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The United Nations Industrial Development Organization defines Small and Medium Size Enterprise as an entity with less than 250 employees. According to the European Union definition SME is recognised with less than 250 staffs and less than â‚¬50 million turnover or with a total financial balance not more than â‚¬43m(EU, 2003). SME is defined by UK HM Revenue & Customs(HMRC) with no more than 250 headcount, less than £ 50m turnover and no more than £43 million aggregate balance sheet total. DBIS(2011) reported the half of the total UK private sector turnover, 48.8 percentage, produced by SMEs and provided more than 58.8 percentage of total employment at the beginning of 2011(DBIS, 2011). Hence, given their vital role in the UK economy, research aiming at improving their competitive advantage is required. Current Study is aimed at developing the knowledge and decision making systems for Solent Sports Co., a UK-based SME established in 1978.
Solent Sports Co. Market Situation
Solent Sports Co., with headquarters in Southampton, is an active retailer in South East England, providing sports and outdoors equipment since 1978. The company, with total number of 200 employees, operates in a main warehouse, with 200-square-foot in West-Quay shopping mall in Southampton and a chain of branches in Bournemouth and Winchester. The company`s vision is to expand its target market to the London, South West and Wales, and also become a dominant provider in South East. The Company`s main sales strategy has designed based on the retail outlets and catalogue sales approaches and a basic e-commerce portal; solentsports.co.uk.
Solent Sports Organisational Challenges
According to the company`s profile a conceptual framework of current situation and intra-organisational relationships presented in below.
Point of Sales
Accounting and Distribution System
Word and SpreadSheets
Concerns: Accuracy Data Volume, Time
Concern: Quality of Information
Chief Officer of Finance
Chief Officer of Marketing
Chief Officer of Operation
Chief Officer of Information
Decisions and Plans
Figure : Solent Sports Information and Decision System
KM Frameworks in SMEs
By reviewing the current frameworks for KM in SMEs, two different trends identified.
2.1. Prescriptive KM Frameworks for SMEs
The main focus of the trend is to draw a roadmap and provide a methodological backbone for KM in SMEs. Some of frameworks within current trend emphasise on the sequent in KM implementation meanwhile other advice on adoption of iterative attitude for accomplishment.
Sequential approaches ritualise an overall three steps methodology for implementation of KM. In accordance, firm firstly should discover and exploit its valuable knowledge, then begin to use the knowledge and in case determine new uses for existing knowledge and finally, to fulfil the knowledge-based missions and reach to objectives start to create new knowledge. This sequential pattern is almost applied by all methodological KM implementation guides. However, research shows these approaches are omitting the role of learning loops in organisational learning. It suggests parallel learning oriented approaches for KM implementation(Liebowitz, 2003).
Iterative learning-oriented approaches value the possible nonlinearity of KM implementation phases. In such way, each phase can be built in a flexible and interactive way and based on the KM initiative requirements. Hofer-Alfeis and van der Spek(2002) by considering the business KPI and strategic approach of the firm, suggest a series of related phases for the implementation of the knowledge strategy process action plan. In accordance, overall key phases for such approach defined in next page.
Conceptualisation and Strategy
Assessment and Measurement
Facilitation the action plan
Understanding the KM framework
Figure : Knowledge Strategy Process Plan
This framework begins by defining the scope and scale of the project. Determining the deliverables such as business need and documentations as well as defining the short/mid/long term objectives and missions takes place in second step. Processing the acquisition and discovering the knowledge and recognising the channels are the deliverables for the third step. In the next step, a preliminary evaluation and measurement against defined goals and objectives being carried and consequently, changes and facilitation implemented to the action plan. The last step is running the full KMS action plan. Reports and result in this step again measured and a loop begins to run till to achieve the project whole goals.
2.2. Descriptive KM Frameworks for SMEs
The main focus in these approaches is given to the employees' knowledge. In other word, organisational knowledge or intellectual capital encompasses the total exploitable knowledge which is un-codified or tacit knowledge held by personals or codified and explicit knowledge. Two main branches, resource oriented and process oriented can be defined among introduced KM frameworks. First branch mainly is supported by human resource view and accounting practices in organisations(Earl, 2001) and focuses on training and recruitment process within organisation. Intellectual capital models, like: SKANDIA, categorised in this level.
On the other side of the tail, process oriented branch has gotten more attention in KM literature. For instance, Nonaka`s KM model that gives attention to the inter-transformation of tacit and explicit knowledge through the organisational knowledge creation(socialisation, combination, externalisation and internalisation), levelled in individual, group, organizational and inter-organizational efforts(Nonaka,1998). Even in his other related studies, where introduces the concept of "ba"(originating, interacting, cyber and exercising) in knowledge creation, central advice is to considering the dependency of organisational knowledge on context(Nonaka and Konno, 1998).
This branch looks at the KMS as a socio-technical approach which is inter-related with social, organisational and technical era of the business environment. Accordingly, KM processes are taken into account in a cycle of growth. One instant for these frameworks, is the integrated KM framework( Handzic and Hasan, 2003), which propose a KM model based on collective and individual activities in sense of providing organisational `know-how` through a systematic knowledge processes within organisational culture. These models consider both environmental and infrastructural capacities in facilitating the knowledge creation, transfer and utilisation as well as developmental tasks. Continues measurement and determining the enablers for KMS gives an advantage of updated process to the KM system implemented through the logic behind this approach.
KMS Challenges and Opportunities for SMEs
Improving decision making and knowledge sharing, faster innovation, reducing duplication of work and improving business processes, managing knowledge resources, etc. could constitute important reasons for SMEs to undertake a KM initiative. The lack of research of SMEs is also noticed within the literature on KM, since, although few exemptions, the empirical literature on KM has mainly focused on large enterprises. It is noticeable for SMEs that the KM systems should not be seemed only as a scaled-down replica of the process in large corporations. The conclusions derived from the studies on KM concerning larger firms have been argued not to differ from smaller firms(Sparrow, 2005). However, its barriers and development seems to operate differently in the context of SMEs(Sparrow, 2005). Previous researches on KM in SMEs shows there are at least three important elements which are playing influential roles in KM success. These are: a knowledge-worker manager/owner, an embedded knowledge system in the organisational context and related networks and a wise policy made to support the whole knowledge process within the organisation(Thorpe et al., 2005). The importance of understanding the differentiation in KM process and implementation in SMEs and large corporations was studied by Desouza and Awazu(2006). They recognise in SMEs: the owners/managers are taking the role of knowledge repositories; Employees possess the common knowledge which is practically facilitate the knowledge processes and characteristically is broad and deep; the carefully considered social context of SMEs is avoiding from pitfall of knowledge and the nature of close relationship between employees can replace the lost resource by mobilising an alternative resource easily; SMEs are highly able to discover and internalise the external knowledge resources as almost all of their resources have an external origin; According to the fact that technology always has not penetrate to the SMEs more than the informative requirements, they are inherently able to manage the knowledge in an humanistic way.
Similarly, Sparrow(2001) while suggesting a KM model for SMEs draws an overall framework for the KM implementation scheme in SMEs. He insists that the knowledge foundation and systems, incentives for knowledge understanding and knowledge-works with in the organisation, integrating the performances related to the KMS, organisational learning and a supportive system to prioritising and incorporating the actions related to the KM implementation are of key success indicator for SMEs. Nevertheless, Wong(2005) mentions that most of the KSFs are adopted from the studies on large companies and consequently before applying these factors directly to the SMEs, their context and condition should be investigated carefully.
An interesting finding in Egbu et al.(2005) study indicates the most generated knowledge in SMEs is in the form of tacit due to the fact the "KM elements practiced in an ad hoc fashion". In such terms, any technological support imported to the firm should be adopted based on the organisational needs.
Wong and Aspinwall(2005) based on the findings of previous researches and their study suggesting a KM model and an action plan for SMEs. The model consisted from eleven factors which are influential in KMS for SMEs. The model shown in fig..
Management Leadership and Support
Information Technology Structure
Strategy and Vision
Motivation and Incentives
Process and Activities
Figure : Knowledge Management Model for SMEs (Wong and Aspinwall, 2005)
These success factors play an important role in accomplishment of KM planning objectives and strategy development in SMEs. Meanwhile, studies on the challenge faced by SMEs in implantation of KMS find the lack of "KM vision due to their over-emphasis for tangible results"(Lelic, 2002) as an effective factor that dissuades SMEs from taking an active approach toward the knowledge acquisition, sharing, integration and formulating new knowledge. Another difficulty is lack of internal expertise for KM. The research shows that SMEs always try to overcome it by means of external sources, such as network collaboration, outsourcing or training. Oyeleran and Oyeyinka(2004) finding illustrates that the common learning trend adopted by SMEs is toward "in-house training", contrary to the large companies trend founded based on external resources.
So, it is essential for SMEs to invest an `intra-organisational employee awareness and interconnection scheme` that can lead to constitution of common knowledge and communication. In accordance it can be said that SMEs KMS impacted by social capital rather than technological systems for business intelligence. Furthermore, Davenport(2005) describes five aspects of "context affected KM capabilities" in SMEs as: turbulence of the business era, naturally vast involved organisational interactions, lack of technical competencies, locus of decision making around owner/managers, limited IT infrastructure.
Research by Kim and Jee(2007) concludes some of the barriers against KM implementation in SMEs as: Lack of time and priority, Lack of actively supports for KM process, Fear of sharing organisational knowledge and Lack of trust. Moreover, some other researchers add the lack of investment on information system, meantime they are clarify the meaning of `investment` as a concept of "overall information systems strategy"(Duhan et al, 2001).
To conclude the KMS challenges in SMEs, the result of a comparative study toward the influential organisational factors in KMS implementation, mentioned in different studies, shown in next page. In general, Studies shows that SMEs capability in implementation of KMS is low(Duhan et al., 2001).
3.1. Hierarchical Spiral Model for Knowledge Management(HSMKM)
The main KM framework which is suggested to solve the Solent Sports knowledge process problems is a modified model of HSMKM model. This model basically introduced by Sun and Hao(2006) and is a combinative complementary model of "Sun's waterfall model(Sun, 2004) and Nonaka's spiral model of KM(Nonaka, 1994)". According to the classification provided in literature review section, this model can be categorized on the way between prescriptive and descriptive modes. It contains both groups advantages, meanwhile it is compatible with growth situation(company`s expansion vision), company`s emerge requirement for organisational memory and applicable to the dynamic environment(SMEs`s characteristic).
The model has to point of view: spiral and hierarchical. From the spiral standpoint, it consists of three main knowledge processes and from hierarchical view, five main process and eleven sub-tasks shaped the model. In this model, the main processes define the operational knowledge activities and sub-processes are reflection of `how` the main process being carried. A conceptual model of HSMKM presented below.
K Preservation & Retention
K Ontology Design
Figure : Hierarchical Spiral Model for Knowledge Management (HSMKM)
According to the conceptual framework main processes are: knowledge selection, sharing, creation, preservation and retention and update(Sun and Hao, 2006).
Modified Knowledge Management Model for Solent Sports Co.
Previous literature indicates that SME business growth is always accompanied by dynamism. It means that "growth is found to occur in an organic manner in that one or a number of factors could be said to have grown, and these growth factors may then contribute to creating other unforeseen internal changes such as greater complexity and dynamisim in organisational systems(Atuahene-Gima et al., 2005). The accounts of SME strategy, structure, systems and culture issues in KM, there is increasing interest in more integrative explorations of dynamic capabilities. Dynamic capabilities are specific strategic and organizational processes that manipulate resources into new competencies and that renew old ones. Cegarra-Navarro and Sanchez-Polo(2007) reveal dynamic capabilities exerting a moderating role between KM investment and business performance, and in deriving customer capital. Solent Sports hold a growth oriented vision toward expansion in UK. In accordance, its knowledge resources are instable situation which faces with changes in any new position. Moreover, it is important for the firm to be able to adopt proper customer relationships as well as stable knowledge base for organisational knowledge process. Lack of interconnection between different departments is a serious problem claimed by managers. So, the importance of organisational memory is being highlighted. From the other side, acquired knowledge should be updated in a cycle based routine. In accordance to these needs, a modified KM framework for Solent Sports presented below.
K Ontology Design
Figure : Modified Knowledge Management Model for Solent Sports Co.
Narver and Slater(1990) defines market orientated SMEs as an organisational culture comprising three behavioural components of equal importance: customer orientation, competitor orientation, and inter-functional coordination. Atuahene-Gima et al.(2005) define learning orientation as the extent to which top management attaches value to new skill development, learning enjoyment, curiosity for new ways to enhance performance, preference for challenging work, and critical reflection on firm assumptions. Entrepreneurial orientation focuses on the relation between structure and innovation in SMEs to form the new process, relationships or product/services. To show how Solent Sports should integrated its KM system in organisational context and interconnected to the marketing and development strategies, a conceptualised model of KM placement and its inactions with other factors illustrated in below
Commitment to Learning
Figure 6: Solent Sport Organisational Context
Group Decision Support System(GDSS)
GDSS is a computer-based decision making instrument aimed to solving the structured or semi-structured problems within the team(Aiken et al., 1994). One of the main advantages of the GDSS is eliminating the communication barriers and increasing the group effectiveness through the supplementary systematic, innovative, technical and applied methods. Main difference between traditional group decision making and GDSS are in the using the computer aids for problem solving, and presence of a facilitator during the meeting. GDSS cycle get live by the interaction between people, hardware, software and series of procedures. There is matrix with four aspects, which are: synchronous/asynchronous(time issue), face-to-face/distributed(place issue), that distinguishes the use of GDSS(Turban and Aronson, 2001).
In case of Solent Sports Co., it seems the hierarchical decision making and lack of information distribution has decreases the synergy along the organisation and specifically in monthly meeting. The low mid-level managers are only producers of ordered reports those are, under the effects of weak organisational and systems integration, always seems to be inaccurate and incomplete. Accordingly it can be guessed that most of the meeting times are spending to evaluate the reports and many of plans are going through the test and trial procedures. GDSS can increase the focus on the main problem and work as a structure even for reports. Parallel processing of the decision problem develops the information sharing protocol that facilitates the investigation about the problem and in a long-term period penetrates in organisational structure and turns to be part of culture. E-side advantages of GDSS reduces the needs for conventional meeting in headquarter, resulted in cost reduction, meanwhile increase the just in time group decision making through the network. Furthermore, employees also are able to participate in decision making by sharing their best practices and consequently learning cycle will be accelerated. Eventually, it prepare an infra-structure to integration of different IS within the organisation and develops the way of documentation and accessibility in terms of electronic data and reports. Solent Sports decision making hierarchy illustrated in next page.
Figure : Solent Sports Organisational Hierarchy
Intelligent System for Customer Relationship Management(ISCRM)
CRM is a strategic approach toward the customer relationship to maximise the creation of dual values both on customer and shareholder sides. CRM utilises the combinative potentials of IT and marketing strategy to increase the level of relationship with customer and upgrade it into a long-term position. CRM needs to be integrated within the organisational IS and IT infrastructures, in a cross-functional way to synergised the firm`s value chain through the mining data and managing sales, marketing and service processes(Payne and Frow, 2005). Accordingly, CRM main component defined: informative business process in marketing and service processes, Automated and integrated process of customer data through the communicational tool, customer intelligent system which processes, records, analyse and report the customers' data. According to the previous researches, Business intelligence works as a backbone for the CRM and data warehouse, OLAP and DM are of the essential pre-requirements of implementation of a CIS(Reinartz et al., 2004).
According to the Solent Sports Profile, learning from costumers is a key performance indicator for the company. They have partly implemented a continuous learning in lack of formal intra-organisational learning process and data warehouse. An intelligent CRMS can fully automatize the data warehouse function meanwhile makes a unique pattern for building constant relationship with costumers. Apart from learning advantages for the organisation, data processed through the system can be directly used to develop the expanding strategies and understanding of company`s market situation. Costumers' preferences, sales details, feedbacks etc. are the possible feature of such system for the company. When the costumer knowledge integrated in KM framework in organisation, resultant CKM system decrease the route from decision making point to the target point in wisely manner. Eventually, accuracy of reports and analyses will be increased and intra-organisational knowledge process and communication will be developed. Although, concerns regarding the cost of implementing such system for the Solent Sports, and possible and realisable advantages that company can extract through such system still needs a deep study on the widely provided details of the company.
An expert system is a computer-based programme aids to simulate the decision making behaviour of the human regarding the real situation problem solving. Each ES has a knowledge base, which is construed based on the task-specific knowledge and response to the conflict in real situation, an interference engine, knowledge acquisition module and the user interface. The program based the definition and characteristic of the problem and its pre-assumption generate the best decision to support the solving the organisational problem(Turban and Aronson, 2001). There is an important organisational hint in ES literature where in case of non-generic problems, organisation will need to have specifically designed ES. In such term, Cost problem is a serious issue for SMEs and always they prefer to adopt the alternative approaches or tools. Accordingly, solving generic problem, which are common among the organisations, through the ES application is more conventional for SMEs rather than specific ESs.
One of the main reasons for designing an ES is to acquire and store the organisational knowledge, or in other word codifying the tacit knowledge. In case of Solent Sports Co., employees are complaining against lack of the learning pattern and experiences distribution within organisation. ES can be an immediate response to this request, in terms of acquiring the available knowledge and experiences and store them in a knowledge base and make it accessible through the network for use of employees. Even it can be applied to solve the iterative decision making problems in higher levels. It is possible to design various ESs for different organisational tasks, nevertheless the cost of ownership for ES is high. Nowadays, even for the large organisation designing the ESs is not a first economic option unless in a completely iterative situation where no future changes in order and condition predicted.
RFID-based product tracking system
RFID-based product system is automatic data identification and tracking systems which be used to draw the sales road map, locate and monitor the different products. Main advantage of using RFID is to obtain the real time information about targeted products and understand their sales cycles. Under the usage of internet, nowadays many companies run an integrated internet based RFID tracking system within their stakeholders' network(Robert, 2006).
In the case of Solent Sports Co. regarding the need for patterning the customer purchasing behaviour in outlet store, an RFID tracking system can be useful to discover the customers' preferences. In n-online and catalogue sales approaches, RFID can help to identify the product situation and facilitate the just in time delivery and order tracking. To control the inventory in different outlet stores aimed to supply the required products in different branches RFID will contribute to the supply chain management. RFID also brings huge facilitation in preparing the accounting reports and procedures. Moreover, can play a mediator role between branches and other IS systems which would close the information gap. RFID technology has introduced in different features and price levels that makes it plausible economic option for SMEs in comparison with other solution. As other solution RFID requires an organisational IS and IT infrastructure to extract the optimised benefits and should be integrated in organisational IS(Robert, 2006).
Distribution of Customers by Regional Market for Solent Sports distribution Co.
The report generated by SAS which compare the Solent Sports Co. market share in each region presented below.
Figure 9: Distribution of Customers by Regional Market
9.1. Decision Making Situation
Solent Sports Co. has a strategic vision for expansion to London and West England and Wales as well as increases its market share in current regional market. Data shows company currently has leveraged %5.19 its profit from London market. According to the company`s profile, there is no established sales point in London yet. As company does not owned any retail shop in London, possible options for the accumulated profit are through the catalogue sales and online sales. Using a Business Intelligence packages, like: SAS, can helps the company to integrate different reports which are merely have a same data. Moreover, the possibility for produce more integrated reports and comparison between different KPIs would be increased. For example a simple product ID easily relates two different series of data sheets to gather, whereas traditional spear sheets have not such inherent capabilities and need huge loads of work to integrate them. As it mentioned, here analysed data shows a currently market connection in London. It plays as pilot market study for Solent Sports Co. Data shows a near possible market opportunity for the company. In case company is deciding to choose limited number of cities in the future targeted market, or even want to run restricted market strategy based on best available option, BIPs like: SAS, can help company to identify the potential market. Another interpretation from extracted data is related to the financial operations in running regional markets. For example, as the company`s profile indicates Bournemouth and Winchester are two other important sales hub for Solent Sports Co.. Whereas, it has illustrated that Basingstoke has the second biggest amount of the total sales in whole targeted market. In such case, to possible tasks for the planning and sales policy making meetings can be: Adopting the feasibility study and to investigate the possible outcomes of increasing the investment and market focus in Basingstoke and second, discover the reasons behind the low proficiency of other secondary markets. Overall, BIPs features will help to integrate the different particular data in a way that the decision makers in Solent Sports Co. prefer to have and distribute them to the action point within the organisation.
Contribution of each sales method to the total profit of the Solent Sports
The resultant analysed data generated by SAS which compare the Solent Sports Co. market segmentations presented below.
Figure 10: Contribution of each sales method to the total profit
10.1. Decision Making Situation
According to the Solent Sports Co. profile, the retail outlet is an oldest founded and well-developed sales method for the company. Recently they have introduced two other sales options to their costumers: catalogue and online sales. Data shows the outlet strategy is still dominant segment for the company; meanwhile the total share of sales through two other segments has passed the leveraged profit from outlet. It indicates there is a serious potential to improve the financial performance through the investment on other segments.
In case that the board of decision makers in Solent Sports Co. in one of their meetings are deciding about their market strategy and running new marketing campaign based on the previous financial performances, these data can insight their knowledge about current market segmentation situation. Again according to the profile, company recently adopted an online campaign for sales. Although it has not mentioned for how long they are running online sale campaign, but by just a simple comparison between date of company`s establishment, 1978, an interesting outcome can be obtained. Their outlet segment is around 34 years old with almost all branding and past strategies focused on it, nowadays it only sales twice bigger than an immature online segment. In case they use a BIP and keep their financial record and compare the trends, it can be seen with how extent of investment such a great profit margin acquired for the company through the online campaign. As well, they can device a continuous strategy with more focus on online or catalogue potential markets. BIP in those terms facilitates the integrated trend oriented analysis for the company to make the best decision and policies and implement the right strategy for growth. Furthermore, they can have an on-line data flow to control any changes in trends, opportunities and threats.
Summary of profits for each product line and category in Solent Sports
The report generated by SAS which compare the various products shares in total profit margin of Solent Sports Co. presented below.
Table : Summary of profits for each product line and category
11.1. Decision Making Situation
Data shows different products profit shares within total company`s margin. Sports equipment sales with £21357.84, outdoors with £13099.4, Clothes and Shoes with £7800.34 and Children related products with 589.95 have held different profit shares respectively. Among the sports product line, assorted sports articles and, within the two other product lines, clothes have produced the highest profit margin for the Solent Sports Co.. One instance of decision issue for the board of decision makers can be defined as the optimised allocation of the products for the warehouses. Analyse shows in field of sports products assorted articles and winter sports equipment are best sellers. Consequently, by considering the session they can request for more winter sport equipment from supplier, meanwhile try to campaign for those products in-house and plan a periodic supply for the outlet stores. Other issue is related to the clothes data facts. Data indicates that Solent Sports Co. has obtained a proper reputation for an indirect targeted product; cloths. It works as a clue for decision making that there is a positive attribute in provided cloths to the market that obtained customers attentions. By comparing the trends, they can even decide to develop a new targeted segment to their business by working directly on cloths sector. Other clue is about the low levelled products. Swimming equipment and children sports have not achieved to a high level of profit margin. They can investigate different option like: quality, other competitors' competitive advantages in those products. On instance, as consequences they may reach to the point to change the supplier or just shift their sales strategy to the other best seller products. BIP can help Solent Sports Co. in way that they can be able to connect their accounting system with sales point to find out the crucial points for inventories, as well as getting precise data about amount of sales on each product and in each warehouse.
Average time to deliver a product for each product category
The resultant analysed data generated by SAS which compare the Solent Sports Co. capability to allocate and deliver the right product in the right time to the costumers presented below.
Table : Average delivery time for products
Decision Making Situation
Data describes the differentiation in delivery times of various products. Shoes by average around 2.8 days and team sports products with average around 0.8 days have respectively longest and shortest delivery times. These data can be interpreted as the delivery times for two other sales segments; Catalogue and Online sales. Although in some cases, like lack of special sizes or heavy or large equipment those need a separate deliver or are based on the order, these data can be related as well to the retail outlets. One example decision making issue can be defined in allocation of the inventory among the delivery points. Shoes data shows the long deliver time in comparison with other product. An emerged clue can guide the branch directors to gather the data on reason behind the delay and inventory related problems among branches. Possibly there is a problem in Solent Sports Co.`s supply chain that lead to the long process of delivering the product. Decision makers can discuss the causes and adopt a proper product distribution among the branches and delivery points. At the same time resultant evidences can be used as a supporting data for the recently implemented online sales campaign. It indicates the company's capability in fulfilling the online customers' orders and, redefines the solutions for any inspected mismatching points in delivery system. As it reflected in company`s profile, directors are counting on their newly implemented sales point to increase the profit margin. As an infra-structure for the e-commerce, delivery system plays influential roles in success. According to the drawn roadmap, BIP brings managerial instruments for the company to control the distribution channels and improve it's just in time data tracking system.
Total Profit for Each Customer Age Group Solent Sports Distribution Co.
The report obtained from SAS which compare the various Solent Sports Co. customers age ranges illustrated below.
Table Total profit for each customer age group
13.1. Decision Making Situation
Analysed data investigates the current and potential customers age ranges. Customers aged between 31 to 45 years old have encompassed the majority. Solent Sports has absorbed the least customers who are between 46 to 60 years old. Understanding the ages' spectrum is a very important issue in advertisement and marketing strategies. By knowing the customers` ages, Solent Sports can be able to run a special in-house and online advertisement campaign based on customers preferences. For example as they are going to open couple new stores in other geographical regions, based on the acquired data, they can adopt an age specific advertisement campaign pre/post inauguration strategies to brand the company among the potential customers. As well, during the directors meeting, they can define the new design for the decoration of current warehouses to maximise the possible acquirable profit margin from specific age range. Furthermore, by integrating the different data, for example product sales and ages it can be determined which type of products are mostly demanded among different ages. So, they can adopt a proper strategy to optimise the sales.
As it discussed, BIP brings many advantages in terms of financial performance improvements, organisational awareness, marketing success and decision making accuracy. It also closes the information gap between different departments and branches and emerges the holistic patterns for the intra and inter-organisational knowledge sharing. In the next section the possible challenges and opportunities might be faced by Solent Sports Co. while adopting the BIPs will be discussed.
14. Organisational and technical challenges of adopting a BI package
There is a well-grounded theory about the condition in which an SME will adopt a new technology. Lefebvre et al.,(1991) defines four factors that are important conditioning the new technology adoption in SMEs: Firm characteristic, firm strategy, external market influence and the characteristic of new technology. In Solent Sport Co. case study, analysis goes through each layer, to do that firstly the new technology which has a chance to be adopted should be defined. Business Intelligence(BI) by definition is an organisational tool that helps in providing crucial information for strategic decision making and support the whole decision making process with organisation. Organisations always adopt the BI approach to increase the prediction capability and reduce the risk of uncertainty in planning(Inmon, 2005). To characterise the possible usefulness of a BI for Solent Sports Co., Bi advantages to current and future position of the company must be determined. The company suffers from the lack of data in decision making process and in terms of information integrity among departments. As there is not any efficient technical tool produce the required data, organisational structure has not any driver for growth. It has mentioned that the only available data processing aid, is the traditional spread sheet technology. There are a serious doubt about the accuracy and quantity of data entry process and a great managerial concern about the degree of usability in output. From the other side, organisation suffers from lack of internal reporting and information sharing among different department and inter-relationship between key data producer and process section like accounting, meanwhile the report preparation affairs is mainly human-oriented and to high extent based on the individualistic approach. The company has a certain vision for the growth, in accordance there is an increasing demand for the accurate, just in time/place and detailed reports. Eventually, adopting a BIP can be a serious option for the company. Apart from advantages, Solent Sports Co. like other SMEs will face with some challenges as well.
First challenge in adopting the BIP for Solent Sports is the cost of acquiring the BIP, implementation and consequent organisational changes. Total cost of Ownership(TOC) in case of SMEs are always hidden in upfront sales. It is obvious that the implementation and maintenance of BI is a long term mission as well as it required plausible financial resources for infrastructure building, data warehouse and software adaptation. From the other side, conventional BIPs are usually designated for the large organisational scales and may not be suitably compatible with SME needs(Bergeron, 2000).
Other issue is related to technical readiness of the organisation. Research shows that the SMEs with experience or currently available IS system may be adopted much more easily with BI in comparison with others(Wixom, B. and Watson, 2001). The company profile indicates that Solent Sports has not a well-established IS, although accounting and sales point systems are active within the organisation. Both systems are suffering from lack of systematic and informative integrity. Consequently, building BI channels upon the well-established prior IS can be an unsuccessful project. Even company`s director-owners does not have an in-depth knowledge of IS that might be work as a substitution for the established IS.
Apart from technological readiness, some organisational and structural concerns are related to appraisal the BIP adoption. In case of an adopted BIP, justification to the operational level of the company looks essential. For example, the meaning of data ownership and control will be changed and new inter/intra departmental task need to be define for Solent Sports. It can be predicted the organisational shape as well will be faced with changes and forced to be more flat than current hierarchal situation. So it can be said, in terms of consolidation level, to some extent the individual prospective will be replaced by departmental and functional prospective. So, the integration would be the essential task for departments and individual to share the data in an enterprise level. Eventually, Solent sports should be gain readiness to align the BIP and its adjusted organisational structure with the market and networks of stakeholder. Securing the sustainable growth as well would be an important challenge for the company.
Another important organisational issue is learning. Meanwhile the new system is being adopted; parallel organisational learning loop and training strategies must be adopted. In case of Solent Sports, according to its background, it seems training the employees is a tough and costly issue. To conclude, a suggested model for BIP adaptation in Solents Sports Co. based on the investigated challenges presented below.