Using Reference Models within the Enterprise Resource Planning Lifecycle

ERP-specific reference models describe on a conceptual level the structure and functionality of enterprise resource planning solutions. However, these models focus on depicting executable processes and do not take into account tasks related to business engineering, system selection, implementation or change. This paper discusses how reference process models can be used within the entire ERP lifecycle. All phases of the ERP lifecycle have individual requirements for the management of the relevant knowledge. It will be shown how extended reference models can serve as a knowledge repository for enterprise resource planning. This paper includes several pragmatic recommendations for managers involved in ERP projects.     

BUILDING AND EVOLVING DATA WAREHOUSING AND BUSINESS INTELLIGENCE ARTEFACTS: THE CASE OF SYSCO

This paper investigates use of data warehouse and business intelligence capabilities to integrate with customers in the supply chain and improve insights into customer sales. By making internal data warehouse sales information available to customers, additional value to those customers is created, eliminating asymmetries of information in the supply chain. In addition, the evolution of data warehousing into business intelligence is investigated, expanding sales information to include marketing associate performance analysis generated for internal use. Further, a methodology that was used for building a business intelligence system is also examined. Finally, what appears to be a business‐intelligence‐driven focus on enterprise resource planning systems is analyzed. These issues are illustrated using real‐world data warehousing and business intelligence artefacts developed at SYSCO. Copyright © 2012 John Wiley & Sons, Ltd.     

Judgment and Decision Making in Project Continuation: A Study of Students as Surrogates for Experienced Managers

This work explores the efficacy of using students as surrogates for experienced managers in escalation studies. Participants were 222 managers with substantial project planning and evaluation experience and 146 undergraduate business students. Our results show that the experienced managers exhibited a strong tendency to continue projects, with this tendency being positively related to the degree of project completion. The managers also tended to invest a greater amount of additional resources in response to favourable rather than to unfavourable information, contingent on the degree of project completion. In contrast, the students' decisions showed little sensitivity to the contextual information, and they exhibited no association between the likelihood they would continue a project and how much funding they would allocate to the project. These results suggest that caution is needed in generalizing student-based escalation findings to real-world business settings.     

Market competition,management accounting systems and business unit performance

Increasing competition in the market, due to the application of modern manufacturing technology, deregulation of economies, and privatization or corporatization of government owned enterprises, makes decision makers use of management accounting systems more important (Bromwich, 1990). There have been calls for research into the use of management accounting systems under the changing circumstances (Kaplan, 1983; Shank and Govindarajan, 1989; Bromwich, 1990; Bromwich and Bhimani, 1994).This paper reports the results of a study which offers an explanation for the relationship between intensity of market competition and business unit performance, by incorporating into the model managers use of the information provided by the management accounting system (MAS). To assess the relationship, data were collected from 61 business unit managers by way of personal interviews. The results indicate that the intensity of market competition is a determinant of the use of the information which, in turn, is a determinant of business unit performance. In other words, managers use of the information plays a mediating role in the relationship between the intensity of market competition and business unit (BU) performance. An interpretation of the results is that those organizations which use the information can effectively face competition in the market and thereby improve performance.     

AN EMPIRICAL ASSESSMENT OF THE “FIT”BETWEEN STRATEGY AND MANAGEMENT INFORMATION SYSTEM DESIGN

This paper was motivated by the limited understanding of the role of accounting vis a vis other information in supporting the needs of management. The paper reports the findings of a study which examined differences in the design parameters of management information systems in firms adopting different strategic priorities. Based on a sample of 49 business unit general managers, the findings indicate that the effectiveness of business units is dependent on a match between the design of the information system and the firm's strategic posture. Information systems which have the characteristics of a broad scope system were found to be more effective in firms employing a strategy of continuous product/market development and innovation (Prospectors) than in firms which were protecting a comparatively narrow and stable product-market (Defenders). The results have important implications for management accountants involved in the design and implementation of management information systems, especially in firms adopting a more innovative strategic posture. In particular, the study sheds light on the role of accounting as part of the “mosaic” of information provided to managers for decision making.     

The promise--and peril--of integrated cost systems

Recent advances in managerial accounting have helped executives get the information they need to make good strategic decisions. But today's enterprise resource planning systems promise even greater benefits--the chance to integrate activity-based costing, operational-control, and financial reporting systems. But managers need to approach integration very thoughtfully, or they could end up with a system that drives decision making in the wrong direction. Operational-control and ABC systems have fundamentally different purposes. Their requirements for accuracy, timeliness, and aggregation are so different that no single, fully integrated approach can be adequate for both purposes. If an integrated system used real-time cost data instead of standard rates in its ABC subsystem, for example, the result would be dangerously distorted messages about individual product profitability--and that's precisely the problem ABC systems were originally designed to address. Proper linkage and feedback between the two systems is possible, however. Through activity-based budgeting, the ABC system is linked directly to operations control: managers can determine the supply and practical capacity of resources in forthcoming periods. Linking operational control to ABC is also possible. The activity-based portion of an operational control system collects information that, while it mustn't be fed directly into the activity-based strategic cost system, can be extremely useful once it's been properly analyzed. Finally, ABC and operational control can be linked to financial reporting to generate cost of goods sold and inventory valuations--but again, with precautions.     

The information archipelago--plotting a course.

Information systems applications in some aspects resemble those of a decade ago--they cost a lot, are technically complex, and take a long time to develop. Moreover, as the technology continues to change rapidly, managers find themselves continually squeezed by a shortage of the technical staff and financial resources they need to keep up. A company can use knowledge of its particular strengths and weaknesses in regard to IS to steer its way onto a safe course, say these authors in the second article of a series dealing with the "islands" of information: computers, telecommunications, and office automation (see "The Information Archipelago--Maps and Bridges," HBR September-October 1982). Setting a safe course requires a new planning approach, for which the guideposts are the company's familiarity with any one technology, the importance of the technology to corporate strategy, and certain business characteristics such as size, complexity of product lines, and the general approach to corporate planning.     

The relevance of managerial accounting information: A multinational analysis

Multinational enterprises often employ their domestic accounting and control systems in their foreign affiliates. The literature suggests that, due in part to different operating environments around the world, this practice may impair the usefulness of information available to foreign managers, as their information needs differ from those of domestic managers. This study empirically examined information relevance for areas of manager responsibility in different countries and attempted to determine the environmental variables associated with information relevance. The results showed that formal accounting reports are considered more helpful in some countries, while informal discussion as a form of information is considered more helpful in others. However, the relationship between the business environment and information relevance was small, although significant, across many types of information.     

RAROC AT BANK OF AMERICA: FROM THEORY TO PRACTICE

In 1993, Bank of America's Risk and Capital Analysis Group was charged with the task of developing and instituting a single corporate-wide system to allocate capital to all the bank's activities. Since 1994, that system has been providing quarterly reports of risk-adjusted returns on capital (RAROC) for each of the bank's 37 major business units. By 1995, B of A had also developed the capability to calculate RAROC down to the level of individual products, transactions, and customer relationships. RAROC systems allocate capital for two basic reasons: (1) risk management and (2) performance evaluation. For risk management purposes, the overriding goal of allocating capital to individual business units is to determine the bank's optimal capital structure–the proportion of equity to assets that minimizes the bank's overall cost of funding. This process involves estimating how much the risk (or volatility) of each business unit contributes to the total risk of the bank, and hence to the bank's overall capital requirements. For performance evaluation purposes, RAROC systems assign capital to business units as part of a process of determining the risk-adjusted rate of return and, ultimately, the “economic profit” of each business unit. The objective in this case is to measure a business unit's contribution to shareholder value, and thus to provide a basis for effective planning, capital budgeting, and incentive compensation at the business unit level. Concerns about capital adequacy, along with the Basel risk-based capital requirements, have played some role in the growth of RAROC among commercial banks. But the most powerful impetus to bankers' use of more systematic risk measures is coming from increasingly activist institutional investors. Besides giving senior management an economic basis for evaluating the bank as a portfolio of businesses and for making resource allocation decisions that improve the bank's risk/reward profile, RAROC systems are also expected to produce better performance by holding managers accountable for the amount of investor capital they are putting at risk.     

Strategic IS planning practise in Croatia: Organizational and managerial challenges

In recent years, the role of information technology has grown in importance. Thus, strategic IS planning is evolving into a key part of a company's strategic business plan. This paper presents the results of a survey on the strategic IS planning practices of Croatian companies. The results of the survey are compared with similar surveys in Slovenia and Singapore. In Croatia, companies' IT is still considered just a tool for automation of present business processes, completely neglecting the challenging role of IT as a competitive resource in the market place. The research findings indicate that the source of this problem comes from lack of knowledge and interest in IT from top management structures of Croatian corporations. Thus, significant efforts must be taken by management to develop a new hybrid manager profile. Certainly, this type of manager must get additional knowledge in strategic business planning and IT management.     

Integrative strategic performance measurement systems,strategic alignment of manufacturing,learning and strategic outcomes: an exploratory study

There is considerable interest in the role of strategic performance measurement systems (SPMS), such as balanced scorecards, in assisting managers develop competitive strategies. A distinctive feature of SPMS is that they are designed to present managers with financial and non-financial measures covering different perspectives which, in combination, provide a way of translating strategy into a coherent set of performance measures. There appears to be wide variation in how these systems are configured. However, as yet, there has been little consideration given to identifying underlying information characteristics that might help explain how the systems have beneficial effects. This study identifies a key dimension of SPMS, integrative information, as being instrumental in assisting managers deliver positive strategic outcomes. Three interrelated dimensions of integrative SPMS were identified in this study. The first, strategic and operational linkages, was a generic factor that captures the overall extent to which the systems provide for integration between strategy and operations, and integration across elements of the value chain. The second attribute, customer orientation, focuses on customer linkages and includes financial and customer measures. The third dimension, supplier orientation, is based on linkages to suppliers and includes business process and innovation measures. A model is developed that predicts that integrative SPMS will enhance the strategic competitiveness of organizations. It is proposed that the influence of integrative SPMS on strategic outcomes is indirect through the mediating roles of alignment of manufacturing with strategy and organizational learning. Data from a survey of 80 strategic business units provide varying support for the proposed relationships.     

Strategic Choices,Environmental Uncertainty and SBU Performance: A Note on the Intervening Role of Management Accounting Systems

This paper examines the role of management accounting systems (MAS) design on the relationship between: (1) strategic business unit (SBU) strategy and SBU performance and (2) perceived environmental uncertainty (PEU) on SBU performance. MAS design was defined in terms of the extent to which managers use broad scope MAS information for managerial decision making. The responses of 62 SBU managers, drawn from a cross-section of manufacturing companies in Western Australia, to a questionnaire survey were analysed by using a path analysis. The results suggest that SBU strategy and PEU are important antecedents of MAS design, and that broad scope MAS information is an important antecedent of SBU performance.     

A conceptual foundation of design and implementation research in accounting information systems

This structured literature review focuses on the design and implementation of systems in Accounting Information System (AIS) research. The review has two objectives: 1) To look in depth at AIS research regarding the design and implementation of information systems related to accounting in the last fifteen years; 2) To understand design and implementation issues in AIS. To do so, this research examines the current state of design and implementation research in the domain of AIS, using a structured review of abstracts in top-level Information Systems, Accounting, and AIS journals. Using a design science in IS theoretical framework, the review categorizes themes and trends in AIS literature. Some of the most relevant themes include audit/auditors, enterprise resource planning, monitoring and control, adoption, and decision making. The most relevant issues include training, commitment, investment, culture, and existing business processes. The research includes gaps, limitations, and opportunities for future research.     

Six IT decisions your IT people shouldn't make

Senior managers often feel frustration--even exasperation--toward information technology and their IT departments. The managers complain that they don't see much business value from the high-priced systems they install, but they don't understand the technology well enough to manage it in detail. So they often leave IT people to make, by default, choices that affect the company's business strategy. The frequent result? Too many projects, a demoralized IT unit, and disappointing returns on IT investments. What distinguishes companies that generate substantial value from their IT investments from those that don't? The leadership of senior managers in making six key IT decisions. The first three relate to strategy: How much should we spend on IT? Which business processes should receive our IT dollars? Which IT capabilities need to be companywide? The second three relate to execution: How good do our IT services really need to be? Which security and privacy risks will we accept? Whom do we blame if an IT initiative fails? When senior managers aren't involved in these decisions, the results can be profound. For example, if they don't take the lead in deciding which IT initiatives to fund, they end up overloading the IT department with projects that may not further the company's strategy. And if they aren't assessing security and privacy risks, they are ignoring crucial business trade-offs. Smart companies are establishing IT governance structures that identify who should be responsible for critical IT decisions and ensure that such decisions further IT's strategic role in the organization.     

How executives can shape their company's information systems.

When a big New York bank expanded in London, technical specialists in the two cities disagreed about which vendor's information system was best. The debate continued for several months until finally the technical experts took the issue to a senior-management policy committee. But the senior managers didn't understand the terminology and kept postponing the decision. Meanwhile, the London office complained loudly that the slowdown was threatening the unit's growth. Like the bank, most companies need a new approach to making decisions about information technology (IT), especially since it now affects so many aspects of the business. The company's technical experts seldom understand the overall business, and the senior managers who understand the business are usually lost when it comes to computers. One way to blend both perspectives is to establish a task force that solicits input from top management and creates a set of principles to guide subsequent investments in information technology. By drawing on 10 to 15 statements that reflect management's basic beliefs about how the company should use IT, the task force translates the language of corporate strategy into computerese. For instance, an electronics company wanted various functions to act more like one company. It created a principle that said, "Information systems will provide application that support cross-functional integration of business processes." Managers making subsequent decisions about computers could immediately rule out any technologies that contradicted that statement. Principles thus speed up the decision-making process, but more important, they ensure that every investment in IT helps the corporation achieve its strategic goals.     

Enhancing the competitiveness and sustainability of social enterprises in Hong Kong: A three-dimensional analysis

Running a social enterprise (SE) is more difficult than running a small or medium-sized enterprise because SEs have to achieve both economic sustainability as business enterprises and their social mission for the benefit of society. After a few years of operation, many SEs fail or struggle for survival. In this study, we examine some of the factors that affect an SE’s profitability, financial management, and business planning and management. Based on in-depth interviews with 22 social enterprises in Hong Kong, we find that SEs with the dual investment objectives of social mission and financial return are more sustainable and competitive than SEs with social impact as their sole objective. Furthermore, SEs managed by non-owner managers have better financial planning and performance than those managed by owner managers. In addition, SEs with an oversight/advisory committee are more competitive and have better management practices than those without such a committee. Our findings have policy implications for government, SEs, funding bodies, and non-profit organizations to enhance and promote the development of the social enterprise sector.     

国有商业银行客户经理绩效管理机制的构建

客户经理是商业银行最小而最重要的经营单位和价值创造主体.当前客户经理绩效管理存在着管理空间断层、考核体系不合理、与利益分配联动度不高及内部机构设置耗散客户经理工作效率等问题.据此,本文作者提出了改进客户经理绩效管理机制的基本思路,即以突出贡献,统一考核,定量分配为基本思路,优化客户经理绩效考核机制,并建立相关配套制度.同时,就客户经理绩效目标的确立、大型客户的绩效在有关人员之间的分割、潜在绩效的考核分配、人力费用资源紧缺矛盾制约客户经理报酬兑现等问题提出了解决方略.     

What's wrong with strategy?

Why is it that successful strategies are rarely developed as a result of formal planning processes? What is wrong with the way most companies go about developing strategy? Andrew Campbell and Marcus Alexander take a common sense look at why the planning frameworks managers use so often yield disappointing results. Companies often fail to distinguish between purpose (what an organization exists to do) and constraints (what an organization must do in order to survive), the authors say. Many executives mistakenly believe, for example, that satisfying stakeholders is an objective that drives thinking about strategy. In fact, it's a constraint, not an objective. Companies that don't win the loyalty of stakeholders will go out of business. Strategy is not about plans but about insights, the authors add. Strategy development is the process of discovering and understanding insights and should not be confused with planning, which is about turning insights into action. Furthermore, because executives develop most of their insights while actually doing the real work of running a business, it is important for companies not to separate strategy development from implementation. Is there a better way? The answer is not new planning processes or more effort. Instead, managers must understand two fundamental points: the benefit of having a well-articulated, stable purpose and the importance of discovering, understanding, documenting, and exploiting insights about how to create value.