Cost Management as a Strategy in Enterprise IT Solutions
According to Macroeconomic analysis [1] of the Canadian SMB sector,
a couple of interesting observation were made by Bank of Canada:
1.0 Business efficiency is unacceptably low
2.0 Operating costs are very high
3.0 Resistance to embrace Information technology and subsequent changes that it requires.
4.0 Lack of Research and Innovation within general business sector.
5.0 Monopoly in various sector makes Canada noncompetitive.
6.0 An attitude of entitlement exists in various sectors.
7.0 Service sector has an attitude of getting away with fleecing customer.
8.0 Low accountability in salary and real output of an employee and an organization.
9.0 Non existing training facility for existing employees in SMB sector.
These comparisons were made in accordance with OECD countries productivity criteria.
All these shortcoming were acceptable prior to economic structural change of 2008. In post recession world if Canada has to create jobs, it has to embrace these problems and solve it with Research and Innovation. A rapid application of cost management and increased efficiency is in order. Certain sectors and businesses will simply not survive if continued innovation is not applied in core business operations. Cost management and operations management has to be applied even in SMB sector. Operational productivity of trade and service sector is low, and of questionable quality, yet the cost is not competitive. Trade and service sector is a real candidate for disruption. [2]
Cost management is a branch of Accounting that studies the various cost options of an organization to identify the alternatives to maximize the operational productivity for goods and services the organization produces and or renders. An example will be using an outside accounting to do your books rather than train an employee with huge cost and the employee then leaving the organization. Operations management is the study of the complex operations of an organization to examine various aspects so that various performance metric can be realized. An example will be low defect rate of electronic pager production, or increased customer satisfaction of public works department in a municipal market. A popular lean six sigma based quality improvement is sometimes used in such context [7]
The role of an organization is to deliver certain goods and service to its customers. For profit making business these are canonical goods and services that the business provides to its customers . Some example of such business are
1.0 Multi-location Car Dealership
2.0 Multi-location Cold Storage Facility
3.0 Specialized Apparel Manufacturing Service with distributed warehouse and manufacturing facility.
4.0 Municipal Governments with distributed offices for administration, public works , water treatment and recreation facilities.
In such organizations, operations management is essential to deliver optimal product and service quality. In delivering the goods and service at an optimal level the organization quite often resorts to the methods and procedure of operations management- An engineering and management field of study that has genesis in US Army[3].
Using operations management one can identify the business operation of an organization and identify key bottlenecks and service delivery across organization that can be automated using information technology or other means.
Example of Service Improvement using Operations Management are the following candidates:
- Multiple Location Car Dealership- Centralized Network Management and cloud based document management and work flow.
- Cold Storage Facility and logistics- Collaboration Serve & ERP -Document Management for Logistics and Trucking Industry, Plant Compressor Management. IOT Monitoring.
- Apparel Industry- Multi Warehouse Integration of ERP using Building top ISM band Microwave Link.
- Municipal Industry- Web Application & E-government, Cloud Based ERP Solutions. Collaboration Server
Cost Management as a Strategy
One of the constraining factor in operations management[6][3] is cost management[4][5]. Simply stated too expensive solutions are not feasible, however good it is. We need a solutions that is workable with in the reality of the market economics.
In reengineering[2][7] a business process and to automate the operations management, we need to understand the associated cost management. The implications of Information Technology and dynamics of Canadian Economy to execute the transformative decisions is dependent on return on investment and local economic situation. Cost management and analysis provides this decision making facility within the context of business process reengineering.
At Keen Computer, we examine the business reengineering and operations management with in the greater context of cost management. If you are contemplating operations management involving Business Process Reengineering[2], please contact us for advice and execution. We will be of positive assistance in your endeavor.
References
1.0 Economics- Samuelson
2.0 Reengineering the Corporation: Hammar and Champy
3.0 Operations Management- 10 th Edition
4.0 Cost Management as a Strategy- 5th edition Cost Accounting
5.0 What is Cost Accounting- https://en.wikipedia.org/wiki/Cost_accounting
6.0 What is Operations Management- https://en.wikipedia.org/wiki/Operations_management
7.0 What is Business Process Reengineering- https://en.wikipedia.org/wiki/Business_process_reengineering
8.0 Lean Six Sigma Based Service Delivery