Management Information Systems Of Vodafone Group Information Technology Essay
Introduction: – Vodafone Group plc was first founded in 1985, since that time it has grown rapidly to become the second largest company in the UK. Vodafone currently holds 37 per cent of the market for mobile services, signing up 800,000 new subscribers during the Christmas 1998 period alone. Vodafone though is headquartered in Newbury, UK it has branches all over the world in countries like India, Netherlands, Australia, New Zealand, China, Japan, etc. Vodafone Essar limited (Vodafone) is a cellular operator in India covering about 23 telecom circles throughout the country. The two owners of the company are Vodafone (67%) and Hutchison Essar(33%). The company is based in Mumbai. It ranks 2nd in terms of revenue after Bharti Airtel as a mobile phone operator. It has about 113 million customers and more than 10,000 employees throughout its branches operating in the nation. It provides mobile networks and telecom services related to calls, messaging, internet surfing and is the largest global telecommunications public limited company
Financial and accounting sector: – The financial management information system has become an integral part of every small and big business companies. FMIS helps to compile all the account related information from the different departments of the company including the operations, sales and marketing, HR and makes it available in an easy format to the chief financial officer. The CFO then analysis the profit and losses of the company, past and present financial transactions made by the company and also uses it to control and monitor the available funds for the right purpose.
Vodafone Essar’s financial department uses the most competent SAP system to manage the accounts and compile the information in a fast and easy way.
a) SAP- Initially the full form was “Systemanalyse und programmentwicklung” in German language. It is actually System analysis and programme development.
System working and benefits-
General ledger- this system automatically makes an entry of all the transactions in the general ledger. It also side by side updates this information in the specific accounts like trade receivables, trade payables, personal, sales, inventory, etc and these all accounts together make the “chart of accounts”. Hence the system helps in keeping a permanent record of the accounts.
Cash management- helps in balancing the cash inflow and outflow. Highlights the area where cash is used up like in buying high cost raw materials, inventory expenses, etc. Depending on the company’s expenses it can regulate the price at which Vodafone sells its sim cards, internet services and also helps deciding the roaming charges, call charges, message schemes, plans, etc.
Budget planning- modifies the financial ratios to help predict the future scenarios and also in setting the financial goals for the company.
Financial reporting- the system not only uploads the transactions directly in the general ledger but it also makes financial statements used for internal reports and share holder use. Compliance with the government regulations, accounting standards and auditing requirements are also made easy.
Reduced finance costs and workload- initially before the invention of computers accounts were maintained in account books and were written manually. To reduce this tedious work computers came into the market but did not possess an advanced technology to maintain complex accounts. Later came, the SAP system which not only could manage the various accounts but also could automatically upload any transactions occurring in every account. This reduced the time and cost of writing and managing accounts. In global companies like Vodafone which extends its branches all over the world SAP system serves as a boon for managing the finances.
Other benefits- making trial balance reports, profit and loss reports, balance sheet, generating bills according to the customer chosen schemes and plans, etc.
b) Operations support system (OSS) and Business support system (BSS)
Vodafone and many other telecommunication companies use these systems mainly to manage the billing procedure which were done manually many decades ago. These systems mainly help in managing networking components, provisioning services and for billing in the accounting sector.
Telecommunications billing is the process of adding together rated calls or services for a certain user or group of users, applying discounts and preparing the data for invoicing.
OSS in processing CDR- Call detail record (CDR) or Station message detail recording (SMDR) is a file containing all the necessary information regarding the time of call, origin of the call, call duration, call charge, total usage time in the billing period and the free minutes left in the billing period. If Vodafone is providing some of its customers with itemized bills then CDR will show up in each bill in a format similar to the long distance itemized bill generated by a conventional telecom company. In a telephone exchange, a CDR contains information about all the calls passing through the exchange. The CDRs are generated by Automatic Message Accounting (AMA) and processed by the operations support system (OSS). With the help OSS the CDR, RAP and TAP data into simple binary encoded data into XML or ASCII. (Refer appendix 2.0).
AMDOCS- Amdocs is a global company which provides Vodafone with its billing solutions through the OSS and BSS. The company leads in providing customer relationship management software but also plays an important role in providing financial solutions. The various features provided by the company are-
Convergent billing system-The system assists Vodafone service providers with appropriate charging and billing system. By this system provided by Amdocs, the hardware and software costs were reduced by 70% and comparison and combination of prepaid and postpaid services was possible.
Invoicing- The system has the capabilities of operating multiple currency bills, managing scheduled as well as on- demand bills, combines prepaid and postpaid bill and also includes discounts and charges in a billing cycle.
Accounts receivable- The system integrates a third party general ledger and enables automatic accounting processes according to the standards and policies. Also manages customer account’s balance by performing every transactions like fund transfer, adjustments, back outs and other financial activities.
CASE STUDY- VODAFONE IMPLEMENTS NEW UNIBILL BILLING SYSTEM TO ENABLE UNLIMITED GROWTH IN RANGE OF SERVICES.
Main goal- to transform this multiplicity of systems into a unified real-time billing solution within client-server architecture – Unibill
Summary-The market for telecom services is growing at an enormous rate. With an exponential increase in its demand, Vodafone started re designing its billing system in 1996 with a goal to decrease the complexity of the billing procedure. Initially Vodafone used two billing system- Voda bill for its analogue network and Euro bill for GSM (global system for mobile communications). Vodafone incorporated IBM’s TX series which can handle such complex transactions and can compile both the billing systems in single software. Another advantage of this software was that the customers could pay their bill on the spot without leaving their credit card details with the agent who is giving the Vodafone network service. TX series provides the real time data of the customer’s information and hence the billing procedure can be carried within no time.
Benefits to the company – faster and simple system as compared to the older version of the billing system. Provides an integrated system benefiting the customers plus the company. The software allowed the company to expand with regards to the business volume and also in achieving faster growth which was analysed after the implementation of this unified system.
Software used- IBM’s TX series middleware.
c) SAS- Statistical Analysis Software Financial Intelligence
This software is mainly used to generate financial reports at a faster rate, in forecasting the future scenario, risk management and simulation problems are also tackled well by this system. SAS Financial Intelligence components help in increasing the profit margins and further assist in improving the accuracy of the financial reports and balance sheets. There are 4 components of SAS Financial Intelligence are:-
SAS Activity- based management- mainly helps by identifying the capital consuming areas and capital generating areas and helps in making decisions that streamline processes.
SAS Financial management-budgeting and planning is done by this system. Assist in making several reports, financial statements and handling various accounts.
SAS Profitability management- provides solutions to increasing profits.
SAS Strategy management- helps the company gain focus on the main goals and to remove the flawed strategies which may prove to be very expensive for the company.
SAS Financial Management- the system is very useful in going through the accounts of the company in no time and making future predictions for further business deals. Processes and generates financial reports very quickly, communicates the planning strategies, budgets, annual reports among various departments of the company making the work easier at every business level. The system also generates reports according to the guidelines mentioned in the IFRS (International Financial Reporting Standards) and sends a copy of the report to GAAP (Generally Accepted Accounting Principles) and IFRS and so there is no need to re check the validation of the reports.
CONCLUSION AND FINDINGS
From the above analysis one thing is very clear that the use of management information system has helped Vodafone in a tremendous way not only in providing solutions to the service providers but to the company as a whole. The various systems mentioned above minimize workforce, man power, cost, time, complexity and flaws. Almost all of the telecommunication companies have to rely on these systems for managing any day to day work without which their work would be very complex.
APPENDIX
1.0
Overview of a Financial MIS