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January 31, 2010

How can IT help in implementing Activity Based Costing (Part 1 of 2)?

My previous blogs series- “Why do you need profitability analysis?” and “Activity based costing for profitability analysis” highlights  the need for profitability analysis and discusses the challenges expected in ABC implementation. As a next step, this blog discusses the role of IT in adoption of Activity Based Costing (ABC) methodology.

Traditionally critics have argued that ABC is too costly and complex to implement and the cost involved in implementing and maintaining ABC based system exceeds the benefits gained. However the advancement in IT has significantly brought down the information processing cost. While the information processing cost has reduced, the cost of poor information leading to poor decision has significantly increased owing to the competitive pressure.

When it comes to IT, the first decision is usually between buy versus build. The ABC allocation model is more or less standard; the Off-the-shelf (OTS) ABC software have matured during the last decade; and building an advanced ABC model is too cumbersome - are the strong arguments in favor of buy option. The build option should be considered only when there is a very strong reason for this. Like - the ABC model is too simple or highly customized or is required to be monolithically integrated with other in-house systems etc.

Talking about the OTS option, the choice can be between specialized ABC software and ABC module of ERP packages. ABC module of ERP package is ideal where ABC is required for operational decision making and most of the data is available within ERP itself.  

However, specialized ABC software should be considered in the following cases:
1) ABC is required for tactical or strategic decision making.
2) Multi-dimensional analysis of overheads are required
3) Underlying data is stored in heterogeneous systems
4) ABC model is required to be flexible as frequent changes are expected.

SAP suite of products has both the offerings - SAP ERP has a sub-module for ABC in SAP Controlling (SAP CO-ABC). SAP BusinessObjects Profitability and Cost Management (SAP PCM) is specialized software for ABC from SAP suite of products.

Right tool selection plays a very important role in the success of ABC. In the subsequent blogs let’s look at some of the important evaluation criteria for ABC software selection, implementation methodology and other related topics. In the mean time, please leave your comments and suggestions Smile.

January 28, 2010

How could digital marketing impact your company processes and systems? (part 2)

The increasing spending in digital marketing pushes the companies to re-view its organization, processes and systems in order to sustain the growth and manage effectively the digital marketing initiative together with traditional advertising.

In the previous blog I have highlighted the reasons why the spending in digital marketing is accelerating and the areas in which an extensive use of digital marketing channels could mainly impact the organization.

Now let’s look deeper at the impacts of digital marketing on the company information systems.

I think that an effective implementation of digital marketing initiatives is going to impact first of all CRM, Web, reporting and analytics either in term of enrichment of functionalities or re-definition and implementation of new platforms: 

 CRM systems are requiring new functionalities for managing the campaign across multiple channels, capacity to gather from multiple sources new types and higher volumes of information regarding the consumer or the customer, tools and repositories to enable an effective digital asset management.

 Web: the trend is to define and implement new platforms that facilitate the development and hosting of the web initiatives,  increase the capacity to deliver personalized multimedia content, promote the reuse of existing assets for the initiative creation
 Reporting and analytics: here the  key element is to develop and elaborate new indicator and scorecards to track the effectiveness of the web initiative, monitor consumer/customer behavior in the web and integrate these measures with the traditional marketing indicators.

How SAP is currently supporting these areas?

We need to look into mySAP CRM.
With the CRM suite SAP addresses multichannel campaign management and allows the interaction with the client via web making available some of the functionalities through the internet channel (e.g quotations and order management, actions) 
But overall at the moment I think it does not provide very specialized E-marketing functionalities.

Campaign management
 Marketing activities can be executed through different interaction channels: direct mail, e-mail, phone, web, fax, and SMS.
 Online marketing channels to plan, develop, and execute e-mail marketing campaigns.

Web Channel management
 Support campaign execution on the web. E.g. the system uses campaign IDs and coupon codes to determine products flagged for campaigns in SAP CRM and to determine campaign pricing in the Web shop. Also create private campaigns for specific target groups or public campaigns for all Web shop visitors. 
 Manage customer loyalty processes via Internet

Web channel analytics
 Perform analysis on the use of web functionalities in order to track the behavior, target the customers and drive future marketing activities.

Digital Asset Management
 Within the marketing resource management a central repository for the digital assets (photos, videos, or text documents) can be maintained. To each object properties and authorization concepts can be assigned to each object in order to manage it efficiently and secure direct web access. Besides the systems tracks the download information and provides specific reporting for each asset.

What is your point of view on this topic? Your thoughts would be highly appreciated and more than welcome.
Is SAP developing any innovative solution with the social CRM?
I will discuss on it in my next blog.

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