STRATEGIC INFORMATION SYSTEMS MAN0605MAqib Khan 11007829 Dr Zahid Hussain

1. Investigate the workings of Enterprise Resource Planning Systems (ERPs) through literature research.

2. Investigate the emergence of new technologies, such as cloud computing, and their impact on organisational information systems governance.

Table of ContentsTask 1.................................................................................................................................................................3

Value..................................................................................................................................................................... 3

ERP system and system hierarchy.........................................................................................................................4

Information flow....................................................................................................................................................6

Value chain............................................................................................................................................................7

Success and failures...............................................................................................................................................8

Key providers.........................................................................................................................................................9

Shift from ERP to SaaS.........................................................................................................................................10

Task 2...............................................................................................................................................................11

Strategic direction...............................................................................................................................................12

IT governance......................................................................................................................................................14

Hurdles and changes...........................................................................................................................................15

Future changes and future forecasts...................................................................................................................16

References...........................................................................................................................................................18

Appendices..........................................................................................................................................................22

Figure 1.0

The ultimate aim of most firms is to create profits for its shareholders. Firms compete with one another, nationally and internationally for markets share. Organisations encompass an array of human resources and technological resources that need to be effectively controlled and harmonised in order to generate profits. Information systems and technology are essential components of these resources for firms such as ASDA in generating income and creating value. A business information system is a set of interrelated modules that work jointly to support decision making in an organisation (Hussain, 2008, p.44).

Silver- et-al (1995) emphasised that information systems should be implemented within firms for the objective of ‘improving its overall effectiveness and efficiency.’ Moreover, Jarvenpaa, S-(1991) defines IS as a significant factor ‘contributing to firms competitive leverage over rival firms. ASDA is currently the UK’s second largest retailer and its success is hugely determined by how effectively it manages and controls its people, organisation and technology. Technology underpins these resources as it squeezes labour to work more efficiently, thus generating value and sustainability.

Value

Systems can work together to create value; value can be defined as tangible and intangible. Tangible value can be measured directly, usually in monetary terms whilst intangible value is difficult to measure but has significant influence, for instance strategic information (Bontis, N.-2001). In order to identify how firms can create the greatest possible value for customers, Michael Porter-(1985) proposed a value chain as shown below. As can be seen, information technology is used in each activity of ASDA’s value chain. A further analysis of ASDA’s primary activities will be discussed later.

The role of ASDA’s accounting information system is to offer information to management allowing them to formulate successful judgments as shown on figure 1.0. This shows why effective information systems are fundamental to the functioning of the company.

Figure 1.1 illustrates Porters value chain analysis consisting of primary and support activities. Primary activities add value to the final product directly and support activities add value indirectly (Gattiker-&-Goodhue.2004). This doesn’t signify primary activities are more superior as firms such as ASDA are increasingly relying on support activities such as human resource management and information systems in order to gain a competitive advantage. The diagram shows how information technology and information systems generate more value for firms, thus resulting in larger profits.

Figure 1.1

Figure 1.3

ERP systems and-system-hierarchy

Antony R.N stressed that different kind of systems signify different interest and business levels. A standard hierarchical firm consists of three broad levels of business decision making. From top to bottom, these are:

Likewise, decisions in the system hierarchy are classed as structured, semi-structured and unstructured as shown below.

Strategic• Setting objectives and policies for organisations. Long term

organisational planning.• Decisions tend to be unstructured.• Spend most time thinking and have decisional power over middle

management.• For example, ASDA set new strategy to target overseas expansion

Tactical• Developing objectives and set policies• Managers monitor performance of organisation. Set medium term

goals. For example ASDA setting up a finance and accounts budget.

Operational• Short term planning and making day to day decisions.• Direct firms efforts towards meeting them medium term goals.• Decisions are highly structured and have little impact on firm• For example, ASDA setting a daily production schedule.

Figure 1.3 shows how decisions vary at each management level. At the operational level, decisions are repetitive hence most decisions are structured. As you move up the hierarchy, information becomes more important. Therefore at strategic level, most information is unstructured, i.e. complicated and infrequently made. Appendix A shows an in depth analysis.

Figure 1.2

Anthony, R N (1965) Level of managerial decision making

Figure 1.4

The following table illustrates how the characteristics of information and decisions affect each managerial level.

During the past, issues relating to large firms such as ASDA were that information systems were built around different functions therefore did not communicate with each other. It is due to such organisational issues that enterprise resource planning (ERP) replaced these systems. ERP software is a business management system that integrates all functional areas of an entity, including marketing, manufacturing and planning (Yen-et-al,-2001). The fundamental purpose of ERP is to replace several applications through an incorporated set of programs, thus making it easier to use and making it more effective (Brady, A-&Monk, F-& Wagner, J.-2001). Appendix-B-and-C-illustrate-the-differences-between-non-integrated-and-integrated-systems,-with-Appendix-C-showing-how-ERP-integrates-all-the departments-of-an-organization, thus-generating-value.

In relation to system hierarchy mentioned above, ERP advances through all three levels and information proceeds upwards, as shown in figure 1.4. ERP is a part of system hierarchy as it has TPS, MIS and EIS functionalities. Besides, it allows different people at every level to have appropriate information to make successful decisions. However, Lucey (1997) proposed that information at EIS level is most important as they make the ultimate decisions; therefore the hierarchy should be inversed as shown in figure 1.5, with EIS at the top.

The diagram below displays the key concepts of the ERP systems and how it initially emerged.

Management Level Decision Characteristics Information Characteristics

Strategic Unstructured, long term decisions which have a large impact on the organisation. For example, launching a new product.

Mostly external, less certain and qualitative information. For instance, market trends and enhancements in technology.

Tactical Tactical management level has a middle position as it contains characteristics from both Strategic and Operational levels.

Operational Short term, repetitive, structured decisions which have a small impact on the organisation. For example, credit approval.

Mostly Internal, detailed and frequent information. For example sales orders.

Figure 1.5

Anthony, R N (1965) System Hierarchy

Information flow

An effective integration of ERP guarantees that information flows vertically and horizontally in businesses as shown in Appendix-D. However information is granular as it varies between high and low level works. Information used by low level workers is rational as opposed to higher level workers who require extensive information in order to make judgemental decisions. An example of how ERP systems assist ASDA in making useful decisions is given below.

Value chain

Figure 1.7 shows ERP systems influence on whether to allow customers to use credit cards or not. For ASDA, information is stored in the ERP systems so that when customers with bad credit ratings try to purchase goods using credit, they will be refused. However, good customers who pay on time will be allowed. Therefore, ERP systems allow a firm to make useful and efficient decisions.

Figure 1.7

Figure 1.6

According to Lefebvre, E & Lefebvre, L (1996) ERP systems facilitate firms making their primary and secondary activities more efficient, consequently generating value. It is suggested that organisations which invest in these systems have experienced substantial results in increased value and superior productivity, a 20% boost in some cases (Dorgan-&-Dowdy.2004). The ERP system ASDA uses is provided by SAP and in 2010 was awarded for excellence in quality of implementation (SAP.2010). Studies by Tallon-(2000) indicate that implementation of ERP leads to customer retention and a reduction in unit production cost. Davenport et al-(2002) proposed a diagram as shown in Appendix E showing how ERP’s are essential in value creation. Gattiker-&-Goodhue (2004) concluded that IT has a greater impact on the primary activities whilst supporting activities have an indirect impact, therefore only primary activities for ASDA are considered below. It can be seen that ERP systems help to integrate all departments of ASDA, thus maximising value.

Primary ActivitiesInbound Logistics

ASDA has worked with various-suppliers-on-the-creation of its integrated-supply-chain-and-data-warehouse; for example NCR which implemented its Enterprise Information Factory model (Sahota, D.2010).This provides ASDA with raft of sales, forecast and stock information as well as order lead times. It also provides information such as when products are not available on the shelf. As a result, the ERP system which ASDA has implemented adds value by enabling enhanced communication and incorporation with suppliers, as well as superior management of raw materials.

Operations As stated by Sahota. D (2010), ASDA has employed an ERP in place that ensures it achieves efficiency and effectiveness in all its operations, for example, integrating its sales, marketing and other information into production schedules. Operational system allows the firm to run the system faster as they now have integrated information from production and labour force levels which help the firm enhance planning. ERP systems help enable the organisation to identify which store needs what product at a given time, thus saving time and cost, ultimately creating value.

Outbound Logistics

ASDA is set to install software from Manhattan Associates to support the growth of its e-commerce operations where it will be used to manage internet orders from its website (Saran, C. 2012). This will help gain competitive advantage over competitors such as Tesco by delivering the product to the customer at the right time. Moreover, it helps the firm build long term relationships with customers. Integrated ERP systems ensure that goods are available and delivered in time.

Marketing and sales

ASDA is renowned for its marketing skills, for example campaigns such as ‘ASDA Price’ and celebrities like Michael Owen pocket tapping. ERP system takes the data and analyses the buying pattern and customer feedback about the product. It ensures customer knowledge is not lost. ASDA will know how well the product is selling and whether production needs to increase or decrease. ASDA can offer many customer loyalty programs through the ERP system and gain customer retention, e.g. online discounts and value for money products. As a result, they will get the idea of customer buying patterns using ERP and customers will be more loyal with this kind of promotional offers.

Service ASDA has a strong online and in store service, it also provides services over the phone. ERP allows customer advisors to provide effective and efficient customer service as they will have access to all the information, thus deal with queries more successfully. This saves time and cost and ultimately creates value for ASDA.

Successes and failures

The-following-table-illustrates-the-success-and failure-of-firms-who-have implemented-ERP-systems.

Organisation Failure Success Why?

SMU Yes - $20 million supposedly over budget. Staffs were not happy with the benefits of the systems versus the cost (SMU. 2001).

FoxMeyerDrugs

Yes - The firm failed due to change of management, lack of knowledge and lack of clear goal focus of the project. Moreover, the implantation of its SAP/ R3 cost $500 million which also contributed to its downfall (Scott, J. 1999).

Reebok Yes - Failed as the system did not fit with the firms processes (Stedman, C, 1999).

Petsmart Yes - Hard to incorporate ERP to existing systems (Mearian, L. 2000).

ScrippsMetabolic Clinic

- Yes Dependable vendor partnership and successful system integration.

Houston Independent School District

- Yes Successfully integrated legacy systems and an existing people soft Incorporation. This resulted in a 42 percent return on investment and a reduction of $1 Million in inventory (Harreld, H. 2000).

Anheuser Busch

- Yes The major success was due to the use of external consultants, project champions and top management support (Summer. 1999).

As stated above, the major ERP failures included employee’s resistance, lack of clear goals and conflict with the business strategy (Loinksy, S. 1995). These issues affected firms significantly, and in some cases, like FoxMayer, lead to bankruptcy (Davenport.-1998). Besides, literature findings (Martin.-1998, Gibson et al.-1999) propose that 90% of ERP ventures finish late whilst Rao-(2000) reports that only 3.6% have been successfully implemented. Given that ERP are complex systems; employing them can be difficult, time consuming and expensive. Implementation of ERP ventures was roughly between six month and two years and the average cost was $1 million (PMP. -2001). Due to various reasons, as shown in figure 1.8, many firms failed, which in turn lowered its value and competitive advantage.

ERP systems - if effectively employed - can bring significant advantages to organisations. By increasing global competitiveness and efficiency, managers are able to make informed decisions. (Holland-et-al,-1999). For example, from the above table, Houston District integrated its systems successfully. This resulted in a 42% return on investment and a reduction of $1 million in inventory. Furthermore, effective adoption of ERP’s can lower production, labour and inventory cost, thus leading to a better competitive advantage (O’Leary,-2000). Hence, ERP is perceived to becoming the foundation of many firms (Al-Mashari,-2003).

The-following-table-shows-the benefits and drawbacks of implementing an ERP system in ASDA.

Type of problem %

Project Cost Overruns 66

Project Delays 58

Conflict with Business Strategy 42

Employee Resistance to Change 42

Internal Conflicts 34

Figure 1.8 Themistocleous et al (2001)

Benefits ASDA’s ERP system enables the firm to provide better company visibility and thus faster collaboration across all departments.

It allows ASDA to analyse many years data and proposes production rate for products in relation to customer needs.

Also, helps the firm organise employee payroll. The new ASDA money credit card gives the firm an idea of customer buying pattern using ERP;

this will keep customers more loyal as they will be informed on their points. Additionally, it tells the firm which season is best for which promotion by analysing selling

pattern of products.Drawbacks It is an expensive system to implement, also time consuming as projects may take 1-3 years.

As ASDA have planned £500 million investment for high tech and depots in the next year (King, 2013), however, they must evaluate the pros and cons before implementation. If this step is not done effectively, it could lead to huge losses.

Finally, as ASDA use SAP-ERP, this means they are at the discretion of SAP and thus may not be able to bargain successfully for their services.

Key-ERP-providers

The major providers of ERP include SAP, Oracle and Microsoft Dynamics. During 2012, the ERP market experienced a slow growth of only 2.2%. SAP still remained the major provider with over $6 Billion in revenue along with 24.6% market share, compared to Oracles 12.8% and Microsoft’s 5% market share (Columbus,-L.-2013). Moreover, according to Markess’ study SaaS-based ERP is expected to grow significantly over the years as it speeds up return of investment and reduces costs. Overall ERP’s growth has been steady and its major providers as of 2012 can be seen below. Appendix-G further illustrates the market share holding of these providers.

ERP-providers-shifting-to-SaaS

ERP vendors now want to break into SME markets due to its growth and emergence. ERP systems are now offered on the cloud under SaaS

ERP providers Overall summary SAP Largest share of the market

Longest payback period Highest short listing rate

Oracle Longest implementation time Largest gap between actual/planned Lowest % of users who realised

between 81-100% of benefits

Microsoft Dynamics Smallest share of the market Short implementation time Highest % of users who realised

between 81-100% of benefits.

Figure 1.9 is an overall summary of the functionality of the three major ERP providers conducted by Panorama Consulting Solutions (2012).

Despite its low market share, the survey indicates that Microsoft Dynamics is the most efficient. However this may be because projects tend to be smaller than SAP or Oracle. SAP has the longest payback period signifying that these ventures might be more complex and difficult to implement. Finally, Oracle is the least efficient, based on the lowest benefits realised and the longest gap between planned and actual project duration as shown in figure 1.1.1.

Figure 1.9

Figure 1.1.1Panorama Consulting Solutions (2012)

Panorama Consulting Solutions (2012)

where the application is hosted by a service provider where users can log in and use the software as shown in figure 1.1.2. For SME, this is considered the best opportunity to benefit from an ERP system without the investment and management expenditure linked with the on-premise model (Seethamraju,-R.-2013). Likewise, larger firms may also implement SaaS to add functionality to their existing systems. Ultimately organisations will implement the system which brings them the greatest value.

IT Developments

Figure 1.1.2.

Figure 2.0

Technology has changed the face and pace of businesses in the past few decades. Companies are relying more on technology to generate value as it has become an integral part of an organisation. As previously discussed traditional technology such as ERP systems do add value to a firm, however they have significant cost. These are costs associated with telecom, hardware, software etc as shown in figure 2.0.

Tech-nology

Define and Benefits Benefits Issues Vendors

Cloud- Computing

Cloud computing is a model facilitating suitable on-demand network which can be quickly delivered with little management effort or service provider interaction (NISC. 2012).

Cost-efficient way to apply, maintain and upgrade. It also gives you roughly limitless storage capacity and can be accessed anywhere as long as there is internet connection.

Security; as it’s entirely based on the internet which makes it susceptible to hack attacks. Another issue is that the firm would have to change its current IT infrastructure so as to make it compatible on the cloud.

Some of the well known cloud vendors include Amazon, IBM, Google, Oracle cloud, Salesforce and Microsoft Azure.

SaaS Software as a service (SaaS) is an approach where applications are delivered over the internet as opposed to a service.

Time spent in installation and configuration is significantly reduced. It also allows small and medium firms to use this software (Sylos, M.2013).

One issue is that workers must be connected to the internet if they need to use the SaaS software services. Firms also lose their freedom and are ultimately at the control of the SaaS provider.

There is now a huge number of SaaS suppliers, including; Salesforce.com, Oracle on demand and cloud 9 analytics.

PaaS Platform as a Service (PaaS) refers to the provision of a computing platform and a solution stack as a service (Cooter, M.2012).

Firm is responsible for the upgrades of the software. There is no need for maintenance this is done by the PaaS provider. (Barry, D. 2013).

There are issues associates with security and internet connection. Being responsible for the upgrades is also a disadvantage.

Major providers include Google, Amazon and Microsoft and Engine Yard.

IaaS Infrastructure as a Service (IaaS) is the foundation of cloud computing. It provides the raw materials for IT (ProfitBricks, 2014).

The most important benefits include increase infrastructure reliability and performance. Also includes reduce cost and waste inefficiency.

In the short run, cost may be low but in the long run cost may prove to be very costly. Because of its shared nature of the infrastructure used, the applications may require innovative types of security.

Major vendors include ProfitBricks Rackspace Cloud and Amaz on EC2.

Virtualisation

Virtualisation can be defined as using specially designed software to convert one physical server into multiple virtual machines (Strickland, J.2013). Appendix H shows the virtualisation process.

It reduces hardware requirements and improves disaster recovery which saves cost and time.

There are security issues where attackers may attack virtual machines with the aim of gaining access to other secure machines.

VMware controls most of the server virtualisation market.Red Hat, Amazon, and Microsoft are also key providers.

Miniaturisation

Miniaturisation includes making things smaller and involves the trend to manufacture devices for example mobile phones smaller. Appendix I illustrates the miniaturisation process.

Lower material cost and higher production output. Products become more convenient as they can carry the devices wherever they go, e.g. I pad, resulting in faster operations& flexibility.

Smaller components are more difficult to make than larger ones and involve higher research and development cost. They are also not serviceable after manufacture.

Many firms are involved in miniaturisation including Apple, Samsung, IBM etc.

The-focus-is-now-on-new-emerging-technologies-which-reduce-cost-and-increase-value,-as discussed-in-the-following-table,-a-further-analysis-can-be-seen-in-Appendix-K.

Since technology is pivotal to a firm’s success, it is important to choose suitable technologies. For Asda most valuable and practical technology is cloud computing, which can be separated into three layers as shown in Appendix J, however other firms can also use new technologies such as

Gartner (2003)

Figure 2.1

virtualisation and miniaturisation. Implementing such technology will ultimately increase a firm’s value, thereby resulting in increased profits. Figure 2.1 illustrates how organisations use cloud computing.

By using cloud computing ASDA implemented the “store-mode” app which offered customers a mobile-facilitated in-store experience like no other allowing them to create shopping lists by scanning product codes into their phones. The success of using cloud computing can be seen as customers have been proven to be loyal, making double the trips and spending up to 40% more each month (Coren, M. 2013). However, ASDA-must-carefully-manage-and-control-the-execution-of-its-cloud computing-system-in-order-for-it-to-function-effectively-and-create-value.

Strategic Direction

Although ASDA is already creating value using cloud computing, to capitalise on value it is critical for the firm to have a strategic direction. Strategy can be defined as the future direction of an organisation (Chaffey, White, 2011). However, there is a gap between a firms current and expected position. In order for ASDA to narrow this gap, they have set out strategies to achieve as shown in figure 2.2.

For-ASDA-to-ensure-their-corporate-strategies-are-delivered, three distinctive yet incorporated-types-of-strategies need-to-be-developed (shown below).

Cloud computing stores related data in a central computer system which then provides customers or other users access to them throughout the world as long as they have internet access. ASDA uses cloud computing by outsourcing some of their activities like online shopping. This allows ASDA to put all the information into one database where current and potential customers can view or purchase their products as opposed to visiting the store.

ASDA’s strategy is structured in four quadrants; focused on benefiting its customers, lowering the cost of its operating model, providing a great place to work for employees and ultimately making huge returns for its shareholders.

Figure 2.2

ASDA (2013)

Information Management Strategy

Liz Orna (1999) suggested having a successful information management strategy should foster a culture of innovation and knowledge sharing. The success in managing the value of information for ASDA will directly depend on having a clear vision on how to manage information throughout its lifecycle. ASDA will be able to maintain its competitive advantage and market presence by effectively managing its people, technology and ultimately information. Successful firms are those that effectively manage its knowledgeable assets, for instance ASDA uses cloud point of sale system in order to manage inventory, therefore be up to date. By having an effective information management strategy, it enables ASDA to analyse which products are being sold the most, allowing them to make more enhanced decisions when ordering. This will support the future growth of ASDA and lead to increase sales and value, thereby satisfying its fourth quadrant strategy.

Knowledge management strategy

The management of knowledge has become influential for businesses as they have realised how the application of knowledge can be in adding value and gaining a competitive advantage (Chaffey, White, 2011). ASDA has undertaken huge transformations with regards to adoption of best knowledge management strategies by offering mentoring programs and professional training to enhance the decision making process. Moreover, the environment at the stores encourages team work with great focus on future growth allowing employees to develop skills, for instance efficient use of cloud computing (Wolpert, 2001). This in turn helps ASDA turn its human capital into intellectual capital, thus create value. This again ensures ASDA focuses on providing a “great place to work for employees”, its third quadrant strategy.

Information systems strategy

Ward and peppard (2002) suggest information system strategy is commonly developed as a plan to support the employment of the organisations strategy. This strategy allows the firm to be responsive to the dynamic environment in which it operates within. IS in ASDA is essential in delivery high quality of services to customers. IS is influential for ASDA in achieving its objectives of being “Britain’s favourite customer service retailer”, hence creating value.

It is vital for ASDA to develop a strategic direction and to implement the aforesaid strategies as it will assist the firm in maintaining a clear future path and gaining a competitive advantage. These strategies will promote openness of communication throughout the firm and foster a culture of innovation and knowledge sharing (Liz Orna. 1999). The-figure-below-illustrates-the three different strategies and what they determine for ASDA.

Strategy Determines:

Information management strategy

Information quality Information policy Legal, ethical and security issues

Knowledge management strategy

Knowledge roles and competencies

Technology approach to KM Information policy

Information Systems strategy

Service quality Technology Infrastructure Applications development

IT governance

Figure 2.3 shows the different forms of strategies needed to make efficient business decisions.

Figure 2.3

Chaffey, White (2011)

For firm’s investment in IT to deliver full value, it is acknowledged that IT has to be completely united with the IT strategy and governance. For-ASDA-to-implement-this-strategy, they have to ensure-that-cloud-computing is correctly incorporated into the firm by managing workers effectively and seeking their approval, thereby creating an ethical culture. Another reason that an effective information strategy is required is provided by COBIT. COBIT is the broadly accepted IT governance model for control objectives for information and associated technology (Chaffey, White, 2011). COBIT (2000) defines IT governance as:

COBIT supports IT governance by presenting a structure that enables managers to bridge the gap between control requirements, technical issues and organisations risks (ISACA.-2014).Besides, COBIT-allows a clear-policy-progress-for-IT-control-right-through-the-firm.

The benefits from COBIT can be seen with Philips Electronics where COBIT was used to establish the firm’s capabilities; this gives a clear indication of where improvements were possible resulting in better value from the groups IT investments (ISACA, 2014). The-following-diagram-shows-how- Information-systems-strategy-can-deliver-value-for-ASDA.

Furthermore, ASDA could align COBIT framework with ITIL to better serve

“A structure of relationships and processes to direct and control the enterprise (use of IT) in order to achieve the enterprises goals by adding value while balancing risk versus return over IT and it processes” (Chaffey, White, 2011, p.257).

Figure 2.4 summarises the framework developed by COBIT with the aim of helping firms achieve a comprehensive and consistent approach to IT governance. As can be seen, a great importance is put on managing information quality, thus illustrating how IT and people resources are used to manage this (Chaffey, White. 2011).

Figure 2.5 shows that requirements of stakeholders, for example, ASDA’s shareholders desire of profits, are achieved by coordinating information-systems to business strategy objectives. Information then adds value to ASDA just as IS supports strategic objectives along with carefully controlling the risk of implementation. Moreover, measurement systems should be in tact to assess if strategic objective are met and whether to make further adjustments. COBIT as an IT governance helps attain the control of information for ASDA. This in turn will result in increase profits and value for the firm.

Figure 2.4

Figure 2.5

Mokabyte (2011)

customers and manage the IT infrastructure within their business. As a result, customers get an improved level of service and the firm saves money. This reduces risk and error, essentially increasing value. The adoption of effective IT governance for ASDA is an important indicator that its cloud computing strategy will be a success.

Hurdles and changes

One of the main issues of cloud computing is security. As the information is stored externally it is susceptible to network attacks. Besides, if the data by any chance goes missing, there is no physical backup.

To help further increase ASDA’s security, private clouds can be created; for example Amazon Virtual Private Cloud (VPC). This allows ASDA to create a safe and flawless bridge between its existing IT structure and the AWS cloud as shown below.

ASDA-can-increase-its-security-by-implementing-a-firewall-solution,-such-as-the-one proposed-by-Amazon-EC2 – An example of this is shown below.

Another shortcoming is that it entails a constant connection which if lost can cause huge issues for ASDA. Moreover, due to geographical areas speed may pose a concern. As much of the data is stored on multiple servers across numerous countries, any issues arising there which cannot be accessed poses a serious concern (Keiko Hashizume et al. 2013).

Amazon VPC allows ASDA to connect their current infrastructure to an area of remote AWS compute assets by means of a virtual private network (VPN) connection. This ultimately helps increase ASDA’s cloud security.

By applying a firewall security, ASDA can add an extra layer of security as customers are also required for their certificate and key for authorisation. This ensures ASDA’s cloud computing system is safe and secure and away from any network threats.

Figure 2.6

Figure 2.7

Jamil, D & Zaki, H. (2011)

Jamil, D & Zaki, H. (2011)

Also, any procedures not in place once data is handed to service provider could result in monitoring problems. Figure 2.8 illustrates major hurdles facing the cloud.

In order for ASDA to overcome these issues, the following table has been prepared.

Issues Solutions

Security An example of a security issue can be seen during 2007 when a staff member of Salesforce.com revealed customer passwords (Krebs, B.2007). In order to reduce the threat of security, ASDA can opt for the private cloud and also ensure it employs an effective firewall security, thereby reducing threat of attacks. Service providers like Google could be an option due to the amount invested ensuring secure information. ASDA must also ensure that there’s a clear contract so if suppliers fail like Nirvanix’s, the firm can claim.(Robinson, S. 2013)

Data protection

ASDA must make sure its provider is willing to submit to external Audits and security certification. UK data protection act 1988 ensures that firm’s data is protected whilst some countries don’t have any data protection acts. Moreover, Google and Microsoft have provided companies to track their data to see where it’s stored; therefore the firm can chose which country to store its data.

Integration In order to effectively incorporate cloud computing ASDA has to ensure everyone accepts this technology. Establishing a successful culture will allow ASDA to make successful changes to its firm. As moving to new systems may be difficult, however, Microsoft provide an alternative as it offers more flexibility which enables the firm to switch to the cloud more easily.

Availability ASDA should ensure they have a good network infrastructure to ensure that access to application is always available and at high speed. If cloud computing is down, the system will cause problems for the firm.

Future development and future forecast

Flinders (2012) forecasted that 93% of financial managers believe that cloud computing will be influential to the success of organisations in the future. Most technology specialists believe cloud computing is not yet at maturity and should take five or more years to mature if growth remains constant. IDC predicts that by 2015 SaaS will be 13.1% of worldwide software spending (Konary, A. 2012). Furthermore, Brown. A (2011) believes that the capability to integrate power applications such as Smartphone’s will speed up SaaS adoption and expects the SaaS market to reach $3.7 billion by 2016.

Additionally, Forrester research (2012) forecasts the global cloud market to grow from $40.7B to exceeding $241B in 2020. The diagrams below further illustrate the expected growth in this market.

Figure 2.8 illustrate that security and privacy are the major issues facing the cloud, whilst other issues such as regulatory compliance, performance and immaturity also pose threat.

Figure 2.8

Eexploria (2013)

Various issues pose a huge threat to the growth of the cloud market. Large vendors such as HP, Cisco and IBM aim to tackle the issue of security by acquiring start-ups aimed to encrypting firm’s data before it departs to the cloud ensuring enhanced security ( Jansen, J.2014). Moreover, data tracking tools and internet speed will improve over time therefore giving the firm more visibility and efficiency (Jansen, J.2014). With development of cloud, ASDA will be able to provide a better service at lower cost, therefore generating more value. Despite all the expected developments, there is still uncertainty about what cloud computing will achieve in the future.

References

Cisco predicts that traditional data centre will decrease from 79% in 2010 to 43% in 2020. Moreover the graph also shows that by 2015 nearly 60% of all workloads will be processed in the cloud (Cisco, 2013)

As can be seen, enterprise spending for on-premise solutions will fall in the coming years. Delliote expect cloud computing applications to compensate 2.34% of firms IT spending in 2014, rising to 14.49% in 2020. Delliote also expected cloud computing to decrease technology expenditure by $30.0-$39.4 billion in 2014 (Prezi, 2012).

Figure 2.9 Prezi (2012)

Figure 2.1.1

Prezi (2012)

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AppendicesAppendix A

The image below shows the spectrum of system characteristics at each level in the organisational hierarchy. It can be observed that strategic level workers have ultimate power whilst operational level employees have less power and low impact on strategic goals. There are lower level of

employees at the strategic level and also have high decision authority, hence significant impact on the overall strategy of the entity. Likewise, at the operational level, employee’s decisions have low risk on the entity with a short time horizon.

Appendix B

The following diagram shows each department with its own database, thus non-integrated systems. These systems are out of date and inefficient due to the emergence of technology. Although, they are timely and don’t generate value, they could be an option for small businesses who can’t afford to implement integrated ERP’s.

Elliot, G (2004, pg. 70).

Appendix C

Enterprise Resource Planning software focuses on integrating all the different departments and functions of an entity into a single computer system to serve the various needs of these departments. Nonetheless, if installed effectively, this integrated approach can be very cost-effective for firms such as ASDA. This in turn allows different departments to easily share information and communicate with each other.

Appendix D

The diagram below shows how a successful integration of EPS allows a firm to generate information from all significant levels, both vertically and horizontally. The ultimate purpose of EPS is to aid the flow of information between all business functions as can be seen below as it ensures effective and efficient flow of information.

Appendix E

The diagram below shows how ERP is essential in an organisation and ultimately results in increasing value of the firm. This pyramid was adopted from Davenport, et al. (2002) who suggested that ERPs are the backbone to the success of an organisation, if achieved. The integration of ERP system helps a firm make valuable decisions and gain a competitive advantage.

Appendix F

The following diagram shows how IT adds value to the organisation. ERP applications may add value to the firm’s primary activities as a function of the firm’s characteristics in relation to such activities as shown below in the path analysis. The advantage of this path analysis is that it enables the firm to assess the virtual importance of direct and indirect factors to the reliant variable.

Davenport et al (2002)

Appendix G

The pie chart below signifies the market share of ERP during 2012. On the whole, the top ten vendors owned 64% of market share in 2012. SAP had just over $6Billion in revenue compared to Oracles $3.12Billion and Microsoft’s $1.1Billion. The fastest emergent ERP vendor was Workday which grew 114.7% in 2012, as its revenue increased from $88.6M to $190.3M during 2012.

Ragowsk, A. Somers, T. (2005)

The following table shows the emergence of Saas-based ERP in the coming years. This software is expected to grow from 12% worldwide in 2013 to 17% in 2016.

Appendix H

A virtual machine, which is the heart of virtualisation, is a software operation of a computing environment where an operating system can be installed. As every virtual-machine is independent they can operate at the same time on a single processor. Likewise, virtualisation saves 50% or more on overall IT cost and simplifies IT management and maintenance of new applications. (PraxisData Systems.2014). A thin layer of software called a hypervisor decouples the virtual machines from the

Forbes (2013)

Gartner (2012)

host and vigorously assigns computing resources to each virtual machine as required, as shown in the diagram below. The diagram below illustrates how many applications and operating systems can be run on one host at the same time. As virtual machines are run to their full capability it allows the firm to considerably reduce costs. Moreover, as independent software files, virtual machines can be manipulated with copy and paste ease. This brings simplicity, speed and flexibility (VMware. 2014).

Appendix I

Miniaturisation involves making things smaller. For example, the diagram below shows how IBM has transformed its old fashion computers to smaller, more powerful and easily accessible tablets. Due to technology advancements IBM are able to store more date on smaller chips, this allows them to reduce the size of its framework.

Appendix J

Cloud computing has changed IT to be delivered as a service; either public or private clouds as opposed to the traditional owning of a software/server method. It has virtually separated information technology into 3 areas of service deliveries as shown in the diagram. In order to understand the cloud model a pyramid has been proposed. The layers are greatly dependent on each other however they can exist on their own, e.g. SaaS provider (SKalicloud.2010).

The higher you go in the pyramid, the more niche it gets, for instance email on Gmail. This requires less technical skills and is simple to use. As a result it instantly benefits firms to use the application, therefore become more efficient. Nonetheless, the lower you go in the pyramid, the more control firms have. This results in more freedom which helps users to do whatever they need in order to develop their application the way they want, for example Google App Engine. A higher degree of technical skills are required as you go down the pyramid. One benefit of this is the flexibility it offers as users can virtually run their own physical data centre (SKalicloud.2010).

Techno-logy How it works and benefits Issues

Cloud Computing

Instead of installing a suite of software for each computer, executives can outsource some services, thus only have one application. Therefore, cloud computing is perhaps the most cost-efficient way to apply, maintain and upgrade. It also gives you roughly limitless storage capacity and can be accessed anywhere as long as there is internet connection.

One of the major significant obstacles is security as it’s entirely based on the internet which makes it susceptible to hack attacks. Another issue is that the firm would have to change its current IT infrastructure so as to make it compatible on the cloud.As much of the data is stored on multiple servers across numerous countries, any issues arising there which cannot be accessed poses a serious concern. Standardization and

Automatic integration of the software also usually occurs and flexibility of the cloud was a key reason for many firms deciding to move to cloud computing (Salesforce.2014). According to Maloney (2012) businesses spend around $14,000 a year on software licensing and maintenance relating to in-house technology. Investing in cloud computing could potentially reduce this margin to $2,463, resulting in an 80% saving.

monitoring are other issues. For instance, once the firm hands all the data and responsibility to a service provider, any procedures not in place could result in a monitoring problems (Rosado.G, 2012).

SaaS Online Banking for example, where users can access information without installing software. Time spent in installation and configuration is significantly reduced and due to lower maintenance and licences’ cost it allows small and medium firms to also use this software (Sylos, M.2013).

One issue is that workers must be connected to the internet if they need to use the SaaS software services. Firms also lose their freedom and are ultimately at the control of the SaaS provider.

PaaS It’s where consumers creates the software using tool from the supplier and also controls software operations and arrangement settings. The suppler offers the networks, storage and other services required to host the user’s request. One benefit is that the firm is responsible for the upgrades of the software.

There are issues associates with security and internet connection. Also, legal issues which may prohibit the use of out of country information. Being responsible for the upgrades is also a disadvantage

IaaS It allows clients access to storage, processing and other essential computing resources which gives the clients the ability to organize systems and applications.

In the short run, cost may be low but in the long run cost may prove to be very costly. Because of its shared nature of the infrastructure used, the applications may require innovative types of security.

Virtualisation

It allows users to load several applications on to a single computer. Moreover, the ability to quickly move a virtual machine from one server to another is another benefit. It also reduces hardware requirements and improves disaster recovery which saves cost and time.

Backups and disaster recovery are the least of worries which is a major issue. Also, there are security issues where attackers may attack virtual machines with the aim of gaining access to other secure machines. As it’s easy to provision virtual machines with the press of a button, a virtualised environment can get out of control which is another issue (Hess, K.2010).

Miniaturisation

These devices tend to get quicker and extra powerful. As long as customers are concerned with portability, miniaturisation will prolong.Some of the benefits include lower material cost and higher production output. Products become more convenient and accessible to customers as they can carry the devices wherever they go, e.g. I pad. This leads to potentially faster operations and flexibility (Pinkerton, G. 2005).

Smaller components are more difficult to make than larger ones and involve higher research and development cost. Also, people are becoming too friendly with these devices which are affecting their interaction with society. They are also not serviceable after manufacture.

Appendix K