Cost Management as a Strategy in Enterprise IT Solutions

 

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:

 

  1.  Multiple Location Car Dealership-  Centralized Network Management and cloud based document management and work flow.
  2. Cold Storage Facility and logistics- Collaboration Serve & ERP -Document Management for Logistics and Trucking Industry, Plant Compressor Management. IOT Monitoring.
  3. Apparel Industry- Multi Warehouse Integration of ERP using Building top ISM band Microwave Link.
  4. 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

Last modified on Monday, 24 October 2016 00:45

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