Peter Sauer Diploma Thesis

Improving an existing CIS by examining customer decisions, development,

More and more companies apply electronic information systems in all their business areas. In the past, many of these systems pertained to one specific user group. However, due to high efforts and investments for maintaining these information flows, companies tend to increase the amount of attracted user groups. Thereby, the users must deal with more and more information every day. In addition, they must select the relevant information, which serves as a basis for their decisions, on their own. This procedure and the included irrelevant information generate high efforts due to re-work requirements. Therefore, users reject more and more information. All these conditions combined with a two-user group-oriented customer information system require output adjustments to the user-specific needs. Consequently, it is necessary to identify the users, their needs, and the potential effectiveness of specific information provided by a specific system.

This thesis refers to theoretical analysis models for generating an optimal concept. Thereby, it considers methods analyzing the original information system aim, user groups, their needs and the way the provided information flow can meet all these requests. These considerations represent actual conditions of Varta Gerätebatterie GmbH. Afterwards, this research compares the optimal with the actual situation in order to deduct appropriate improvement steps. Finally, this thesis suggests possible integrations and constitutes the related advantages and disadvantages based on cost accounting and information management theory.

The information flow analysis demonstrates the importance of finding appropriate methods and the key role of defining all users. Moreover, it emphasizes the significance of adjusting this flow to user needs in regular intervals due to the rapidly changing environment. The analysis of the information preparation and output indicates that communication plays a key role in exchanging information. The analysis of the optimal and the actual information system display several gaps, which VARTA should close. The actual situation analysis includes company conditions. Therefore, it is valid for practical implementation. These gaps pertain to the improvement procedure as well as to completely new integration issues.

Peter Sauer

List of abbreviations

Admin. Administration ABC Activity-based costing CCA Customer Cost Allocation CIS Customer Information System cm contribution margin co opportunity costs CSF Critical Success Factors CuCo Customer Contribution cv variable costs e.g. for example EIS Executive Information System etc. et cetera fig. figure FCA Fixed Cost Allocation FSC Fixed Sales Costs i.e. that is IM Information Management IS Information System ISC International Sales Controlling ISM International Sales and Marketing Min CuCo Minimum Customer Contribution margin Min Price Minimum Price MIS Management Information System OIR Objective Information Request ovh. overhead p price PC Profit Contribution prop. proportional R&D Research and Development SIR Subjective Information Request VARTA Varta Gerätebatterie GmbH YTD Year-To-Date

iii

Peter  Sauer Diploma Thesis  

Table of  contents  

List  of abbreviations  ii

List  of abbreviations  iii

Index  of appendices  iv

List  of definitions  vi

List  of definitions (VARTA)  vii

1.  Introduction  1

1.1  Background to the research  1

1.2  Research problem, research issues and contributions.  2

1.3  Justification for the research  3

1.4  Delimitations of scope and key assumptions.  3

2.  Methodology.  4

2.1  Research approach.  4

2.2  Information model criteria.  4

2.3  Procedure.  5

2.4  Reliability and validity.  8

3.  CIS-model  8

3.1  Determination of influence factors.  9

3.2  Analysis of influence factors.  11

4.  CIS status quo.  27

4.1  Hierarchy.  27

4.2  CIS information insert.  29

4.2.1  Insert application software  29

4.2.2  Insert sources  30

4.2.3  Information preparation and output  30

5.  Gap-analysis  35

5.1  Customer status quo and estimated status quo  35

5.1.1  Improvements concerning insert and preparation  36

5.1.2  Improvements concerning layout output  43

5.2  Potential status quo.  43

5.3  Gap concerning pricing, deviation and benchmarking.  44

6.  Practical improvements  45

6.1  Pricing  45

6.2  Deviation analysis  57

6.2.1  ISC deviation methods  58

6.2.2  ISM deviation analysis output  62

6.3  Contribution benchmarking  68

7.  Conclusion  72

Appendix 1  - Tables  75

Appendix 2  - Figures  89

Bibliography   103

Peter Sauer

Table of appendices

Index of tables

Table 1: IS requirements Table 2: Reporting models Table 3: Overview of different approaches Table 4: Survey on IS implementation Table 5.1: Method areas Table 5.2: Information side allocation Table 5.3: Strategy allocation Table 6: Strategy evaluation diagram Table 7: IS categories Table 8: Operative business characteristics Table 9: Decision Analysis Table 10: “6 W” method Table 11: ISC process analysis Table 12: Insert, time, and preparation Table 13: Direct-cost oriented pricing Table 14: Full cost-oriented pricing Table 15: Subsidiary-specific full-cost oriented pricing Table 16.1: Marginal break-even analysis - variable costs Table 16.2: Marginal break-even analysis - fixed costs Table 17: Fictive customer Table 18.1: ISC deviation analysis Table 18.2: Deviation in sales volume Table 19: Deviation in fixed costs Table 20: Break-even analysis - sales volume Table 21: Break-even analysis - net sales Table 22: Benchmarking information insert Table 23: Benchmarking report

Diploma  Thesis Peter Sauer  

Index  of figures  

Fig.  1: Research procedure  

Fig.  2: Four circle information model  

Fig.  3: Three circle information model  

Fig.  4: Communication flow  

Fig.  5: Meaning within communication  

Fig.  6: Relationship of SIR and OIR  

Fig.  7: Control loop  

Fig.  8: Management (MM) hierarchy  

Fig.  9: Management system  

Fig.  10: Database structure  

Fig.  11.1: EIS screenshot  

Fig.  11.2: CIS screenshot  

Fig.  11.3: Customer Cost Allocation screen  

Fig.  11.4: Minimum CuCo / Price screen  

Fig.  12: ISM requests / three-circle model  

Fig.  13: Insert, time, and preparation  

Fig.  14: Pricing - influence factors  

Fig.  15: Price policies  

Fig.  16: Price ranges  

Fig.  17: CIS layout (“from-to guidelines)  

Fig.  18: Layout for break-even analysis  

Fig.  19: CIS layout (break-even analysis)  

Fig.  20: CIS layout (CVP sensitivity analysis)  

Fig.  21: Benchmarking results - break-even  

Fig.  22: Benchmarking results - customer distance  

Fig  23: Customer value portfolio  

Peter Sauer

List of definitions

ABC a method of applying overhead costs to customers by considering non-volume-related activities. Additional costs a variance between historic and current costs due to price and sales volume changes. Allocation a method of channeling overhead costs to cost objects by assuming causal relationships. Avoidable costs all costs, a company could avoid in the future. Budget a management-operating plan expressed in quantative terms. Common costs a cost not traceable or identifiable with a business segment or cost object (ovh. costs, indirect costs, nontraceable costs). Contribution margin the difference between sales revenue and variable costs. Cost Center an activity unit to which costs are assignable (departments). Cost driver a basis for allocation within activities in activity-based costing. Cost object activities concerning products, customers, departments, projects, for which costs are measured and assigned. Direct costs a cost directly traceable to a specific business segment. Direct costing a manufacturing accounting method charging a product only with the sales volume-varying costs. Direct tracing a cost traceable to a cost object by causal relationship. Driver tracing a cost indirectly traceable to a cost object by causal factors measuring a cost object’s resource consumption. Full costing a manufacturing accounting method charging a product with all fixed and variable costs (absorption costing). Marginal costing a method of deducting all variable costs from revenue. Margin of safety a decrease in sales before suffering a loss. Relevant costs costs affected by decisions and thereby avoidable. Relevant range the production volume range a company expects to operate. Standard costs costs incurring under efficient operating conditions and forecasted before the manufacturing process begins. Sunk costs in the future unavoidable historic cost, e.g. R&D costs and rental costs. They are independent from current decisions.

Peter Sauer

List of definitions (VARTA)

Admin. 2 costs all costs for operating an organization but excluding already reported features within other cost types. Direct costs it includes material and labor direct costs, transportation to

Inbound costs all costs for transporting goods to factories.

Sales logistics costs all distribution costs, except for freight, e.g. charges, logistics management, and warehousing. Net sales all product and service sales revenues, which form and contribute to VARTA’s main business. Marketing costs direct customer assignable costs, e.g. POS-related costs

Min CuCo minimal allowed customer profit contribution on SKU level. Min Price a subsidiary price guideline; lowest price level in negotiations and contracts. Outbound costs all freight expenses for shipping VARTA products to

Ovh. admin. 1 costs all administrative costs, necessary for directing a subsidiary’s

Ovh. marketing costs all costs deriving from main business activities, not

Peter Sauer Diploma Thesis

Pocket sales net sales minus rebates. Production costs all indirect manufacturing costs. Prop. costs all direct labor and direct material costs, i.e. product-related

Rebates listing and entry fees, cash discounts, credit insurance, cooperation advertising, promotional allowances.

Sales admin. costs all administration costs supporting customer relationship but

Sales costs all sales force costs, e.g. salaries, wages, benefits, broker

SKU Selling Key Unit, smallest and most precise characterization of a battery. Volume relating to units (blisters) consisting of pieces (batteries) and pieces consisting of cells. WCC receivables opportunity costs; imputed costs; calculated by multiplying

WCC stocks opportunity costs; imputed costs; calculated by multiplying

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1. Introduction

1.1 Background to the research

Worldwide nations are trying to strengthen their international ties. Therefore, the former protectionist barriers are falling. This is stimulating free capital movement as well as it is paving the way for companies to establish subsidiaries abroad (Svend Hollensen, 2001). Global alliances and new information technologies are exerting pressure on the international markets. This leads to worldwide competition and more price transparency. Moreover, companies must deal with different customer preferences, habits, and laws on this world market. Hence, companies should obtain all local market and unique customer information. Thereby, they could manage to achieve long-term profit and liquidity targets. Therefore, a company must know all customer costs and revenues to secure a short and medium-term activity management (Joos-Sachse, 2001). Finally, the strategic controlling hedges this operative controlling steering task.

The relationship between a company and its environment becomes increasingly complex. This makes an Information Management (IM) with Information Systems (IS) a crucial competitive factor. A company should give IM a corresponding significance within the organization because it allows monitoring and measuring subsidiaries, customers, and products (Picot, 2001). A successful IM must consider all affected and interacting users ([Picot, 1988]; [Horváth, 1996]; [Krcmar, 1997]) and an IS should permit an effective communication between these users ([Shenk, 1997]; [Wimmer, 2001]). Consequently, concerning marketing and sales departments, appropriate methods are essential in order to guarantee a common understanding ([Zahn, 1998]; [Zerres, 1998]). Moreover, IM also requires cost accounting and cost management knowledge because qualitative interior and exterior information often derives from quantitative background information. Therefore, several authors illustrate the appropriateness of different cost accounting methods within various IM and IS conditions (Coenenberg, 1999).

This thesis focuses on the Customer Information System (CIS) improvement of VARTA Gerätebatterie GmbH (VARTA). According to the IS lifetime model (Watson, 1993), this CIS has passed the initial phase and is at an evolutionary stage. Nevertheless, Wattson’s survey (1991) demonstrates an average IS failing rate of 42 percent during both phases. Hence, an IS condition adjustment process and an

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observation of current weaknesses is essential. Thereby, companies learn from their failures. Finally, a company should adjust the coordination of insert, preparation, and output in predetermined intervals in order to match new exterior and interior conditions.

1.2 Research problem, research issues and contributions

The thesis examines customer decisions, customer development, and customer planning in order to improve the existing CIS by increasing the effectiveness of International Sales Controlling (ISC) and International Sales & Marketing (ISM).

Firstly, the thesis deduces the importance of identifying all IS influence factors for generating an optimal CIS frame. Thereby, the thesis considers all interacting users and their needs.

Secondly, the thesis infers the necessity of involving all users into the CIS content determination process. Thereby, users could express their understanding of a satisfying CIS. Thus, they can realize the integration of their needs. Thirdly, the thesis determines the CIS status quo. Thereby, the thesis can examine all differences between the current and the optimal CIS frame and content. In addition, this comparison permits evaluating current preparation and integration methods, such as calculation, allocation, and tracing. The same applies for all userspecific adapted information output characteristics, such as time, layout, and preciseness.

Fourthly, the thesis displays the importance of having a risk and feasibility rating. Thereby, VARTA could cancel further investment consuming implementation actions in time. Moreover, these infeasibility-causing issues redirect a company’s focus to other necessary pre-research areas. Fig. 1 in the appendix shows a graphical research overview.

This thesis explains and uses several theoretical approaches. This overview is merely a brief summary at this point:

The research process describes the appropriateness of information models within section 2.2 and uses various analysis methods within section 3.1 and section 3.2. Moreover, concerning operational business departments, it employs theoretical definitions within section 3.2. Afterwards, it applies this theoretical background

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knowledge to the analysis within section 3.4. Additionally, the thesis mentions several accounting, allocation, and tracing methods within section 5 and 6. In section 6, it uses further theoretical approaches for pricing, deviation analysis, and contribution benchmarking methods.

1.3 Justification for the research

In general, user problem statements emphasize weaknesses and initiate researches. Thereby, the CIS ISM users argue about missing, undetectable, and imprecise information. This leads to user aversion due to inefficient search processes through a large amount of irrelevant data.

A further research justification is user questions about qualitative meanings deriving from quantitative values. This leads to enormous clarification efforts and it reduces ISC’s efficiency in steering and guiding operational business processes. Moreover, unreliable CIS maintenance and allocation based on historic assumptions vindicate this research because unsupported and inaccurate information could lead to wrong decisions.

Additionally, users merely utilize the CIS as a query system in order to receive customer status quo information. The ISM and ISC decision support concerning customer development and planning is missing, i.e. time-oriented measurement and benchmarking are unavailable.

Finally, all these reasons lead to the last justification. ISC has less time for generating additional reports about crucial processes, weaknesses, and problem sources. This degrades their unique observing, steering, and guiding task.

1.4 Delimitations of scope and key assumptions

The thesis concentrates on the CIS concerning customer decisions as a supporting information tool on a programmed application-level. Therefore, it does not examine any non-database related disturbances regarding this information flow, e.g. cultural differences between users and different meanings of terms. Moreover, it does not consider irrelevant customer decision information as well as all exterior company information, such as market researches. Additionally, the thesis focuses on quantative customer information as basis for qualitative decision support due to the existing cost and revenue-oriented CIS structure. It examines the CIS as a stand- alone tool without any references to management or other departments. The thesis

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highlights ISM decision support to the extent this information is matching the regular ISC reporting task. The major body of research is to improve the CIS as an ISC analysis tool with regard to a few additional reporting improvements concerning ISM. The thesis must consider the second issue due to the research aim of providing ISC with more time in steering business processes with additional irregular analyses.

2. Methodology

2.1 Research approach

There are two different research approaches for an improvement process: an inductive and a deductive approach (Enström, 2002). An inductive approach observes an actual situation based on a theoretical model (section 2.2). A deductive approach begins with a status quo analysis, from which it derives conclusions. This thesis uses both within different sections. Adaptations and changes focus on the comparison of an actual CIS (section 4) with an optimal CIS (section 3). Thereby, from a main perspective, the whole improvement process is a deductive approach. On the other hand, theoretical models are the main source for generating an optimal CIS. They are the only possibility for eliminating weaknesses existing in an actual situation because they replace practice by theory.

2.2 Information model criteria

IS users have different responsibilities and they focus on different tasks. Therefore, an application-level IS must provide user-related information meeting specific requests. This also comprises communication volume and quality ([Horváth, 1996]; [Kuhlmann, 2001]; [table 1]). A CIS query system is only convenient if the users recognize a benefit of the provided information (table 2) because a user must discharge this dept at the domicile of the debtor. Otherwise, it is unsuitable and users reject this information completely due to a current “information and stimulus overload” as well as a “data addiction” (Shenk, 1997). Consequently, such an IS cannot contribute to higher productivity, job dimension, and individual performance due to a lack of work related outcome (Joshi and Rai, 2000). Finally, the users retain their old systems, information preparation and communication tools.

Thus, the thesis summarizes all IS difficulties within the following four problem areas (Notger and Kiesel, 2001):

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• volume

• communication

• quality

• time

All these problem areas depend on the specific IS, tasks, user conditions, and relationships. They reflect the main selection criteria for an appropriate information system model (section 2.3).

2.3 Procedure

Several authors include all possible IS influence factors within similar circle models in order to show their relationship ([Picot, 1988]; [Horváth, 1996]; [Krcmar, 1997]). The first model includes four different circles ([Picot, 1988]; [fig. 2]). The offered information circle is a company’s available information pool. The Objective Information Request (OIR) as well as the Subjective Information Request (SIR) is the user-related information pool. The user task determines the OIR and the user perception determines the SIR. The Info-Request is part of the SIR and represents individually expressed user statements. Nevertheless, user statements are often diffuse due to an inability of communicating needs in an accurate way (McClatchy, 1990).

Therefore, a second model combines the SIR and the Info-Request in one pool ([Horváth, 1996]; [fig. 3]). The three-circle intersection reflects an optimal IS frame, which should be the target for improving a status quo IS frame. Moreover, a third model connects the four-circle model with the IT communication flow theory of sender, transmission, and receiver ([Wimmer, 2001]; [table 3]; [fig. 4]). A common basis of understanding offers the widest possible information flow if there are no disturbances. Therefore, it requires an equal sender and receiver character pool (Berthel, 1975). The character combinations must have the same meaning for both sides (fig. 5).

Consequently, Horváth’s model in conjunction with Wimmer’s model match all selection criteria. This model combination justifies the following research step order. The first inductive step is to analyze the intersection between OIR and SIR in order to illustrate the optimal CIS frame and content. The bigger this intersection, the more information an IS could provide, if permitted by the available information. Later on, this section explains the used appropriate analysis methods in more detail.

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The second deductive step is to extract needless information, which is part of the CIS status quo but not of the newly generated information pool. It only makes work without providing benefits.

The third inductive step is to include missing information and to make it available in order to fill out the intersection between OIR, SIR, and available information. The fourth deductive step is the user-related reorganization of remaining and newly integrated CIS information. Hence, a research process must verify the user-specific purpose and it must adapt it to the user’s needs. Additionally, standardization and a company-wide acceptance reduce the disturbance risks. The final step is a benchmark comparing the prepared information with the quality of the output produced (QIP). This guarantees the work-related outcomes contribute to the user’s job satisfaction. This is the case if the output meets the user requirements (table 1). Krcmar (1997) suggests the same research procedure. He argues that an optimal CIS creation based on the existing available information only leads to a higher (subjective) information request (fig. 6).

A further practical analysis supports this theoretical procedure (Havelka and Lee, 2002). They conducted, concerning a new IS implementation, a survey on Critical Success Factors (CSF) among development personnel and users. However, VARTA’s second phase-oriented improvement process still contains all first phase implementation elements. Therefore, it is also applicable within this thesis. It demonstrates that practical experience emphasizes the same procedure (table 4).

In theory, SIR and OIR should be congruent but in practice, they are not. Theory mentions various SIR and OIR analysis methods. Firstly, identifying important method areas is viable ([Horváth, 1996]; [Köhler, 2001]; [Bruhn, 2001]; [table 5.1]). Secondly, an allocation of methods to different information sides is feasible ([Koreimann, 1976]; [Krcmar, 2000]; [table 5.2]). Finally, it is possible to assign these methods to the different information obtaining strategies (Watson, 1993). All these allocations depend on the company condition and the IS lifetime phase (table 5.3). These theories deal with different research levels. The vague strategy allocation only minimizes the selection amount. Afterwards, it is the task of the thesis to decide on several more detailed information side-oriented methods.

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Therefore, this thesis suggests a vague strategy analysis in the beginning because the method selection process must first determine VARTA’s environmental circumstances and the IS lifetime phase. Thereby, a smaller method variety remains. Then, concerning the information side analysis, the planning process allows choosing from a smaller method range. Finally, repeating this control loop with different methods should deliver an appropriate method mix (fig. 7).

Watson (1993) states that “each approach poses some difficulties” and “because of the variety of problems associated with identifying executives’ information requirements, organizations have used a variety of methods”. Therefore, a major task is to find an appropriate and comprehensive method mix highly detailed and efficient.

First, the “asking” strategy relates to the SIR methods obtaining user statements. . For this reason, these methods could merely generate the Info-Request circle, which is only a part of the SIR. In addition, these methods often lead to diffuse problem statements ([McClatchy, 1990]; [Ahituv and Neumann, 1990]; [Shenk, 1997]). Consequently, these methods never cover the proper Info-Request volume and a research must focus on supplementary methods. This is particularly the case concerning the management levels within the affected departments. Both departments observed are not on the lowest operational level (fig. 8). Therefore, there are more unstructured problems and poorly defined data needs. The second strategy of “deriving needs from an existing IS” should merely enhance a method mix because it is the defectiveness of the existing systems that motivates the development of other new IS ([Houdeshel and Watson, 1987]; [Watson, 1993]). Furthermore, other IS within the same company often have different aims and target user-groups. Therefore, they cannot serve as a research principle. The third strategy of “synthesizing needs from characteristics of the utilizing system” focuses on the object system (user) activities. There, it is important to use a method dealing with the IS-aim.

The last strategy of “discovering needs from an evolving system” is only applicable if a company already implemented a system. Nevertheless, the risk of this strategy is to transfer existing weaknesses into a new system generation.

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Due to the IS man-machine dialog, the selection depends on its suitability regarding:

• user-groups (hierarchy level, task, requirements, problems)

• IS conditions (aim, lifetime phase)

The thesis focuses on the third and fourth strategy (section 3.2) due to their advantage over the other ones (table 6). It decides on a top-down approach, i.e. integration starts after the whole research is completed (Dick, 1991). The CIS existence, concerning this approach, minimizes the usual failure risk and allows continuously monitoring of operational business.

2.4 Reliability and validity

A thesis should consider two crucial issues: reliability and validity. These terms determine to which degree a research outcome corresponds to reality. The thesis concentrates on the current organizational structure including actual tasks, perceptions and IS aims. Company conditions as well as employee’s behavior could change rapidly. Therefore, this thesis excludes SIR analysis methods to the extent it is possible and involves OIR methods as much as possible. This increases reliability because task-related characteristics are usually more solid. Nevertheless, this risk of rapid changes underlines the need for regular observation and adjustment. Concerning VARTA this thesis is highly valid because it uses theory and adapts it to practice. The improvement process involving all relevant VARTA user-groups and considering the current CIS reflects this practical orientation. Moreover, the thesis evaluates all theoretical conclusions with regard to their practical suitability. Finally, the numerous theoretical method adaptations demonstrate the same intention.

3. CIS-model

A thesis must examine above all the user-group specific OIR and SIR intersection ([Horváth, 1996]; [Krcmar, 1997]). These circles are user-group-specific because they depend on user tasks and activities. Moreover, it must define the IS user-groups before it can decide on an analysis method because different analysis methods are appropriate for different user-groups. Afterwards, a suitable selection is possible. Finally, all selected methods must adhere to the CIS aim. Therefore, the thesis will examine this within the next section as well.

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3.1 Determination of influence factors

The thesis utilizes the newest version of the CIS documentation for determining the relevant user-groups. It limits the method selection to two user-groups (ISC and ISM). The ISC department represents the first relevant user-group. Theory positions it on an operational management level in the management hierarchy (fig. 8). “ISC should assure that specific tasks are carried out effectively and efficiently” (Ahituv & Neumann, 1990). This also emphasizes the steering, regulating, guiding, and directing task (fig. 9) by supporting decisions and effective work. Therefore, ISC should provide information in a lucid and contributing manner. This means it should educe only ISM relevant information out of the whole company data pool (fig. 9). Additionally, it should search for further CIS enhancements and prepare their whole information flow. All these ISC activities depend on the ISM-related SIR and OIR circle.

The CIS, concerning ISC, plays the role of an information databank (table 7). It must store all available information. Hence, ISC can select and prepare ISM-relevant information of the whole pool. In fact, ISC reports are hardly ever self-initiated because receivers motivate their generation.

Finally, with regard to ISC, the thesis chooses the process analysis method (Valusek and Fryback, 1987). This method deducts the ISC insert and preparation necessities from the ISM information request. Therefore, it is reasonable to define ISC as the available information side. It provides the CIS information volume, splits the requested information into its single elements, searches for sources, and prepares it appropriately.

The ISM department represents the second relevant user-group. Theory positions it on a middle management level in the management hierarchy (fig. 8). “ISM should assure that resources are obtained and used effectively and efficiently to accomplish the organization’s objectives” (Dick, 1991). Therefore, concerning resource allocation within changing objectives, ISM must make information-based decisions (fig. 9). Thus, the CIS should play the role of a predicting and decision-making IS ([Mason and Swanson, 1981]; [table 7]).

The thesis suggests applying the decision analysis method (Jenkins, 1984) because ISM-related decisions are the basis for the OIR analysis. Firstly, this method

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determines all necessary ISM decisions to perform related tasks. Secondly, it inspects supporting information for enabling users to generate their specific decision making patterns and priorities. Although the popular CSF method was also applicable, it would include all company-related critical success factors. However, as this research method only affects one department, this would generate higher efforts than necessary.

The CIS supports both user-groups in their operative business tasks and activities (table 8) on an application-level. In addition, this thesis applies the “6 W” method within the fourth strategy. It contains the following elements:

• who (user)

• what (information)

• why (reason)

• what for (aim)

• which form (layout)

• when (time)

The previous ISM decisions illustrate the aims within this method regarding the other two methods (decision and process analysis). It enhances the current method mix because it observes the analyzed OIR once more and includes the SIR. All these endorsements derive from included CIS experimentation and user activity examination, e.g. additional habits of information adaptation, frequently used information, and rejected data. Moreover, it specifies the method mix more precisely by adding the reasons for a certain information request. This enables ISC to observe if a request is really an ISM task and if this information could support an ISM decision. In the end, it observes if the IS output-related layout and time aspect adheres to all table 1 features (section 2.2).

IS aims set out in writing are often imprecise and could change over time (Stelzer, 2001). Nevertheless, as this improvement process should not develop a new system, it must clarify the already implied aim. An improved IS must still maintain the original one, i.e. the analysis in section 3.2 must correspond to this aim. According to Horváth (1996) and due to customer orientation, the CIS plays an information-providing role for the whole customer plan and control system within the management system (fig. 9). This has a severe impact on the ISM decision analysis because only decisions contributing to this aim should be included.

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The available information and its preparation provide ISM with satisfying information. Nevertheless, the main problem is the information overflow (Dorn, 1994) and the divergent user understanding. Therefore, a CIS should highlight, compress, and filter specific information by employing various preparation methods. However, concerning ISC, this could lead to a high insert and preparation effort in order to match all quantity and quality-related needs. Finally, the available information research must consider all insert, time, and preparation areas.

3.2 Analysis of influence factors

All these theoretical methods concentrate on different objects or they have different starting points. Therefore, this paragraph comprises three parts. The first part applies the decision analysis, which is the primary basis for using the other two methods. A decision is the only obvious managerial activity output (Emmanuel, Otley, Merchant, 2001). The thesis determines three major ISM decision areas regarding the delimitations (table 9). Every decision area contains several minor decisions supporting the main one. Nevertheless, this detailing procedure is essential because it allows a more thorough examination of the relationship between decision and information request. The sum of all information requests defines the ISM oriented OIR and SIR intersection content.

In the second part, the “6 W” method enhances the decision analysis. The information requirements deriving from all minor decisions represent the basis for this method. It describes the already determined information request in more detail by adding four additional aspects. Moreover, it emphasizes the ISC planning and controlling issue. Thereby, it is possible to maintain the CIS aim. The “6 W” method is the only method containing a reason analysis. This increases ISC’s understanding of a specific information purpose. Thereby, ISC can customize a preparation process more accurately to meet a request. Moreover, ISC is able to secure a specific ISM request matching the CIS aim. Consequently, ISC can assess if the CIS is the appropriate tool for this information supply. Additionally, it must secure this information insert. Finally, this method integrates time and layout aspects into the CIS output. This affects ISC’s layout preparation. Thereby, the process analysis may neglect this layout issue.

The last part focuses on the ISC process analysis. It uses the decision-related requirements as basis for deducing all necessary CIS inserts. The minor decisions in

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conjunction with their aims and reasons allow determining an accurate data insert volume. The layout aspect is only included insofar as it concerns time characteristics. Furthermore, the operative business characteristics of ISM lead to additional preparation requirements, such as high precision, simple layout, predetermined period, high update frequency, and straightforward calculation methods. Finally, all data inserts and preparations generate the available information circle. The intersection of all three circles displays an optimal CIS information frame and content.

The “6 W” method is supposed to maintain the CIS information flow. Therefore, it does not consider ISC as an independent CIS influence factor. A further illustration of this relationship is the ISM decision analysis as the basis for the ISC process analysis.

ISM decision analysis (table 9)

The main ISM objective is to increase VARTA’s total profit. The common operational cash flow calculations emphasize the same objective. Moreover, they demonstrate that doing business with customers is an essential component for a company’s profit. Every customer is a contributory factor to the whole income. The single customer profit derives from subtracting all customer-allocated costs from the customer’s net sales. The single Selling Key Unit (SKU) net sales generate these customer net sales. Finally, the SKU profit results from SKU net sales minus all product-specific manufacturing costs and minus allocated customer-initiated costs:

Consequently, VARTA’s profit depends on two key factors: customer consistency and battery prices within a customer’s portfolio. These are the starting point for every profit calculation. Therefore, they represent the main decision areas of existing customer development and customer pricing. The third decision area, potential customer development, derives from customer consistency. Moreover, potential customers in contrast to existing customers do not contribute anything to VARTA’s profit. Therefore, it is reasonable to differentiate between existing and potential customer consistency.

Peter Sauer Diploma Thesis 13

The minor decisions influence the major decision areas (King, 1975). Minor decisions are independent from each other. Therefore, ISM has the possibility to make all of those minor decisions at the same time. Firstly, the commercial partnership strategy constitutes the whole customer selection and planning process. It is necessary in order to harmonize all VARTA conducted customer-specific activities. Secondly, the customer resource assignment represents VARTA’s investments in a customer in order to improve the commercial partnership. Thirdly, the customer portfolio structure implies a customer-specific product-mix, e.g. highly or lowly contributing batteries. Changing this mix would directly affect a customer’s contribution. The decision analysis excludes the battery manufacturing side because it is not ISM’s task to manage these costs.

ISM needs the following planning information in the field of commercial partnership strategy decisions:

The customer status quo and the estimated status quo together must provide enough data to make decisions about either commercial partnership intensification or slowdown possible. Nevertheless, concerning strategy justification, the estimated status quo is more important. This is due to the prediction of a future contribution rate and its close relationship to planning.

The contribution benchmarking process mainly serves as an evaluation and adaptation tool when searching for commercial partnership strategies. Planning evaluation is always a crucial issue within the whole planning process. Firstly, the CIS must integrate the customer status quo as well as the estimated status quo into the benchmarking process. Thereby, ISM is able to evaluate the intended strategy. Secondly, the CIS examines if a customer reaches a defined target position or if a chosen strategy leads to a planned target position. Thereby, ISM can evaluate a strategy’s efficiency. Moreover, it can compare the strategies of different customers by focusing on various gaps between the status quo and the estimated status quo positions. Finally, it is possible to evaluate an already implemented strategy ex post