historic cost, e.g. R&D costs and

rental costs. They are independent from current decisions.

Peter Sauer

Diploma Thesis

List of definitions (VARTA)

Admin. 2 costs

all costs for operating an organization but excluding already

reported features within other cost types.

Direct costs

it includes material and labor direct costs, transportation to

local warehouses, special direct costs of repackaging and

assembling, and costs for non-VARTA product attachments.

Inbound costs

all costs for transporting goods to factories.

Sales logistics costs

all distribution costs, except for freight, e.g. charges, logistics

management, and warehousing.

Net sales

all product and service sales revenues, which form and

contribute to VARTA's main business.

Marketing costs

direct customer assignable costs, e.g. POS-related costs

such as displays, floor stands, and design charges including

production, installation, and shipping charges. Additionally,

salaries for service increasing brand awareness in POS,

promotional packaging costs, and other special production

costs not belonging to standard production costs, e.g. special

promotional packaging or promotion products.

Min CuCo

minimal allowed customer profit contribution on SKU level.

Min Price

a subsidiary price guideline; lowest price level in negotiations

and contracts.

Outbound costs

all freight expenses for shipping VARTA products to

customers, special packaging transportation costs,

transportation insurance fees, and environmental & recycling

regulation costs (direct sales cost).

Ovh. admin. 1 costs

all administrative costs, necessary for directing a subsidiary's

organization but excluding parts already reported in sales

administration

Ovh. marketing costs

all costs deriving from main business activities, not

assignable to a customer. All other marketing expenses,

except for selling, i.e. marketing management, administration

for all marketing business processes, public relation,

consumer relationship management.

vii

Peter Sauer

Diploma Thesis

Pocket sales

net sales minus rebates.

Production costs

all indirect manufacturing costs.

Prop. costs

all direct labor and direct material costs, i.e. product-related

variable costs, transportation expenses to local warehouses,

direct costs for repackaging & assembling, and attached non-

VARTA products.

Rebates

listing and entry fees, cash discounts, credit insurance,

cooperation advertising, promotional allowances.

Sales admin. costs

all administration costs supporting customer relationship but

not included in other cost types, e.g. order, invoice, and

accounting processes.

Sales costs

all sales force costs, e.g. salaries, wages, benefits, broker

fees, agent commissions, bonuses, and incentives.

Moreover, selling-oriented travel expenses such as traveling

costs, entertainment costs, e.g. charges, leasing,

depreciation, petrol, insurance, maintenance and all

merchandising costs (replaced by customer or outsourced).

SKU

Selling Key Unit, smallest and most precise characterization

of a battery.

Volume

relating to units (blisters) consisting of pieces (batteries) and

pieces consisting of cells.

WCC receivables

opportunity costs; imputed costs; calculated by multiplying

monthly net sales by one-year interest rate available on

money market and by average customer payment term.

WCC stocks

opportunity costs; imputed costs; calculated by multiplying

the monthly average gross inventory per SKU and the one-

year interest rate available on the money market.

viii

Peter Sauer

Diploma Thesis

1. Introduction

1.1 Background to the research

Worldwide nations are trying to strengthen their international ties. Therefore, the

former protectionist barriers are falling. This is stimulating free capital movement as

well as it is paving the way for companies to establish subsidiaries abroad (Svend

Hollensen, 2001). Global alliances and new information technologies are exerting

pressure on the international markets. This leads to worldwide competition and more

price transparency. Moreover, companies must deal with different customer

preferences, habits, and laws on this world market. Hence, companies should obtain

all local market and unique customer information. Thereby, they could manage to

achieve long-term profit and liquidity targets. Therefore, a company must know all

customer costs and revenues to secure a short and medium-term activity

management (Joos-Sachse, 2001). Finally, the strategic controlling hedges this

operative controlling steering task.

The relationship between a company and its environment becomes increasingly

complex. This makes an Information Management (IM) with Information Systems (IS)

a crucial competitive factor. A company should give IM a corresponding significance

within the organization because it allows monitoring and measuring subsidiaries,

customers, and products (Picot, 2001). A successful IM must consider all affected

and interacting users ([Picot, 1988]; [Horváth, 1996]; [Krcmar, 1997]) and an IS

should permit an effective communication between these users ([Shenk, 1997];

[Wimmer, 2001]). Consequently, concerning marketing and sales departments,

appropriate methods are essential in order to guarantee a common understanding

([Zahn, 1998]; [Zerres, 1998]). Moreover, IM also requires cost accounting and cost

management knowledge because qualitative interior and exterior information often

derives from quantitative background information. Therefore, several authors

illustrate the appropriateness of different cost accounting methods within various IM

and IS conditions (Coenenberg, 1999).

This thesis focuses on the Customer Information System (CIS) improvement of

VARTA Gerätebatterie GmbH (VARTA).

According to the IS

lifetime model (Watson,

1993), this CIS has passed the initial phase and is at an evolutionary stage

Nevertheless, Wattson's survey (1991) demonstrates an average IS failing rate of 42

percent during both phases. Hence, an IS condition adjustment process and an

Peter Sauer

Diploma Thesis

observation of current weaknesses is essential. Thereby, companies learn from their

failures. Finally, a company should adjust the coordination of insert, preparation, and

output in predetermined intervals in order to match new exterior and interior

conditions.

1.2 Research problem, research issues and contributions

The thesis examines customer decisions, customer development, and customer

planning in order to improve the existing CIS by increasing the effectiveness of

International Sales Controlling (ISC) and International Sales & Marketing (ISM).

Firstly, the thesis deduces the importance of identifying all IS influence factors for

generating an optimal CIS frame. Thereby, the thesis considers all interacting users

and their needs.

Secondly, the thesis infers the necessity of involving all users into the CIS content

determination process. Thereby, users could express their understanding of a

satisfying CIS. Thus, they can realize the integration of their needs.

Thirdly, the thesis determines the CIS status quo. Thereby, the thesis can examine

all differences between the current and the optimal CIS frame and content. In

addition, this comparison permits evaluating current preparation and integration

methods, such as calculation, allocation, and tracing. The same applies for all user-

specific adapted information output characteristics, such as time, layout, and

preciseness.

Fourthly, the thesis displays the importance of having a risk and feasibility rating.

Thereby, VARTA could cancel further investment consuming implementation actions

in time. Moreover, these infeasibility-causing issues redirect a company's focus to

other necessary pre-research areas. Fig. 1 in the appendix shows a graphical

research overview.

This thesis explains and uses several theoretical approaches. This overview is

merely a brief summary at this point:

The research process describes the appropriateness of information models within

section 2.2 and uses various analysis methods within section 3.1 and section 3.2.

Moreover, concerning operational business departments, it employs theoretical

definitions within section 3.2. Afterwards, it applies this theoretical background

Peter Sauer

Diploma Thesis

knowledge to the analysis within section 3.4. Additionally, the thesis mentions several

accounting, allocation, and tracing methods within section 5 and 6. In section 6, it

uses further theoretical approaches for pricing, deviation analysis, and contribution

benchmarking methods.

1.3 Justification for the research

In general, user problem statements emphasize weaknesses and initiate researches.

Thereby, the CIS ISM users argue about missing, undetectable, and imprecise

information. This leads to user aversion due to inefficient search processes through a

large amount of irrelevant data.

A further research justification is user questions about qualitative meanings deriving

from quantitative values. This leads to enormous clarification efforts and it reduces

ISC's efficiency in steering and guiding operational business processes.

Moreover, unreliable CIS maintenance and allocation based on historic assumptions

vindicate this research because unsupported and inaccurate information could lead

to wrong decisions.

Additionally, users merely utilize the CIS as a query system in order to receive

customer status quo information. The ISM and ISC decision support concerning

customer development and planning is missing, i.e. time-oriented measurement and

benchmarking are unavailable.

Finally, all these reasons lead to the last justification. ISC has less time for generating

additional reports about crucial processes, weaknesses, and problem sources. This

degrades their unique observing, steering, and guiding task.

1.4 Delimitations of scope and key assumptions

The thesis concentrates on the CIS concerning customer decisions as a supporting

information tool on a programmed application-level. Therefore, it does not examine

any non-database related disturbances regarding this information flow, e.g. cultural

differences between users and different meanings of terms. Moreover, it does not

consider irrelevant customer decision information as well as all exterior company

information, such as market researches. Additionally, the thesis focuses on

quantative customer information as basis for qualitative decision support due to the

existing cost and revenue-oriented CIS structure. It examines the CIS as a stand-

alone tool without any references to management or other departments. The thesis

Peter Sauer

Diploma Thesis

highlights ISM decision support to the extent this information is matching the regular

ISC reporting task. The major body of research is to improve the CIS as an ISC

analysis tool with regard to a few additional reporting improvements concerning ISM.

The thesis must consider the second issue due to the research aim of providing ISC

with more time in steering business processes with additional irregular analyses.

2. Methodology

2.1 Research

approach

There are two different research approaches for an improvement process: an

inductive and a deductive approach (Enström, 2002). An inductive approach

observes an actual situation based on a theoretical model (section 2.2). A deductive

approach begins with a status quo analysis, from which it derives conclusions. This

thesis uses both within different sections. Adaptations and changes focus on the

comparison of an actual CIS (section 4) with an optimal CIS (section 3). Thereby,

from a main perspective, the whole improvement process is a deductive approach.

On the other hand, theoretical models are the main source for generating an optimal

CIS. They are the only possibility for eliminating weaknesses existing in an actual

situation because they replace practice by theory.

2.2 Information model criteria

IS users have different responsibilities and they focus on different tasks. Therefore,

an application-level IS must provide user-related information meeting specific

requests. This also comprises communication volume and quality ([Horváth, 1996];

[Kuhlmann, 2001]; [table 1]). A CIS query system is only convenient if the users

recognize a benefit of the provided information (table 2) because a user must

discharge this dept at the domicile of the debtor. Otherwise, it is unsuitable and users

reject this information completely due to a current "information and stimulus overload"

as well as a "data addiction" (Shenk, 1997). Consequently, such an IS cannot

contribute to higher productivity, job dimension, and individual performance due to a

lack of work related outcome (Joshi and Rai, 2000). Finally, the users retain their old

systems, information preparation and communication tools.

Thus, the thesis summarizes all IS difficulties within the following four problem areas

(Notger and Kiesel, 2001):

Peter Sauer

Diploma Thesis

· volume

· communication

· quality

· time

All these problem areas depend on the specific IS, tasks, user conditions, and

relationships. They reflect the main selection criteria for an appropriate information

system model (section 2.3).

2.3 Procedure

Several authors include all possible IS influence factors within similar circle models in

order to show their relationship ([Picot, 1988]; [Horváth, 1996]; [Krcmar, 1997]). The

first model includes four different circles ([Picot, 1988]; [fig. 2]). The offered

information circle is a company's available information pool. The Objective

Information Request (OIR) as well as the Subjective Information Request (SIR) is the

user-related information pool. The user task determines the OIR and the user

perception determines the SIR. The Info-Request is part of the SIR and represents

individually expressed user statements. Nevertheless, user statements are often

diffuse due to an inability of communicating needs in an accurate way (McClatchy,

1990).

Therefore, a second model combines the SIR and the Info-Request in one pool

([Horváth, 1996]; [fig. 3]). The three-circle intersection reflects an optimal IS frame,

which should be the target for improving a status quo IS frame.

Moreover, a third model connects the four-circle model with the IT communication

flow theory of sender, transmission, and receiver ([Wimmer, 2001]; [table 3]; [fig. 4]).

A common basis of understanding offers the widest possible information flow if there

are no disturbances. Therefore, it requires an equal sender and receiver character

pool (Berthel, 1975). The character combinations must have the same meaning for

both sides (fig. 5).

Consequently, Horváth's model in conjunction with Wimmer's model match all

selection criteria. This model combination justifies the following research step order.

The first inductive step is to analyze the intersection between OIR and SIR in order to

illustrate the optimal CIS frame and content. The bigger this intersection, the more

information an IS could provide, if permitted by the available information. Later on,

this section explains the used appropriate analysis methods in more detail.

Peter Sauer

Diploma Thesis

The second deductive step is to extract needless information, which is part of the CIS

status quo but not of the newly generated information pool. It only makes work

without providing benefits.

The third inductive step is to include missing information and to make it available in

order to fill out the intersection between OIR, SIR, and available information.

The fourth deductive step is the user-related reorganization of remaining and newly

integrated CIS information. Hence, a research process must verify the user-specific

purpose and it must adapt it to the user's needs. Additionally, standardization and a

company-wide acceptance reduce the disturbance risks. The final step is a

benchmark comparing the prepared information with the quality of the output

produced (QIP). This guarantees the work-related outcomes contribute to the user's

job satisfaction. This is the case if the output meets the user requirements (table 1).

Krcmar (1997) suggests the same research procedure. He argues that an optimal

CIS creation based on the existing available information only leads to a higher

(subjective) information request (fig. 6).

A further practical analysis supports this theoretical procedure (Havelka and Lee,

2002). They conducted, concerning a new IS implementation, a survey on Critical

Success Factors (CSF) among development personnel and users. However,

VARTA's second phase-oriented improvement process still contains all first phase

implementation elements. Therefore, it is also applicable within this thesis. It

demonstrates that practical experience emphasizes the same procedure (table 4).

In theory, SIR and OIR should be congruent but in practice, they are not. Theory

mentions various SIR and OIR analysis methods. Firstly, identifying important

method areas is viable ([Horváth, 1996]; [Köhler, 2001]; [Bruhn, 2001]; [table 5.1]).

Secondly, an allocation of methods to different information sides is feasible

([Koreimann, 1976]; [Krcmar, 2000]; [table 5.2]). Finally, it is possible to assign these

methods to the different information obtaining strategies (Watson, 1993). All these

allocations depend on the company condition and the IS lifetime phase (table 5.3).

These theories deal with different research levels. The vague strategy allocation only

minimizes the selection amount. Afterwards, it is the task of the thesis to decide on

several more detailed information side-oriented methods.

Peter Sauer

Diploma Thesis

Therefore, this thesis suggests a vague strategy analysis in the beginning because

the method selection process must first determine VARTA's environmental

circumstances and the IS lifetime phase. Thereby, a smaller method variety remains.

Then, concerning the information side analysis, the planning process allows choosing

from a smaller method range. Finally, repeating this control loop with different

methods should deliver an appropriate method mix (fig. 7).

Watson (1993) states that "each approach poses some difficulties" and "because of

the variety of problems associated with identifying executives' information

requirements, organizations have used a variety of methods". Therefore, a major task

is to find an appropriate and comprehensive method mix highly detailed and efficient.

First, the "asking" strategy relates to the SIR methods obtaining user statements. .

For this reason, these methods could merely generate the Info-Request circle, which

is only a part of the SIR. In addition, these methods often lead to diffuse problem

statements ([McClatchy, 1990]; [Ahituv and Neumann, 1990]; [Shenk, 1997]).

Consequently, these methods never cover the proper Info-Request volume and a

research must focus on supplementary methods. This is particularly the case

concerning the management levels within the affected departments. Both

departments observed are not on the lowest operational level (fig. 8). Therefore,

there are more unstructured problems and poorly defined data needs.

The second strategy of "deriving needs from an existing IS" should merely enhance a

method mix because it is the defectiveness of the existing systems that motivates the

development of other new IS ([Houdeshel and Watson, 1987]; [Watson, 1993]).

Furthermore, other IS within the same company often have different aims and target

user-groups. Therefore, they cannot serve as a research principle.

The third strategy of "synthesizing needs from characteristics of the utilizing system"

focuses on the object system (user) activities. There, it is important to use a method

dealing with the IS-aim.

The last strategy of "discovering needs from an evolving system" is only applicable if

a company already implemented a system. Nevertheless, the risk of this strategy is to

transfer existing weaknesses into a new system generation.

Peter Sauer

Diploma Thesis

Due to the IS man-machine dialog, the selection depends on its suitability regarding:

· user-groups (hierarchy level, task, requirements, problems)

· IS conditions (aim, lifetime phase)

The thesis focuses on the third and fourth strategy (section 3.2) due to their

advantage over the other ones (table 6). It decides on a top-down approach, i.e.

integration starts after the whole research is completed (Dick, 1991). The CIS

existence, concerning this approach, minimizes the usual failure risk and allows

continuously monitoring of operational business.

2.4 Reliability and validity

A thesis should consider two crucial issues: reliability and validity. These terms

determine to which degree a research outcome corresponds to reality.

The thesis concentrates on the current organizational structure including actual tasks,

perceptions and IS aims. Company conditions as well as employee's behavior could

change rapidly. Therefore, this thesis excludes SIR analysis methods to the extent it

is possible and involves OIR methods as much as possible. This increases reliability

because task-related characteristics are usually more solid. Nevertheless, this risk of

rapid changes underlines the need for regular observation and adjustment.

Concerning VARTA this thesis is highly valid because it uses theory and adapts it to

practice. The improvement process involving all relevant VARTA user-groups and

considering the current CIS reflects this practical orientation. Moreover, the thesis

evaluates all theoretical conclusions with regard to their practical suitability. Finally,

the numerous theoretical method adaptations demonstrate the same intention.

3. CIS-model

A thesis must examine above all the user-group specific OIR and SIR intersection

([Horváth, 1996]; [Krcmar, 1997]). These circles are user-group-specific because they

depend on user tasks and activities. Moreover, it must define the IS user-groups

before it can decide on an analysis method because different analysis methods are

appropriate for different user-groups. Afterwards, a suitable selection is possible.

Finally, all selected methods must adhere to the CIS aim. Therefore, the thesis will

examine this within the next section as well.

Peter Sauer

Diploma Thesis

3.1 Determination of influence factors

The thesis utilizes the newest version of the CIS documentation for determining the

relevant user-groups. It limits the method selection to two user-groups (ISC and ISM).

The ISC department represents the first relevant user-group. Theory positions it on

an operational management level in the management hierarchy (fig. 8). "ISC should

assure that specific tasks are carried out effectively and efficiently" (Ahituv &

Neumann, 1990). This also emphasizes the steering, regulating, guiding, and

directing task (fig. 9) by supporting decisions and effective work. Therefore, ISC

should provide information in a lucid and contributing manner. This means it should

educe only ISM relevant information out of the whole company data pool (fig. 9).

Additionally, it should search for further CIS enhancements and prepare their whole

information flow. All these ISC activities depend on the ISM-related SIR and OIR

circle.

The CIS, concerning ISC, plays the role of an information databank (table 7). It must

store all available information. Hence, ISC can select and prepare ISM-relevant

information of the whole pool. In fact, ISC reports are hardly ever self-initiated

because receivers motivate their generation.

Finally, with regard to ISC, the thesis chooses the process analysis method

(

Valusek

and Fryback, 1987). This method deducts the ISC insert and preparation necessities

from the ISM information request. Therefore, it is reasonable to define ISC as the

available information side. It provides the CIS information volume, splits the

requested information into its single elements, searches for sources, and prepares it

appropriately.

The ISM department represents the second relevant user-group. Theory positions it

on a middle management level in the management hierarchy (fig. 8). "ISM should

assure that resources are obtained and used effectively and efficiently to accomplish

the organization's objectives" (Dick, 1991). Therefore, concerning resource allocation

within changing objectives, ISM must make information-based decisions (fig. 9).

Thus, the CIS should play the role of a predicting and decision-making IS ([Mason

and Swanson, 1981]; [table 7]).

The thesis suggests applying the decision analysis method (Jenkins, 1984) because

ISM-related decisions are the basis for the OIR analysis. Firstly, this method

Peter Sauer

Diploma Thesis

determines all necessary ISM decisions to perform related tasks. Secondly, it

inspects supporting information for enabling users to generate their specific decision

making patterns and priorities. Although the popular CSF method was also

applicable, it would include all company-related critical success factors. However, as

this research method only affects one department, this would generate higher efforts

than necessary.

The CIS supports both user-groups in their operative business tasks and activities

(table 8) on an application-level. In addition, this thesis applies the "6 W" method

within the fourth strategy. It contains the following elements:

· who (user)

· what (information)

· why (reason)

· what for (aim)

· which form (layout)

· when (time)

The previous ISM decisions illustrate the aims within this method regarding the other

two methods (decision and process analysis). It enhances the current method mix

because it observes the analyzed OIR once more and includes the SIR. All these

endorsements derive from included CIS experimentation and user activity

examination, e.g. additional habits of information adaptation, frequently used

information, and rejected data. Moreover, it specifies the method mix more precisely

by adding the reasons for a certain information request. This enables ISC to observe

if a request is really an ISM task and if this information could support an ISM

decision. In the end, it observes if the IS output-related layout and time aspect

adheres to all table 1 features (section 2.2).

IS aims set out in writing are often imprecise and could change over time (Stelzer,

2001). Nevertheless, as this improvement process should not develop a new system,

it must clarify the already implied aim. An improved IS must still maintain the original

one, i.e. the analysis in section 3.2 must correspond to this aim. According to Horváth

(1996) and due to customer orientation, the CIS plays an information-providing role

for the whole customer plan and control system within the management system (fig.

9). This has a severe impact on the ISM decision analysis because only decisions

contributing to this aim should be included.

Peter Sauer

Diploma Thesis

The available information and its preparation provide ISM with satisfying information.

Nevertheless, the main problem is the information overflow (Dorn, 1994) and the

divergent user understanding. Therefore, a CIS should highlight, compress, and filter

specific information by employing various preparation methods. However, concerning

ISC, this could lead to a high insert and preparation effort in order to match all

quantity and quality-related needs. Finally, the available information research must

consider all insert, time, and preparation areas.

3.2 Analysis of influence factors

All these theoretical methods concentrate on different objects or they have different

starting points. Therefore, this paragraph comprises three parts.

The first part applies the decision analysis, which is the primary basis for using the

other two methods. A decision is the only obvious managerial activity output

(Emmanuel, Otley, Merchant, 2001). The thesis determines three major ISM decision

areas regarding the delimitations (table 9). Every decision area contains several

minor decisions supporting the main one. Nevertheless, this detailing procedure is

essential because it allows a more thorough examination of the relationship between

decision and information request. The sum of all information requests defines the

ISM oriented OIR and SIR intersection content.

In the second part, the "6 W" method enhances the decision analysis. The

information requirements deriving from all minor decisions represent the basis for this

method. It describes the already determined information request in more detail by

adding four additional aspects. Moreover, it emphasizes the ISC planning and

controlling issue. Thereby, it is possible to maintain the CIS aim. The "6 W" method is

the only method containing a reason analysis. This increases ISC's understanding of

a specific information purpose. Thereby, ISC can customize a preparation process

more accurately to meet a request. Moreover, ISC is able to secure a specific ISM

request matching the CIS aim. Consequently, ISC can assess if the CIS is the

appropriate tool for this information supply. Additionally, it must secure this

information insert. Finally, this method integrates time and layout aspects into the CIS

output. This affects ISC's layout preparation. Thereby, the process analysis may

neglect this layout issue.

The last part focuses on the ISC process analysis. It uses the decision-related

requirements as basis for deducing all necessary CIS inserts. The minor decisions in

Peter Sauer

Diploma Thesis

conjunction with their aims and reasons allow determining an accurate data insert

volume. The layout aspect is only included insofar as it concerns time characteristics.

Furthermore, the operative business characteristics of ISM lead to additional

preparation requirements, such as high precision, simple layout, predetermined

period, high update frequency, and straightforward calculation methods.

Finally, all data inserts and preparations generate the available information circle.

The intersection of all three circles displays an optimal CIS information frame and

content.

The "6 W" method is supposed to maintain the CIS information flow. Therefore, it

does not consider ISC as an independent CIS influence factor. A further illustration of

this relationship is the ISM decision analysis as the basis for the ISC process

analysis.

ISM decision analysis (table 9)

The main ISM objective is to increase VARTA's total profit. The common operational

cash flow calculations emphasize the same objective. Moreover, they demonstrate

that doing business with customers is an essential component for a company's profit.

Every customer is a contributory factor to the whole income. The single customer

profit derives from subtracting all customer-allocated costs from the customer's net

sales. The single Selling Key Unit (SKU) net sales generate these customer net

sales. Finally, the SKU profit results from SKU net sales minus all product-specific

manufacturing costs and minus allocated customer-initiated costs:

Consequently, VARTA's profit depends on two key factors: customer consistency and

battery prices within a customer's portfolio. These are the starting point for every

profit calculation. Therefore, they represent the main decision areas of existing

customer development and customer pricing. The third decision area, potential

customer development, derives from customer consistency. Moreover, potential

customers in contrast to existing customers do not contribute anything to VARTA's

profit. Therefore, it is reasonable to differentiate between existing and potential

customer consistency.

Peter Sauer

Diploma Thesis

The minor decisions influence the major decision areas (King, 1975). Minor decisions

are independent from each other. Therefore, ISM has the possibility to make all of

those minor decisions at the same time. Firstly, the commercial partnership strategy

constitutes the whole customer selection and planning process. It is necessary in

order to harmonize all VARTA conducted customer-specific activities. Secondly, the

customer resource assignment represents VARTA's investments in a customer in

order to improve the commercial partnership. Thirdly, the customer portfolio structure

implies a customer-specific product-mix, e.g. highly or lowly contributing batteries.

Changing this mix would directly affect a customer's contribution. The decision

analysis excludes the battery manufacturing side because it is not ISM's task to

manage these costs.

ISM needs the following planning information in the field of commercial partnership

strategy decisions:

The customer status quo and the estimated status quo together must provide enough

data to make decisions about either commercial partnership intensification or slow-

down possible. Nevertheless, concerning strategy justification, the estimated status

quo is more important. This is due to the prediction of a future contribution rate and

its close relationship to planning.

The contribution benchmarking process mainly serves as an evaluation and

adaptation tool when searching for commercial partnership strategies. Planning

evaluation is always a crucial issue within the whole planning process. Firstly, the

CIS must integrate the customer status quo as well as the estimated status quo into

the benchmarking process. Thereby, ISM is able to evaluate the intended strategy.

Secondly, the CIS examines if a customer reaches a defined target position or if a

chosen strategy leads to a planned target position. Thereby, ISM can evaluate a

strategy's efficiency. Moreover, it can compare the strategies of different customers

by focusing on various gaps between the status quo and the estimated status quo

positions. Finally, it is possible to evaluate an already implemented strategy ex post

Peter Sauer

Diploma Thesis

by integrating new customer status quos into old benchmarking processes. Thus, the

CIS compares its current position with the before declared target position.

After having defined customer-specific development strategies, ISM must decide on

further parameters influencing the existing customer decision area.

The first parameter refers to the available company resource allocation, e.g.

customer-initiated business and monetary efforts. Both comprise rebates,

promotions, received invoices, sales personnel visits etc. ISM needs the following

planning information to make a decision about this allocation:

The customer status quo enables ISM to decide on an appropriate customer-specific

investment volume by taking a customer's potential in covering these allocated costs

into account. This potential also comprises product-manufacturing costs not even

ISM can influence. Manufacturing costs accrue because it is always a company's

purpose to supply its customers. The proximate shipment causes these costs to

become customer-related costs.

Nevertheless, the estimated status quo is essential for planning purposes. Thereby,

ISM can examine if a customer is also in the position to cover the costs, plus

additional investments, by its future profit. Consequently, based on this budget

information, ISM can evaluate an investment decision currently at issue.

The second parameter is the customer portfolio structure containing battery types,

battery mixtures, and sales volume. ISM needs the following planning information in

order to perform its tasks:

This parameter is similar to the first one because the customer development strategy

determines the direction.

The customer status quo enables ISM to examine the relationship of profit and costs

as well as the relationship between different cost types of different assortment

Peter Sauer

Diploma Thesis

groups, assortments, battery types, and SKUs. In general, SKUs with a high

contribution rate enforce the whole contribution rate of battery types. The higher the

battery type contribution, the better the assortment contribution. Therefore, a

customer portfolio should mainly consist of highly contributing SKUs. ISM must

always consider a higher SKU contribution if it makes decisions about changes within

a customer portfolio.

The estimated status quo predicts future consequences, which could justify current

decisions, e.g. increasing versus decreasing the contribution margin.

Finally, ISC must provide ISM with information about reasons and sources for

deviations. This enables ISM to evaluate their strategies with measurable values and

by understanding their previous mistakes. Consequently, this provides the

opportunity to improve forecasting strategies and adapting them to new conditions in

irregular intervals. The included re-deciding processes about current strategies could

initiate additional more detailed research reports.

The existing and potential customer decision areas are similar because both deal

with customer consistency. The sole exception is the existing impossibility of basing

estimations on current data because no customer status quo information is available.

This decision area concentrates on commercial partnership approvals and

disapprovals as ISM-selectable strategies. Therefore, ISM needs the following

planning information:

The potential status quo is similar to the estimated status due to common time-

orientation characteristics. Nevertheless, the first potential status quo is more

imprecise. Therefore, only a contribution benchmarking process could provide

sufficient data for approval or disapproval decisions. Moreover, benchmarking

enables ISM to examine if a specific customer increases or decreases VARTA's total

profit. In case of an approval, ISM could evaluate the selected strategy in the same

way as in the existing customer decision area.

Details

Seiten
Erscheinungsform: Originalausgabe
Jahr: 2002
ISBN (eBook): 9783832457907
ISBN (Paperback): 9783838657905
DOI: 10.3239/9783832457907
Dateigröße: 5.8 MB
Sprache: Englisch
Institution / Hochschule: Hochschule Aalen – unbekannt
Erscheinungsdatum: 2002 (August)
Note: 1,0
Schlagworte: information sales controlling

Autor

Peter Sauer (Autor:in)

Improving an existing CIS by examining customer decisions, development, and planing to increase the effectiveness for ISC and ISM

Zusammenfassung

Leseprobe

Inhaltsverzeichnis

Details

Autor

Peter Sauer (Autor:in)