MANAGING DECISIONS WITHIN COMPANIES IN A GLOBAL CRISIS AFFECTED ECONOMY

Authors: Stefan OLARU1, Prof. PhD., Iuliana BOTHA, PhD. Student, Anda VELICANU, PhD. Student, The Bucharest Academy of Economic Studies

AbstractWorldwide companies are affected by the Global Economy Crisis which make the decision process very important within the company. The strategic decisions for enlargement or new investments are usually taken by the higher part of the pyramidal structure, by the managers, the board, and the investors or by the CEO. These decisions did not rely enough on the software analysis. The new Business Intelligence and Decision solutions can provide important results that will give the company an important strategic advantage on the market. This article is presenting some methods and solutions for organizations to progress based on strategic decisions made by a good decision analysis.

Keywords: global crisis, decisions JEL Classification: D70

Decizii ale companiilor într-o economie afectată de criza globală

Autori: Prof. Dr.Stefan OLARU, Drd. Iuliana BOTHA, Drd. Anda VELICANU, ASE Bucureşti

RezumatProcesul decizional a devenit foarte important în condiţiile în care companiile sunt afectate de criza globală. Deciziile strategice pentru noi investiţii sau extindere sunt luate de manageri, de cei cu poziţii înalte, de investitori sau de CEO. Aceste decizii nu se bazează suficient pe analiză software. Acest articol prezintă câteva metode şi soluţii pentru ca organizaţiile să progreseze prin decizii strategice luate pe baza unei analize decizionale adecvate.

Cuvinte cheie: criza globală, decizii

Clasificare JEL: D70

1. Introduction

Usually the software decision analysis of the organization is not taken in consideration when strategic decisions are made in order to start the development of a new product, to change the production line, to buy a new company, or rearrange the structure of the organization. This may be one of the aspects that determined the global economic crisis. In order to repair some of these economic errors, this article proposes introducing the software decision analysis.

2. Strategic decisions

Strategic decision making is the process of selecting alternatives among the existing situation to make decision that have long term implication for the organization performance.To manage correctly the comprehensive knowledge of the company can establish a real asset. Let us take for example Oracle Corporation that has around 75.000 employees worldwide. The most recognized strategic plan that keeps Oracle in the top of IT companies is the acquisition plan of new rising medium-small organizations that have great potentials in the

1Email address: Stefan4@gmail.com

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eyes of Oracle head quarters. In this way, Oracle diversifies its range of products and can keep the growth phase that is so important in the life cycle of a company. Every company has five phases in its life cycle [1]. Different experts will argue on how many phases there are, but there is elegance in using something easy to remember. We divide the organizational life cycle into the following phases (as shown in Figure 1):

Startup (or Birth); Growth; Decline; Renewal; Death.

The growth phase is sometimes divided into an early growth phase (fast growth) and maturity phase (slow growth or no growth). However, maturity often leads to the decline. When in decline, an organization will either undergo or renew or will die.

Figure 1 – The organizational life cycleSource: Authors

In the Global Economic Crisis situation most of the companies are in the danger of going in decline phase or even death.Oracle Corporation is trying to keep its place in the growth phase by using this acquisition strategic plan. This strategic plan was put in action since year 2005 and so far, Oracle bought 44 companies. The most important ones are People Soft, Siebel, Hyperion, BEA and the recently Sun MicroSystems. With these companies Oracle extends and strengthens its product offerings. The other relative small acquisitions, Oracle is trying to improve its products by merging these technologies. For example by acquiring Bharosa, a leading provider of fraud prevention and strong authentication security solutions, Oracle, will extend Oracle's Identity Management capabilities by adding proactive real time risk-analysis, strong authentication and fraud prevention.According to [15] there are four key trends which are affecting the IT management:- Driving down costs – many organizations are under pressure to reduce costs, especially in these changing economic times;- Increasing the quality of service – the organizations have to provide many services (and with a better quality of them) with reduced resources;- Increasing agility – since the business requirements are changing faster than ever, IT needs to make more changes and has to keep up with business;- Lowering risks – while organizations need to increase agility, making any change decision introduces risks.

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In any way a company decides the plan for keeping a growing phase, the aggregate knowledge of employees is important and also the analysis made using specialized software must be taken in consideration when developing this plan.

3. Risk Management and Decision making solutions for strategic decisions

Decision Technology provides organizations with intuitive, information retrieval software that delivers business intelligence through reporting, data analytics and tight integration with standard business output formats such as Excel, XML and HTML. Particularly well-suited for small and midsize enterprises, Decision Technology's business intelligence software enables IT and Business professionals to access and integrate disparate databases—on the fly.Employees, managers and executives use Decision Technology products to derive business intelligence from virtually any combination of disparate databases. Decision Technology's business intelligence software provides a lower total cost of ownership compared to "Big BI (Business Intelligence)" solutions.Instead of requiring data warehouses and cumbersome ETL (Extract, Transform, Load) processes, Decision Technology employs the Data Federation Model to integrate data. Data Federation is a form of Enterprise Information Integration (EII) that is optimized for Small and Midsize Enterprises. This approach enables users to benefit instantly from Decision Technology’s business intelligence software regardless of whether data warehouses, data marts or ETL software is in place. It also eliminates the long start-up and deployment times associated with "Big BI" software [6].The main goal of Business Intelligence Systems (BIS) is to assist managers, at different levels in the organization, in taking decisions and to provide in real time representative information, to help and support them in their activities such as analyzing departmental data, planning and forecasting activities for their decision area [2][3].A business intelligence system can improve the decision quality made by the appropriate group when analyzing the organization. Business intelligence systems are helping answer questions that are mandatory in making good and profitable decisions. The paper [4] is giving examples about the questions answered by a BI system: Finance: What are the net income, expenses, gross profit, and net profit for this quarter,

year? Accounts: What is the sales amount this month and what is the outstanding pending

payment? Purchase: Who is the vendor to be contacted to purchase products? Production: How many products are manufactured in each production unit today, weekly,

and monthly? Sales: How many products have been sold in each area today, weekly, monthly? Quality: How many products have been defective today, weekly, monthly, quarterly, and

yearly? Service: Are the customers satisfied with the quality? Another question that can be answered by the business intelligence system could be:Is there any knowledge in our company that can support, develop and maintain our line of work?

4. Business Intelligence (BI) overview

In the information era, corporations have a lot of data collected and stored in transactional systems. These systems are very important for business because they maintain the data, over time. Data becomes information when processed, in order to answer various questions and economic issues. In this way, a manager can understand the business that one coordinates.

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We can consider that actual solutions of BI type are an important integration stage between business and IT domain. The usage of high end technology from computer science (e.g. AI – Artificial Intelligence, Expert Systems etc) and from management (e.g. Business Process Reengineering, BPM – Business Process Management, Business Performance Management etc) will create a symbiosis process between those two domains. For what we are sure is the fact that the implementation of a BI solution is a big challenge for management experts as for IT experts. It is imperative for them to complete a team that should work hand in hand for a successful end implementation.Many Business Intelligence (BI) applications require historical data or data collected from various sources. Often the solution is found in data warehouses. A data warehouse is a relational database that is created more for query and analysis than for transactional processes. It contains historical data, but may also include data from other sources. Data warehouses often integrate data from multiple transactional systems, making possible comparisons and analysis of data from a large database. Once data is inserted into a data warehouse, they can not be modified in order to correct errors. Historical data stored in data warehouses are important for business intelligence, because the performance analysis is done based on them.Traditionally, BI applications have been used to present data so that the managers can try to figure out what happened after the fact. Reports deliver the facts about what has happened to help managers see the overall health and status of the business. Analysis lets them further explore the data, in order to determine trends or uncover root causes of successes and failures.To become more intelligent and remain competitive, organizations need to understand the whole picture: the current state of their business as well as where it’s been and where it’s headed. This information can only be gleaned through a combination of reporting and analysis, both via corporate reports developed by technical users and delivered to employees across the organization and via ad-hoc analysis that is performed on demand, in order to answer unpredictable and immediate questions. Today, corporate employees expect dynamic, interactive business applications on the Web. They want to get at their business information whenever and wherever they need it. Delivering pure Web-based BI provides this universal accessibility and availability.The BI solutions must give users the ability to interact with the reports and graphs and even change their report layouts dynamically, on-the-fly.Traditionally, BI tools have been criticized for being overly complex and less than usable. Various technologies can be applied to improve the entire user experience in BI tools, including:

Flash and AJAX-enabled user interfaces, which offer more seamless interactivity and dynamic updates on-the-fly;

Innovative and more powerful data visualization tools which show patterns and trends and allow users to interact with data more easily;

Accessibility for the mobile devices currently available; Access to relevant information only based on the users’ roles.

To most effectively reach more users, BI features and functionality must be built on an open, pure Web-based industry standard platform that lets developers quickly and easily integrate them into business applications.A service-oriented architecture (SOA) enables distributed software to work together based on standard interfaces, reducing the cost of deployment and integration. Web Services is a method of designing applications so that, rather than running as a standalone piece of code on one system, their functions can be made available as “services” for any server or application linked to the network. When properly implemented, this makes it easier to share information among multiple systems.

5. SOA

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SOA is a software architecture which involves distributing application functionality into smaller distinct units - called services - which can be distributed across a network and can be used together in order to create business applications. The reusability of these services in different applications is a feature for software services-oriented architectures. These services communicate with each other by sending information from one service to another. SOA is often seen as an evolution of distributed programming and modular programming.SOA defines how two computing entities, such as programs, interact so as to allow an entity to perform a unit of work on behalf of other entities. Interactions between services are defined using a description language. Each interaction is self-contained and loosely coupled, so that each interaction is independent of any other.SOA is a flexible and standardized architecture that contributes to a better connectivity between various applications and facilitates the exchange of information between them. SOA unifies business processes by structuring large applications in a collection of smaller modules, called services. These applications can be used by different groups of people both within the company and beyond.Services are functional unrelated units which don’t have intercalls embedded. There are typically implemented features that people would recognize as services, such as filling an application for an account, viewing a bank account in a report or making an order for air ticket, all of them being on-line.The services do not have implemented their code the way they should communicate with each other; the protocols implement it.To efficiently use the SOA architecture it is necessary to meet the following requirements:

- interoperability between different systems and programming languages provides the basis for integrating applications on different platforms through a communication protocol. An example of such communication is based on the concept of message. Using messages through message-defined channels leads to decreasing the complexity of the final application, thus allowing the application’s developer to focus on the actual application functionality instead of focusing on the intrinsic needs of a communication protocol;

- creating a federation of resources shall establish and maintain the data flow of a federal data deposit. This allows the new created feature to make reference to a common business format for each data element.

SOA architecture is based on the following principles: - services are loosely coupled - flexibility - services virtualise the logic - generalization - services are composite - modular structure that can be composed into a whole - services are reusable - modules that are reused in different applications - services are autonomous - they have a relative independence - services don’t have a state - services are open source - can be easily extended.

The main advantage of SOA model adoption lies in drastically reducing the complexity of the general infrastructure because the applications’ logic is organized in specific modules or services, so it’s not duplicated in several systems. Also the number of the managed connections is the same as the number of co-opted platforms [13].

6. Interfaces for a BI system

The user-interface for Business Intelligence system could be an internal portal that can be accessed by all employees and display general statistical reports of the knowledge based in the organization. The specific matrix and the specific queries on the knowledge database

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should be made available using an account. This way only authorized managers and decision groups can use this information.The primary purpose of a portal is to integrate data and information from a wide range of applications and Repositories, and to create and manage a volume and variety of composite applications from that integration [5]. Portal oriented-integration allows visualization of a multitude of systems, either internal to organizations or external to them, through a simple user interface. This integration type brings an added benefit of avoiding problems due to integration and adaptation of user interface of each disparate system to a common one (aggregated user interface), which is often a Web site.An information portal can be seen like an Web based, secured, interface, which can offer an unique integration point for the applications and services used by employees, partners, suppliers and clients. The main advantage of the information portal is that it can be easily offered as a service to the wide public [10].

Figure 2 – Portal based integrationSource: David Linthicum, 2003

A portal is a collection of one or more groups of pages, which are hierarchical collections of pages. A page is the interface between users and the portal through which they can access and use the integrated applications. The pages of the portal developed with the Oracle Application Server Portal can integrate any type of HTML content, can be created with the help of wizards accessible through the browser or can be set programmatically as Java Server Pages (JSP).

Figure 3 – The pages of a portal and their componentsSource: www.oracle.com

A group of pages require the use of common attributes and mechanisms for defining the component pages behavior. The entire portal may actually be a single group of pages, or can

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be built more groups of pages as sub-portals for organizational structures identified. In a commercial organization, for example, can be defined the sub-departmental structures and for each of them we can realize a sub-portal.Another way to realize the user-interface for a Business Intelligence system could be through an ERP (Enterprise Resource Planning) solution. In time, ERP systems have evolved from isolated back-office accounting systems to enterprise wide solutions that touch not only every employee, process, and asset in a company but also reach outside the firewall to customers, prospects, suppliers, and partners. With the right ERP system as the backbone for a midsize company, operational, manufacturing, distribution, and engineering systems can be integrated into one cohesive and productive environment across the value chain [14]. When businesses are first formed, they often start with simple software applications, which typically utilize a combination of paper documents and electronic spreadsheets. At the next phase of business growth, these firms usually incorporate in-house developed software or plug-in modules with features to handle the business processes. Growing companies rapidly exceed the capabilities of these simple heterogeneous applications and find themselves with a mixture of data and processes. When companies realize that this solution is inhibiting growth and causing unnecessary costs, they consider implementing an ERP system. The transition to ERP for midsize companies is often the catalyst for faster growth and improved profits. The key to making this transition successful is careful evaluation of ERP options. There are hundreds of ERP systems available today (Oracle e-Business Suite and SAP are the most used in the large companies), and often the midsize companies have only one chance to make a good decision. The wrong decision can potentially collapse a company. An ERP solution is based on a unique data model. By accessing an application from any departments (sales, marketing, administration, agreement etc) all data will be stored, updated and accessed from same place, providing like that a complementary guarantee, oneness and accuracy of the image that the client will perceive.

7. Conclusions

In order to manage decisions within companies in a global crisis affected economy it is important to evaluate the risk management and the decision making solutions for strategic decisions. The most appropriate and modern solution for this kind of analysis is using a business intelligence software solution. The proper interface for a Business Intelligence system can be an internal portal or an ERP solution. Because Business Intelligence features and functionality must be built on an open, pure Web-based industry standard platform the software application should follow a service-oriented architecture that allows the services to be loosely coupled, reusable, autonomous and open source.To develop a decision making software solution that suites these entire restrictions one can use Oracle Portal, Oracle E-Business Suite or SAP.

This article is a result of the project „Doctoral Program and PhD Students in the education research and innovation triangle”. This project is co funded by European Social Fund through The Sectoral Operational Program for Human Resources Development 2007-2013, coordinated by The Bucharest Academy of Economic Studies.

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