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Study Centre: Darlinghurst, Sydney ITC501 Strategic Information Management (Faculty of Business) Spring Session 2009 Subject Lecturer: Sanjay Jha Assessment Item 2 (Due 2nd November 2009) By Samer Krim csu11367408 TABLE OF CONTENTS Executive summary3 Inputs into information systems3 How IT can affect industry attractiveness? 4 The threats of new entrants4 The bargaining power of customers5 The bargaining power of supplier5 The threat of substitute products5
Competitive rivalry between companies of the same manufacturing industry6 Value Chain Analysis6 Product life cycle8 Boston Box Portfolio Analysis8 The Star8 The Wild Cat9 The Cash Cow10 The Dog10 McFarlan’s matrix10 Strategic11 Turnaround11 Factory12 Support12 Suggested generic management strategies as per Parsons12 Centrally planned13 Leading edge13 Free market13 Monopoly14 Scarce resources14 Necessary evil14 Alignment with assignment 114 Conclusion15
Recommendations15 Abbreviations16 References17 Executive summary Previously we have discussed different aspect of Whirlpool Corporation in regards to its background and history and went into depth with its SWOT analysis, competitive advantage and so forth… The previous aspects discussed the mission statement and the managerial approaches taken by the organization without much regards into the role of Information Systems in the whole scenario.
In this paper we will be discussing the involvement of IS in Whirlpool and the way it has affected its current and future processes. We will discuss how the IS department of Whirlpool with its in-sourced and outsourced activities and its partnership with SAP, enables the implementation of its global vision. Porters five questions of industry attractiveness will also be introduced with their relevance to IS and management and how IS plays a role in each of them.
The value chain of Whirlpool will be presented with its different section relating to the company’s operations and whenever possible the role of IS in them. The Boston Box portfolio will be interpreting how Whirlpool IS activities are involved in innovation, future growth and sustainability and the stages in which a Whirlpool product life cycle goes through. McFarlan’s matrix will constitute an important section of this report, defining the situation in the way it is and the suggested generic management strategies by Parsons.
The main point of this paper is that the leveraging of new and existing systems in the IS portfolio, we overhaul the IT infrastructure to be a potential for more capabilities and functionalities that come to light with not much additional costs. We will finally align the outcomes of this paper with the ones from the previous assignment and come up with recommendations towards the conclusion. Inputs into information systems What Whirlpool has done was to make a partnership with SAP and adapt one of its products, the SAP NetWeaver to be the core set of applications behind its operations across its different business stages.
In other words they have integrated SAP processes to achieve new efficiencies throughout its entire supply chain. The applications provided Whirlpool the ability to do faster and more accurate processing on a global scale, such as product taxonomy, standardized metrics across different countries, in an environment where Whirlpool’s business transaction are going global as globalization itself emerges and Whirlpool’s mission to globalize itself as the world’s leader in appliance manufacturing as well.
The benefits that Whirlpool had from this were that it acquired faster product development cycles, better allocation of trade partner incentives, the sharing of the best business practices across different geographical areas and the focus on the most profitable products. Whirlpool has developed a strategy in its IS vision where it can put information and capabilities in a way that helps it make a distinction between its products and services. One of the driving motives of its IS strategy is to spare some budget and resources that could be invested for future plans and developments.
Whirlpool business application vision starts with the SAP Enterprise Portal as the main interface; then it is composed in a way where management and reporting analysis is placed at the top of the application hierarchy with applications such as SAP BW and SEM. Then comes the customer relationship management alongside supply chain organization standing on the level of standard planning and commerce systems such as SAPAPO and CRM and at the bottom of the hierarchy we have the standard business system application for sales and distribution, manufacturing and depots management and finance such as SAP R/3.
Whirlpool has almost a 100 separate SAP instances running across the company. This was a sign of a gradual proliferation of business process happening over time. So the necessity to import a SAP platform on which the company expands its processes was inevitable. How IT can affect industry attractiveness? Porter’s competitive force model is made up of the following: The threat of new entrant The bargaining power of suppliers The bargaining power of customers Threats of substitute products Competitive rivalry between companies
To interpret each of these in relation to IS in Whirlpool, we need to understand the role of SAP in the way it provides its application services. In this instance, through the adaptation of SAP NetWeaver, SAP has become an integral part of Whirlpool’s business process that it can impose a certain power over it. The threats of new entrants In order to understand how new entrants can be a threat to whirlpool in the way they implement their IT infrastructure and the way their infrastructure helps them compete with Whirlpool, we must first acknowledge that Whirlpool’s current IT infrastructure didn’t happen from one day to another.
It was in fact the global expansion, complexity and size of Whirlpool which necessitated the existence of its current IT skeleton. A smaller Whirlpool would have had many facilities in managing its own processes and business. The constant growing of the company started exhausting its global transactions without the presence of a strong, efficient, standardized and centralized application infrastructure. Whirlpool considers that the key to sustaining its growth was operational excellence and optimization, which made turn to industries of expertise in the IT and application world that could handle multi-layered transformations.
Having considered this we come to conclude that if a potential entrant was to be a threat to whirlpool in the way it structures its IT and IS hierarchy it will have to go through the necessity of doing so. The necessity is in this case a rapidly growing business network which no juvenile entrant can really have. New entrants will not have the budget nor the motive to create the same infrastructure that Whirlpool has created and hence we can see that the external threat is minimal.
The threat only comes from long existing and experienced companies that are going through the same expansion and globalization that Whirlpool is going through and are more subject to compete in their IS implementation in a way that threatens the success of Whirlpool. The bargaining power of customers This aspect can be minimized by enhancing customer loyalty as Esat Sezer, the Vice president and CIO of Whirlpool Corporation says, and here IS plays an important role.
Like we said in the previous section, the global optimization of Whirlpool’s IS infrastructure was intended to create an accurate and organized differentiation of products and services. The business application hierarchy that we have discussed makes that possible and when it is possible, senior management can focus more on the insights into what customers really want and reflect that in the planning process with extreme differentiation and value. This is why it is important to have management reporting and analysis at the top of the application hierarchy with application like SAP BW and SEM.
When customer loyalty is maximized, and the company gets a tighter grip of what customers want and delivers those needs, the purchasing power of the consumer will no longer be a great threat. But as long as the company doesn’t understand what the consumer wants through dissection and differentiation processes, the consumer will always be able to impose the possibility of not buying. The bargaining power of supplier Equal to the bargaining power of consumers, the supplier has a power to impose by monopolizing the industry through the parts and raw material it provides.
Again by understanding what consumers want through the detailed differentiation of products a better view can be presented on understanding what parts and material are exactly needed. This minimizes the opportunity of the supplier to bargain on a wide range of raw material and parts. Like we said in the previous report, Whirlpool was already too dependant on its major supplier SEC, causing the relation between them to shift from a supplier/buyer to almost business partners involving SEC in the profits of Whirlpool.
So any attempt to reduce the elements circulating in the supply chain through the product differentiation process that Sezat mentions, would minimized the bargaining power of the supplier. This is why it is important to place the standard integrated business information processed manufacturing and raw material departments at the bottom of the application hierarchy with applications as SAP R/3. The threat of substitute products
Product substitution can only threaten in Whirlpool’s case when there is a loss of understanding and standardization across Whirlpool’s expanding empire. By creating a firm standards that the company can refer to and efficiently assess, it gains an understanding of the nature of its own products world wide, enabling it to make better decisions on how to tackle external product competitiveness better on a global geographical scale. The implementation of SAP NetWeaver has enabled that by offering the ability to maintain the redundancy issues occurring in its production cycle.
For example, the lack of standardization between part numbers, sets of metrics, numerous legacy platforms, different procurement systems and product taxonomy in two different countries creates a heterogeneous environment for Whirlpool where understanding and optimizing the nature and the purpose of its own products was almost impossible. This threat can be minimized through the migration of the current data and activities into a centralized platform. In this case, Sezat mentions that in North America only, Whirlpool uses platforms such as Teradata, PepleSoft and Trilogy which it intends to migrate onto a standardized SAP platform.
This is possible with two of the components of SAP NetWeaver: Master Data Management and SAP Exchange Infrastructure which enable the integration of internal legacy applications and external suppliers and trade partners. Competitive rivalry between companies of the same manufacturing industry As discussed in the threats of new entrants, the bigger threat is the one that comes from existing companies within the same manufacturing industry. Expanded companies already have in place an IT strategy made to promote its expansion in a competitive and innovative manner.
Whirlpool in this case competes with them within the frame of innovation, development of new capabilities, building competencies and supporting solutions through its IT/IS infrastructure. What Sezat says, that the competitive advantage that Whirlpool has in regards to its IT infrastructure lies in the differentiation process we already mentioned. He says the non-differentiating aspects of a business such as ordering, billing, shipping etc… are not what constitute a competition ground for companies as any other company does the same operations in a globally known manner, despite their mission-driven importance.
Sezat sums up the competition of Whirlpool with other companies based on three points: Building the necessary capabilities that create a differentiation in the consumer’s purchasing experience Being up to speed in developing and implementing solution that address the challenges of the business Defining global best practices and standards to drive global visibility and consistency, this can be done through using a global business performance management (BPM). Value Chain Analysis In regards to Whirlpool IS, it could be assessed as follows: This table represents the value that the horizontal departments can add to the vertical activities below Infrastructure | |The migration and implementation of SAP NetWeaver with its layers of applications as defined by business operations and their | |importance to the mission statement. Discussed in Inputs to IS | |Human Resource Management | |Handled by the HR department separately by choosing the right people with the right skills to be employed in the IT department in | |order to handle the in-sourced and outsourced activities and adapt easily to the migration and implementation of SAP.
Creating a | |knowledge sharing culture within the department. | |Product and Technology Development | |Determined by diffusing the right and accurate product information across the supply chain in order to ensure that the information | |was reaching the right person the value chain from supplier, to manufacturing, to retailers.
This has been enabled for example by | |the introduction of the SAP NetWeaver Global Data Synchronization, as part of the SAP Master Data Management feature This enables | |manufacturers and distributors to exchange consistent product information according to global international data formats and | |standards. It makes the exchange of data between Whirlpool and a reseller or retailer easy within the IT department without the | |necessity if creating a new interface for each exchange.
Diffusing correct and accurate product information across the value chain | |is crucial to Whirlpool for its product quality. | |Procurement | |Done through meeting the requirement of the UCCnet, a subsidiary of the non profit Uniform Code Council, with Whirlpool SAP | |platforms.
It is essential for supplier and retailer management, since it allows manufacturers to publish exact information about | |their material and their products made available for suppliers and retailers, through the Web whereas their IT departments can pull| |out the information easier. Again the integration of SAP and UCC made that sort of management possible. This saves Whirlpool the | |time and money to have this information diffused to other parties through its own organizational structure. |Inbound Logistics |Operations |Outbound Logistics |Sales and Marketing |Servicing | | | | | | | |Raw materials coming from| |From the logistics and |From the sales department| | |SEC, whirlpool main |Utilization of ERP and |impulse department goes |goes information such as |Whirlpool IT department | |supplier of parts. SAP GDS to perform |information such as |description, pricing, |to maintain company | |Information on parts and |operations such as |package, carton, product,|name, dimensions, number,|website, to include | |material exchanged |account rep, sales and |weight, pallet |measurement unit, |detailed product | | |logistics. |dimensions, to retailer |weights, etc… to the |information available to | | | |logistics and warehouse. |retailer processed in its|customers online. | |Manufacturing and the | |ERP, then to the buyer. | | | |warehouse system, plus |Through the UCCNet |From the marketing |Maintaining an efficient | | |some third party |service product |department goes |helpdesk and call centre | | |operations such as image |information from |information such as |to answer customer | | |management. Whirlpool is shared with |marketing images, |enquiries about products | | | |the retailer ERP |planograms and |and services. | | | |Account representative |advertising copies to |Other services such as | | | |enters the product data |advertising and store |vouchers, shipping, | | | |via the Web or extranet |planning companies |promotions…. | | |into the retailer system | | | Product life cycle As for most of home and business appliances Whirlpool products vary in their life cycles from 10 to 15 years. Warranties on products also have varied from 1 to 5 years. Like any product it will go through the four phases of Emergence, Growth, Maturity and Decline. What makes Whirlpool special in regards to its product development and life cycle is its consideration for the environment and energy efficiency.
As Jeff Fettig, the CEO and Chairman says, Whirlpool continually strives to manage the environmental effect of its business. It also develops products that consume less energy and water, with materials that do not affect the planet alongside improving their processes. • The emergence phase of a Whirlpool product starts in manufacturing with less power plant emission, low energy lighting and high efficiency equipment. • The growth phase goes after product distribution with the installation of electric truck lifts with less net emission. The maturity phase goes after the design and development phase, the product is then being used in homes and businesses. For this phase Whirlpool focused on more resource saving appliances. • The decline phase is in the end of life management of the product. In this phase, Whirlpool uses 85-90 % recyclable material in its products such as iron, steel, packages and plastics. Boston Box Portfolio Analysis It could be shown as follows Star |Wild Cat | |IS to promote growth |IS to innovate, control and segment the market | |Cash Cow |Dog | |IS to improve productivity and reduce cost |IS to support | The Star
We have already discussed Whirlpool’s intention to standardize its processes across different countries and markets as its empire grew to cover many continents. The standardization came as a necessity as Whirlpool experienced some discrepancies in the way it was reading its own products and parts data and causing confusion for its own suppliers and retailers. For that reason, Whirlpool implemented, through its partnership with SAP, the SAP GDS (Global Synchronization Data) as part of SAP NetWeaver and its Master Data Management feature. GDS allowed Whirlpool and the companies of suppliers and retailer to use their existing IT landscape.
It also provided basic functionalities in a single package, offering an easy and quick way to fulfill retailer mandates and it ensures data consistency and accuracy across different retailers, reducing cost form data processing errors. Some of the important features of SAP GDS are the bidirectional communication with the existence of network data pools such as 1SYNC (www. 1sync. org), using global information structures enabling message orchestration, automatic updates, full product information contents, status management, and more flexibility.
Another feature is that it provides compliance with information standard of UCCNet and a unidirectional communication with SAP R/3 and SAP MDM. Finally it enable global trade item number (GTIN) information from the object product and the material master. To sum it up the application that enabled synchronization of Whirlpool product data created a Global Operating Platform which led to the creation of the Trade Management phase where coverage and conversion are involved and brand/customer loyalty enhanced. Trade management gave the space for Brand Equity and made the creation of demand/share possible.
The ladder of GOP, TM, and BE is what constitutes Whirlpool’s global brand focused value and growth strategy. The Wild Cat We have mentioned in the previous research paper, that Whirlpool had a strong commitment to innovation and that innovation made a clear part in its global policy. The CEO of Whirlpool once said: “Success will be for those who innovate with the new products as well as with new features on traditional products”. In 2000, whirlpool conducted a global innovation project called “Innovation From Everyone, Everywhere”. 75 people across the company worldwide formed a network to work on new ideas of products, features and mprovements of the current products. These people were hand picked as they have already demonstrated innovation skills in the past, and they were assigned this special task across different fields of the company. The best new ideas were picked and introduced to the market. Another program was called the Innovation E-Space Knowledge Management System doing similar activities as the ones mentioned above but also overcoming the cultural barriers standing between different countries that might prevent business innovation. This has also overcome the Not-Invented-Here syndrome and involved risk aversion.
Another activity of IS that helped segment the market is the differentiation process that we mentioned in the beginning of this paper. Through the enabling of SAP products such as SAP R/3, this differentiation was possible, giving a clearer idea on product data and how it relates to different customers and retailers. This subsequently gave Whirlpool the ability to dissect and segment its market more. Plus the fact that it could publish this data on UCCNet gave Whirlpool more control over its won processes as it didn’t have to exhaust its IT department with the diffusion of product data to external sources.
The Cash Cow Moving more and more systems to SAP has reduced the overall IT operating costs for the past four years by 7 per cent and capital spending by 10 per cent. Not only the numbers are going down but the output was also going up. The savings that are credited to SAP have also contributed to research new and improved processed that deliver better developed products. What also added to this success of cost reduction was the fact that SAP NetWeaver was a self funding initiative.
All that Whirlpool had to do was to replace its existing legacy systems, writing off their funding and resources to pass them on the SAP and getting in returned the advanced capabilities of NetWeaver. Whirlpool CIO saw that running the same system on SAP NetWeaver has a more reduced cost than the maintenance of the existing legacy systems, which resulted in annual savings. The finance department was hardly ever referred to for funding for new capabilities and strategies after the migration to NetWeaver. For the past four years, Whirlpool’s annual saving were used to invest in new value creation activities and its revenue grew by billion US dollar on average every year. Another cash cow was caused by some outsourcing activities to reduce IT costs. Once Whirlpool’s solutions are developed, stabilized and rolled out on a global scale they are then outsourced such examples include application maintenance, this enables the Whirlpool IT team to move on to the next stage of innovation, contributing to better productivity. Outsourcing lowers the costs and frees up focus for strategic activities. The Dog The way Whirlpool’s has set a strategy to support its business through its IS activities was by establishing a culture of knowledge sharing across the IS department.
Whirlpool has dissected everyone’s job in the development groups in a manner to have 20 per cent of it for consultancy. Meaning that everyone in the development group has to dedicate 20 per cent of his or her job in being a consultant to others in areas of deployment and development. These staff focuses more on deliverables rather than projects. Deliverables are a prototype for a certain business function, if that function is not coming in on time, someone needs to be consulted to draw the path of developing this new function. A culture of collaboration in Whirlpool’s IS department enables it to give support more consideration.
McFarlan’s matrix |Strategic |Turnaround | |Applications critical for future success |Applications for potential future strategic importance | |Factory |Support | |Application critical to sustaining existing business |Applications to improve management and performance |
Strategic These are IS activities that deal with the challenges an organization faces in building its IT/IS infrastructure. When Whirlpool was growing through the acquisition of other companies and their brands, it included and involved numerous IS platforms and legacy systems that it inherited from those brands. What comes as strategic importance here is about bringing together all those systems and platforms to work in a collaborative manner and for specified unique purposes distributed across them.
Like we said above about retiring an existing legacy system involves a lot of work to be done afterwards such as the full data migration and decommissioning of that system. In North America, some of the retired systems were PeopleSoft and trilogy, in Asia there was Fourthshift, and in Latin America there was Baan. The migration of data from these systems was in the direction of SAP NetWeaver which in turn also supported existing homegrown manufacturing systems, I2 and Siebel. The migration has to be done by supporting the old system for a transitional period to ensure the integrity of the business.
SAP NetWeaver has given Whirlpool the ability to maintain the migration as well as the ability to build key capabilities essential for the organization. The SAP Web Application Server and SAP Enterprise Portal are also two systems considered critical to future success as they are used to collaborate with partners in the value chain. Turnaround The most common ways to enhance potential future strategic importance was the significant effort spent to build the competencies, deploying global solutions and supporting them, developing the IS staff and the department, cultivating the skills needed to support the migration and the new SAP platform.
But the most important thing in the Turnaround activities of this matrix, is to identify and understand the activities that eventually differentiate Whirlpool from the rest of the other organizations in the marketplace. That is done through the following: First, recognizing the different experience of consumer purchasing to provide all the detailed necessary information on the company’s website in a self service mode to customers and that is also easy to navigate through. This also enables the development of an effective call centre and helpdesk that would understand onsumers better and answer specific questions about what they want in a product. This will help other sub activities such as locating trade partners and retailer, scheduling installations and service calls, etc… Second, being up to speed in developing and implementing solutions to unexpected problems, such as the rise of costs of oil and gas, or other base material like steel and copper. To do that, the necessary capabilities should be deployed to deal with those high price increases or decreases.
In terms of IS and IT the department need to know how to allocate the right skilled people and resources to cope with these issues in a fast manner, that is within hours or days, not months. Third, aligning the IT and IS activities with business needs closely to facilitate the development and implementation of data. This necessitate an articulated and flexible IS infrastructure and applications. The implementation of SAP application platform was a good example on that. Factory These are application at the base of the business application strategy that deal with activities that essential for business maintenance.
They are widely used in the departments of Finance and Treasury, Sales and Distribution, Manufacturing and Materials. For Whirlpool, these applications are sub categories of SAP at the employee end that constitute the platform for the above business transactions. Examples of those are the Standard Business System SAP R/3 which is at the foundation layer of the application hierarchy and which is executed on a global scale as well as across the board. 30 countries around the world that represent 98 percent of Whirlpool’s revenue close their respective books using SAP R/3. All that data is sent to the primary data processing center in Michigan.
That also enables the sharing of the best business practices; deploy tested and proven business processes and capabilities from one geographical area to another through a standard system. Support These are application that support and enhance management and they lie in the middle of the business application hierarchy in areas of customer relationship management and supply chain optimization. The SAP sub applications used here are standard planning and commerce systems such as SAP APO (Advanced Planner Optimizer) and CRM (Customer Relations Management) CRM includes activities such as:
Front office operations that enable direct interactions with customers through online services, emails and phone calls Back office operations dealing with activities of the front office such as billing, planning, maintenance, advertising, marketing, manufacturing and finance Business relationships enabling interaction with other partners and organizations such as vendors, suppliers, retailers, distributors, industry network and others Analysis which analyses key CRM data in order to organize campaigns for target marketing, and conceive the business strategies and evaluate the success of the CRM activity through the market share, revenue, number of customer and their types and profitability. Suggested generic management strategies as per Parsons Centrally planned: Centralized responsibility of IS strategy to develop competitive advantage Leading edge: Innovative IS, potential applications not necessarily requested by clients to create business opportunities
Free market: Governed by market forces and user preferences. IS competes with external vendors to acquire clients. Monopoly: An internal source for users as a utility service satisfying their needs at reasonable costs. Scarce resources: Limits IS by allocating it on a priority basis. Applications are only created once resources are clearly defined up front. Necessary evil: Involving IS when there is no other alternative; only essential applications such as payroll or accounting. Centrally planned The current strategy in regards to this is linked to the business mission. In Whirlpool’s case the mission is to globalize itself to be the leading manufacturer of home and business appliances.
The process of data standardization that we have discussed in this paper and the partnership with UCCNet have served this mission well, by providing a single point of view of the products in terms of their name, numbers, units, and description. The primary processing data centre in Michigan is a concrete implementation of the new SAP platform that was triggered by the need of data synchronization and standardization. Leading edge This demands an IS strategy that recognizes any reason for change as an opportunity for the creation of a new value in business. It necessitates that all parties be open to those changes so that everyone can benefit. The UCCNet project and its success is the result of Whirlpool’s commitment to change and the technology challenges it faces.
In this case IS and the business demonstrated an ability to benefit both Whirlpool and its partners and customers in the process of implementing the data exchange project through UCCNet which also required a lot of patience from the retailers during the development phase. A leading edge IS strategy is a way to leverage the opportunities for change and not just compliance. Free market This is an IS strategy that has been discussed under customer loyalty in a previous section of this paper. When it comes to acquiring clients and customer, whirlpool has developed a brand and customer loyalty strategy (as also mentioned in the previous paper) to retain it market share of clients.
It starts with understanding what customers really want and developing the products based on that. This requires a lot of research but like we said, it enables Whirlpool to dissect its own products and demand for material better. It is about offering product with increasing value and differentiation. What concretely enables that is the placement of the management reporting and analysis related applications at the top of the Whirlpool’s application hierarchy making the right decisions about customer needs on a global scale. Monopoly What is suggested in this strategy is the availability of a portal or a data center for users with a pool of available information about the products they want.
In that case, a website that organizes products and details their features (dimensions, description…), offering at the same time easy navigation, could play a significant role in enhancing customer satisfaction. It should also offer alongside product the detailed available services that Whirlpool offers in regards to those products (online billing and purchasing, service scheduling, shipping and taxations…), and also brief details about the company such as Whirlpool’s mission, values and commitment, locations and contacts. Sections for customer feedbacks and complaints are also preferable allowing a closer and largely personalized interaction between the clients and the company.
The internet and the maintenance of websites offer this sort of services at a very reasonable cost when compared to other methods such as phone surveys and telemarketing, transportation expenses for face to face service etc… Scarce resources This is a situation that an IS strategy should avoid as much as possible: When only the availability of resources permits the implementation of activities that could foster innovation and productivity. The IS department in this case should seek solution to reduce maximum costs on redundant IS activities that could be either migrated to a foreign platform like Whirlpool did with SAP NetWeaver or outsourced at a lower cost.
Once repetitive processes and the procedures have been established by Whirlpool, they can be passed on to an outsourcer to carry on to the outsourcer. Whirlpool would then save a lot of funding that could be, over the long run, be saved for the creation of new application and activities promoting higher goals on a mission statement level. Necessary evil This is the strategy that deals with applications situated at the bottom end of Whirlpool’s business application hierarchy. They have been placed on that position for a purpose and that is to minimize their effect on a managerial level. These are applications that are extremely necessary with no other alternative to perform what they do.
They involve sales, manufacturing, finance, payroll… We cannot substitute or decommission them in any way for their unique nature, but we can only have alternative on their same level, and mange them in a way that minimizes their effect on the important high end activities of the company in case of their outage. Alignment with assignment 1 Assignment one handled the business perspective of Whirlpool such as its mission, business analysis (SWOT and Environmental Analysis) we answered Porter’s five forces of industry attractiveness in terms broad business perspectives. In this paper we discussed the influence of Information Systems on the general business study and its different aspects. We suggested alternative strategies from a business perspective in our conclusion at the end of the previous paper.
The relation with third parties such as suppliers was discussed in Assignment 1 and here we discuss it form an IS point of view in terms of the processes involved. It was the dilemma that Whirlpool has faced with its third parties and its environment that has prompted the IS strategies and application presented in this paper. We grab at communication of data across different third parties, causing a lot of frustration between Whirlpool and them resulting in tensed relationship between them such as the one with SEC. It was the lack of communication on product and material that resulted in such an undefined relation. Hence there was the necessity to implement data translation, synchronization and publishing for all third parties on the UCCNet system.
We grab at another example where Whirlpool was facing a dilemma from its environmental surrounding such as the consumer power and the rivalry from other companies of the same industry, resulting in the current IS strategy to focus on differentiation to enhance customer loyalty and minimize their power and the data synchronization strategy to enhance data exchange across different geographical areas to promote Whirlpool’s globalization facing the rivalry from other companies in the world marketplace. Everything discussed in this paper in terms of Information Systems strategies came to support the business reasons behind them discussed in assignment 1.
In other words assignment 1’s business dilemmas was the ground for this assignment’s IS solutions. Conclusion We have gone over the important above points that constitute Whirlpool’s IS strategies and application approaches by discussing how IS can influence the industry attractiveness (Porter) and the value chain. The strategies were dissected into the Boston Box and McFarlan’s IS portfolio and the suggested generic management strategies of Parson with their justifications, covering most of the strategies and main essential applications classified in different levels of importance in the application hierarchy (particularly in the purposeful migration into SAP platform).
We can conclude that the Whirlpool’s IS strategy always had a goal of achieving high potential and business objectives in a cost saving manner and they were placed in the right time frame with the right budget, enabling the company to make further profits. IS has played a role in the profitability of the company by either implementing itself in a cost saving manner or creating cost saving features that were implemented in the future, all as well as producing better product and more business effectiveness. Whirlpool has also managed the IS activities well and made the right decisions on what is to be in-sourced and what is to be outsourced to expert system, keeping in mind the educating of its own IS department as a high consideration. Recommendations
We are left with the recommendations in hand for this study, some of them would be: • The recognition of the reasons for change, and that change should play an important role in the creation of opportunities and new values and not just for compliance with existing processes. • High management support is vital to the success of any project or change within a project. The communication between IS and the business at the high end of management is essential for IS to find the space, time and the funding it needs to prove its potential. Management needs to understand the importance of an IS strategy for the company itself as well as for the trade partners sometimes. Internal flexibility is a must with any IS strategy, it should mainly serve as a base to support the external changes not just the internal ones. Even if IS strategy are aligned closely with the business goals of the company the external changes come to force an environment of discomfort for the company. If IS is not flexible those changes could cause serious damage to the business. • Educating the IS department even in times of transitions to other platforms or systems and times of outsourcing. A company’s internal IT/IT department should aware of the change and the strategies and how to cope with them from the top end (CIO and managers) to the lowest one (customer service and help desk).
This minimizes the time to market strategy and creates less overhead in responding to clients’ needs and enquiries. • Recognizing business partners and third parties in the benefits, as they too have to use the shared information effectively to produce a good return on Whirlpool’s business and make the right decision. An IS strategy should address this need, it should somehow be able to serve those third parties as well as its own company for the company’s good. • Recognizing the importance of integration is key, because it isn’t just the data that makes the difference in the change, but it is rather the way that data integrates with itself and the surrounding environment that adds the value to the business.
The integration process should be combined in an innovative way to produce the best quality for a strategy or a whole portfolio. When data or different strategies are spread across the IS department with no consistency or relation it ends up as obsolete. It needs to diffuse within itself and the business and even with the external standards such as the Internet and the Web services to produce the best efficiencies. Abbreviations CIO: Chief Information Office CFO: Chief Finance Officer CEO: Chief Executive Officer UCCNet: Uniform Code Council Network SAP: Systemanalyse und Programmentwicklung (“System Analysis and Program Development”) SAP XI: SAP Exchange Infrastructure SAP GDS: SAP Global Data Synchronization
SAP MDM: SAP Master Data Management SAP EP: SAP Enterprise Portal SAP BW: SAP Business Warehouse SAP R/3: SAP Real time data processing 3-tier SAP APO: SAP Advanced Planner and Optimizer SAP WAS: SAP Web Application Server CRM: Customer Relationship Management SEM: Strategic Enterprise Management GTIN: Global Trade Item Number References Curry, A. , Flett, P. & Hollingsworth, I. (2006). Managing information and systems. London: Routledge. Whirlpool Corporation’s Official Website: http://www. whirlpoolcorp. com/ Ronkainnen, I. (1996), “Implementing global marketing strategy, an interview with Whirlpool Corporation”, International Market Review, Vol. 3, No. 3, 56-63.
Corporation Fact Sheet, Whirlpool Corporation’s Official Website, retrieved on the 25th September 2009 from: http://www. whirlpoolcorp. com/about/corpfactsheet/default. asp Gargeya, V. & Brady, C. (2005), “Success and failure factors of adopting SAP and ERP system implementation”, Business Process Management Journal, Vol. 11, No. 5, 501-516. Innovation and growth: Ideas from those in the vanguard of innovation, Strategic Direction, Vol. 19, No. 4, (2003), 29-31. Loewe, P. & Dominiquini, J. (2006), “Overcoming the barriers to effective innovation”, Strategy and leadership, Vol. 34, No. 1, 24-31. Ronkainnen, I. (1996), “Implementing global marketing strategy, an interview with Whirlpool Corporation”, International Market Review, Vol. , No. 3, 56-63. Case study, Whirlpool’s IT practices for continuous innovation, SAP NetWeaver Magazine, (2005), viewed on the 28th September 2009 from: www. netweavermagazine. com Case study, A new era in manufacturer-retailer relationships, SAP NetWeaver Magazine, (2005), viewed on the 28th September 2009 from: www. netweavermagazine. com Whirlpool focuses on operational excellence for global growth the green way, Business Insights, viewed on the 39th September 2009, from: http://bizinsight. com. au/ Whirlpool Corporation Continues Steady Commitment to Energy Efficiency, NewsComm, viewed on the 29th September 2009 from: http://www. newscom. com
Whirlpool air conditioners, devices that effectively rid the reasons for sweating, Ezine Articles, viewed on the 30th September 2009 form: http://ezinearticles. com IBM Case Study: Whirlpool Corporation, Tech Republic, viewed on the 1st November 2009 from: http://whitepapers. techrepublic. com. com/abstract. aspx? docid=97292 Whirlpool Corporation: Evolution of a supply chain, PENSKE, viewed on the 1st November 2009 from: http://www. penskelogistics. com/casestudies/whirlpool2. html SAP and Whirlpool, Evolving Excellence, viewed on the 1st November 2009 from: http://www. evolvingexcellence. com/blog/2007/09/sap-whirlpool-a. html SAP customer success story: Whirlpool, SAP, viewed on the 1st November 2009 from: http://www. sap. com/swiss/platform/netweaver/pdf/CS_Whirlpool. pdf Word count: 6,759
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