Cross Functional Enterprise System

SWOT Analysis is a tool used to identify the internal strengths and weaknesses and external opportunities and threats environment of Aalsmeer Flower Auction. Table 1 below shows the strengths and weaknesses within the company, and the opportunities and threats faced by Aalsmeer Flower Auction.

1.2 Information Requirements

The board of Aalsmeer Flower Auction requires an information system that could help to support its e-business activities.

It is important for the company to view information systems as a set of technologies that will support efficient business operations, work groups and enterprise collaboration in order to success (O’Brien & Marakas, 2008, p.44). Hence, the company needs to know the information requirement in order to set up an electronic auction market.

Hardware and software are the main information requirement. It is use to perform input, processing and output activities of the business. Once the hardware and software are installed, the company needs to consider whether the end users familiar with the system and understand how to use the system. Beside that, the company has to ensure that users security when using the system. For instant, when buyers make their online payment, they make sure that their credit cards are safe and cannot be hack. Furthermore, maintenance of the system is important information that the company needs to know in order to keep the system operational. (Scribd, 2011)

2.0 The New System and Objectives

2.1 Cross-Functional Enterprise System

An enterprise system is essential to an organization to ensure information can be shared across all business function (Stair & Reynolds, 2008, p.220). Aalsmeer Flower Auction may develop an integrated cross-functional enterprise system that cross the boundaries of the traditional business and organization functions (O’Brien & Marakas, 2008, p.250). The purpose of this system is to reengineer and improve vital business processes all across the enterprise (O’Brien & Marakas, 2008, p.250).

Besides that, cross-function enterprise system is view as a strategic way to share information resources and improve the efficiency and effectiveness of business processes, and develop strategic relationships with customers, suppliers, and business partners (O’Brien & Marakas, 2008, p.250). This system are integrated by enterprise resource planning (ERP), supply chain management (SCM), and customer relationship management (CRM). The company will be also using the World Wide Web and their intranets and extranets as a technology platform for their cross-functional and interenterprise information system (O’Brien & Marakas, 2008, p.250). With this system, it enables the company to fulfill its objectives.

Enterprise Resource Planning (ERP)

Enterprise resource planning (ERP) is an integrated computer-based system designed to integrate and automate many internal business processes and information flows within the company such as integrated logistics, production planning, accounting and finance, sales distribution and human resource function of the company (ERPChronicle.com, 2011).

The key objective of an ERP system is to integrate information and view real-time of its core business process from all functional divisions of the company in a single database (TopBits.com, 2011). All information is flow from one system to another automatically with no repetition of entry and thus suppliers, customers and other business partners can access to current and consistent data (Accurate, 2005).

With this system, the company can reduce the transaction costs. Running more efficient and effective operation like production management, supply chain and customer relationship management into one streamlined process where everything can be accessed through one enterprise wide information network, and enhance management decision making (ERPChronicle.com, 2011). After implementing ERP system, the company can transform the way they conduct their business and thus achieving the initial objective of the e-business activities.

Supply Chain Management (SCM)

The implementing of supply chain management (SCM) system is to create a demand driven organization by connecting an extending value chain, streamline traditional supply chain process and eliminating non value added activities (CiteMan Network, 2008-2011). Increasingly, SCM is accomplished using the internet and electronic marketplace to reengineer and streamline traditional supply chain processes (Stair & Reynolds, 2008, p.26).

The objective of SCM system is create customer value leading to increase organization profitability, shareholder value, and sustained competitive advantage in the long run (MBA Knowledge Base, 2011). Besides that, SCM is to help the company achieve agility and responsiveness in meeting the demands of its customers and needs of its suppliers using a fast, efficient, and low-cost of network business relationships or supply chain (O’Brien & Marakas, 2008, p.315). In the long run, the initial objectives of the e-business activities to redefine the value chain to reduce transaction costs accomplished.

Customer Relationship Management (CRM)

To help the company to deliver an excellent customer serving processes in sales, marketing and product service, customer relationship management (CRM) system is recommended (O’Brien, 2002, p. 130). The main objective of this system is to build and maintain valuable relationships with the customers, to increase profits and become more competitive (Exforsys, 2000-2011).

CRM system will capture key customer data and enable the company to use that data effectively at each stage of the customer relationship (Customer Connect, 2006-2009). In the sales process, CRM tracks customer contacts for cross-selling and up-selling (O’Brien, 2002, p. 130) as well as translate the salespeople’s skills into institutional knowledge (Customer Connect, 2006-2009). Besides that, CMR helps the company to plan and execute the marketing effort efficiently (Customer Connect, 2006-2009). Furthermore, CRM helps customer service managers quickly create, assign and manage service requests (O’Brien, 2002, p. 130). In short, CRM system helps to manage the business effectively, reduce costs and support a total customer care.

2.2 Information Strategies

To obtain major advantages over the competitive forces it faces in the global marketplace, strategic information systems are required and the use of internet technologies are essential to gain competitive advantage.

2.2.1 Cost Leadership Strategy

Cost leadership strategy concerned with delivering the lowest possible products and services. The company can help the suppliers and customer to reduce their costs such as transaction process, warehousing and shipping costs by implementing online auction and online ordering.

Internet is the primary information technology infrastructure that supports e-business applications (O’Brien & Marakas, 2008, p12). Aalsmeer Flower Auction can use an electronic auction website as information strategy to connect buyers and sellers from all over the globe. Trading on the internet allows the company to reach a larger number of potential customers and suppliers in a shorter time and reaching customers for a low cost per transactions (Kumar and Feldman, n.d).

Web auction is easy to use. It allows million of buyers to participate in the live auction which occurs around the world at the same time via online without attending in the auction hall. Buyers will feel convenience and it is the fastest way to make their bid. There is also an auto bid buying method, where it benefits for buyers who have no time to participate in the live auction (FlowerBuyer.com, 1995-2011).

The company can implement an online ordering which change its traditional way of selling. Online ordering allows customers to place their order through website. With this service, customers are able to make their order anytime because the website provides 24 hours. Besides that, internet enables Aalsmeer Flower Auction to showcase all the products and provide up-to-date information to customers. In short, online auction and online ordering can substantially lower costs, reduce lead times, and improve the quality of services provided.

2.2.2 Differentiation Strategy

The company is said to have competitive advantage when it delivers different products or services from its competitors. Aalsmeer Flower Auction could provide an online customer design, where customers are allowed to have more option and opportunities to customize based on their own preference.

Buyers can buy the bunch which allows them to order in smaller quantities. There are some advantages of buying in smaller quantities. First, retailers can access to a wide variety of fresh products all the time. Second, retailers can buy frequently and require several varieties in small volumes. At the same time, they have flexibility to mix and match any products they like, and choose the colour they wish to have. (FlowerBuyer.com, 1995-2011) Besides that, buyers can also select the time schedule when they want to make their delivery. These have satisfied customer tastes which they wish for fresher products, more varieties, smaller quantities and multiple deliveries each week.

In addition, online transaction processing system plays a strategic role in electronic commerce. The company can use internet that tie them electronically to their customers and suppliers for online transactions processing (OLTP). In online processing, data are processed immediately after a transaction occurs, which will help to provide superior service to customers and other trading partners. (O’Brien & Marakas, 2008, p.256) With this system, company goals can be reached. Reducing transaction costs, running more efficient and effective operation, add value to their products, and give them an importance way to differentiate themselves from the competitors.

3.0 System Development Methodology

A system development methodology refers to the framework that is used to structure, plan, and control the process of developing an information system (Centers for Medicare & Medicaid services, 2005).

3.1 System Development Life Cycle (SDLC)

One method of using system approach to develop information system solution is system development life cycle (SDLC). The waterfall model is one of the methodologies that the company can practice.

Diagram 2: The waterfall model

Investigation

Analysis

Design

Implementation

Maintenance

Source: Startvbdotnet, 2004-2010

3.1.1 System Investigation

The systems investigation stage requires the development of feasibility study, which assesses technical, economic, legal, operation and schedule feasibility (O’Brien & Marakas, 2008, p.449). Feasibility study is used to test the proposed system, meeting user’s requirements, and effective use of resources and cost effectiveness (Scribd, 2011).

Technical feasibility concerned with whether the hardware, software and other system components can be required or developed to solve the problem. Economic feasibility is the most important study that determines the cost and benefits of the proposed system makes financial sense. If benefits are found to be more than costs, then the analyst decides to continue the development of the proposed system otherwise considers it economically not feasible. (MBA Knowledge Base, 2011)

Legal feasibility determines whether laws or regulations can prevent or limit a systems development project. Legal feasibility involves an analysis of existing and future law to determine the likelihood of legal action against the systems development project and possible consequences (Stair & Reynolds, 2008, p.351).

During operational feasibility study, it is determined whether the system will operate in the way that user wants. It depends upon human resources whether the qualified and experienced manpower is available for the development and implementation of the system. Furthermore, schedule feasibility determines whether the project can be completed within the time frame. If it takes too much time it is likely to be rejected. (MBA Knowledge Base, 2011)

3.1.2 System Analysis

Diagram 3: The problems solving steps

Define and understand the problem

Develop alternative solutions

Choose the best solution

Implement the solution

System analysis

Source: Laudon and Laudon, 2009, p.372

Define and understand the problem

One of the problems faced by Aalsmeer Flower Auction is that they are still using the traditional way which is floricultural value chain to sell flowers and plants to customers. The company has to stay competitive align with the emergence of alternative, electronically driven flower markets.

Besides that, the company has to collect and arranges all the flowers and plans, and gathers all suppliers and buyers in the auction hall before auction can take place. This method of doing business is very costly and time consuming. Furthermore, retailers request for fresher products, more varieties, smaller quantities and multiple deliveries each week in order to satisfy the changing of customers tastes, thus the demand have more influence on supply. The company must react to these changes to support its business processes and to connect with suppliers and customers, hence changing from traditional way to an electronic way to trade flowers and plants.

Develop alternative solutions

After determining the problems, the next step is to develop alternative solutions. The alternative solutions put forward to solve the problems is to streamline the existing processes that rely on manual procedures, custom-build a software using Microsoft Access or implement an online transaction processing system.

Choose the best solution to be implemented

The company then must choose the best solution. If the company would like to choose the first solution, however, if given a large numbers of flowers and plants orders, as well as relationship with manufacturers and shippers, redesigning and streamlining a manual ordering and delivery process would not have provided many benefits.

If the company would like to choose the second solution, the disadvantage is time consuming, expensive in terms of the programming costs plus the purchase of hardware, software and networking equipment to run the system and link it to the Internet. Although it is very costly, but it is useful using the Microsoft Access because it can provides a fast and accurate data when the numbers of orders are taken.

If the company chooses the third solution which is using the online transaction processing system that provides templates and tools for creating simple database system in very short time, provides the hardware for running the application and website and can be accessed by many different users over the web.

After determining the advantages and disadvantages each of the alternative solutions, the third alternative solution is the most feasible and best solution that the company can applied.

3.1.3 System Design

The purpose of system design is to create a technical solution that satisfies the functional requirements for the system (NYS project management guidebook, n.d.). A data flow diagram (DFD) is being used to show the flow of data through an information system (iReference, 2008-2011). It consists of four components, they are processes, data stores, external entities, and data flows. Diagram 4 below illustrates the data flow diagram of an online ordering system that the company can applied.

In process 1.0, customer detail and information are collected and store as member file. After verifying member’s information, process 2.0 will verify the order items that customers have selected. It then stores the order items information into items file. Besides that, process 2.0 will also updates all the validated orders and store as daily order. Lastly, in process 3.0, the orders are ready to print out the invoice and shipping list. All the invoice and shipping list will than pass to the order processing department to print and later ship the products to customers.

3.1.4 System Implementation

A few tasks need to be completed before the system is installed and ready to operate. The system implementation stage involves hardware and software acquisition, testing of programs, conversion of data resources and training. (O’Brien & Marakas, 2008, p.464)

Acquiring hardware and software

To obtain the component for an information system, Aalsmeer Flower Auction needs to purchase the new system, computers and networking hardware. It also needs a computer program that governs the operation of the computer (Scribd, 2011). When acquiring the software, it needs to make sure that the application software is supported by the hardware.

Testing of programs

System testing may involve testing and debugging software, testing website performance, and testing new hardware (O’Brien & Marakas, 2008, p.472). Several forms of testing should be used, including testing each program (unit testing), testing the entire system of programs (system testing), testing the application with large amount of data (volume testing), and testing all related system together (integration testing), as well as conducting any tests required by the user (acceptance testing) (Stair & Reynolds, 2008, p.367). When all managers are satisfied the new system meets the standards, the transaction processing system is accepted for installation.

Data conversion

Data conversion involves making sure that all files and databases are ready to be used with new computer software and systems (Stair & Reynolds, 2008, p.366). Direct strategy is used. This strategy is the simplest conversion strategy which replaces the old system with the new system.

Training

The company needs to consider whether the end users are have the appropriate skill and experience to use the new business system. There will be an online practice area with step by step instruction guide for user to practice entering data into the system.

3.1.5 System Maintenance

Maintenance is required after the installation of software that is performed to keep the system operational (Freetutes.com, 2007-2011). System maintenance involves checking, changing, and enhancing the system to make it more useful in achieving use and organization goals (Stair & Reynolds, 2008, p.367).

The organization’s database must be maintained so that information updated and errors can be eliminated in the system. Consequently maintenance enables users to use the system more efficient and more effective. Other enhancements include capabilities for paying for orders more rapidly, and entering the orders information without waiting for a specified starting date.

4.0 Impact and effectiveness of new system

4.1 Organization

Changing new way of doing business to an e-business with the implementation of new information system, Aalsmeer Flower Auction’s objective can be achieved easily. The impact included bringing new opportunities and competitive advantages, managing business changes, reducing transaction costs for long term period, increasing market share, and strengthen the link with wholesalers and retailers.

The company gain competitive advantage with the developing of website to trade the products via internet compare to their competitors who do not offer this service. This new way of doing business allows the company to reach globally. Thus, increase market share of Aalsmeer Flower Auction. Besides that, the company also can strengthen the customer-supplier relationship.

With e-business, the company does not need a large warehouse space to store the flowers and plants, hence, reducing transaction costs. However, the company is having a high investment because they need to purchase new system. The organization is also facing a high risk due to the first time setting up the new system and afraid that the system does not function well.

4.2 Management

With electronic system of doing work, information can flow easily, directly and rapidly from buyer to seller because electronic connection and communications are already establish (Scribd, 2011). The management has the effectiveness of using the computerized to reduce the paper workload as well. All reports, payments, and invoices can be printed out easily from the computer. The documents also can be done in a systematic way and organized the workloads effectively. The reports also can be generated and updated automatically by the system in every week.

Following this, the effectiveness of using the computerized is to help the management to generate planning with a fastest way. The management first needs to forecast the customer’s demand and forecast orders. After forecasting, they must plan how many quantities of flowers and plants to order from the suppliers in order to get enough quantities. As a result, all the information from the computer comes out with the easiest and accurate data.

4.3 Employees

Employees in Aalsmeer Flower Auction now have to adopt the new way of doing business by using internet technology. However, this is the first time of trading in Flower Auction so it is possibility that employees do not have the required knowledge about e-business. E-business required skilled people and have knowledge about information system so that the organization can operate successfully without failure. Therefore, employee training and development program is necessary. (Scribd, 2011)

5.0 Conclusion

Although the company will face a high risk due to the first time setting up new system, suppliers, customers and employees will benefit from the new information system. With the use of information technology and new system the company manages to thrive with today’s highly competitive and dynamic business environment. Buyers can easily make their bid and order online. Suppliers no longer need to transport their flowers and plants to the auction hall as the pictures of the flowers and plants will be display in the internet. And lastly, Aalsmeer Flower Auction still plays their role as market mediator. (Scribd, 2011)