Back to school for Businesses
Story by Rob O'Neill. Sunday Star Times, Auckland, New Zealand. Oct 16th 2011
There are a lot of smart people at our universities and that's attracting smart businesses to team up with them in cost effective product-development and business-improvement projects. A handful of local organisations including Pumpkin Patch and cinema-management software developer Vista Entertainment Solutions, as well as Ports of Auckland and Fonterra, have benefited this year from partnerships with the Auckland University's business school on software development projects as part of the university's information systems programme.
Infosys 345 is a course which invites businesses to specify and clearly define projects in which students can solve a business problem through information systems development. Vista, for instance, has used its project to make cinema managers more mobile. Managers can access information on session times and bookings on the dashboard of an iPhone application and "drill down" into that information for further insights. They can also communicate with staff and approve action without moving round a cinema complex, or operate from even further afield, developer Wen-Yang Ji told the Sunday Star-Times.
Ports of Auckland used the programme to revamp its stores procedures to speed the delivery of items such as spare parts to tradespeople, cutting what could be a 20-minute wait down to two minutes and saving an estimated $70,000 a year. It was also able to lower its inventory levels from $5million to just $1.5m. Pumpkin Patch is now able to visually search and analyse its stock with software developed in the programme, while Fonterra is targeting replacing warehouse paperwork with digital information. The student team working with Deloitte, meanwhile, developed a "public data explorer", a web application that allows users to access and interrogate public online data stores that use the increasingly common XML data format.
But perhaps the most startling application, and one with possible applications beyond the sponsoring company, is the profit maximising software from Auckland-based applications and data hosting company OneNet. OneNet founder Michael Snowden,describes the software as an integrated suite of modules which, based on uncertain forecasts of business opportunities and the current financial position of a business, mathematically determines the optimal decisions to maximise a firm's profits.
Among other applications, the software aims to expose information much talked about in business but rarely analysed - the profit (or loss) contribution of individual customer relationships. Snowden said most firms find that 20% of their clients provide 80% of revenue. However, few businesses understand that the most profitable 20% of customers can produce between 150% and 300% of profit - in other words, many others are not profitable. The software, built with Microsoft technologies, tracks new clients through their customer life cycles with time driven, activity-based accounting and client-balanced scorecards using business intelligence to explain profit variations from changes in prices, costs, volumes and sales mix, Snowdon said.
The software can do this because it differs from most accounting and financial software packages by capturing and using management accounting information, not just financial information such as sales revenue and expenses. The development, which had its origins in Snowdon's own PhD research in the 1970s, has so far been focused on OneNet's own cloud computing services, but he said it is capable of supporting "anything as a service"essentially any outsourced service . Profit Maximising Software uses Monte Carlo simulations (named after a roulette wheel) to test the uncertain future with thousands of different combinations to determine the most likely outcomes. Future demand is projected with probabilities and fed into a mathematical model of the business to calculate the maximum profit achievable under the assumptions made.
In the case of cloud computing and hosting, the software can help determine the correct allocation of data storage resources needed to meet a specified service level in a customer contract. The software also calculates the opportunity cost of resources contained in the model. If there is a constraint on a particular resource, the software can calculate how much extra profit could be earned if more of that resource was made available. Snowden said the project is at a fledgling stage but in 2012 the rest of the company's services will be added to the system and it will be made available to resellers.
Snowden then plans to set up a new company to take the software to market, with OneNet becoming the foundation customer. More research is planned with the university's Engineering Science Department to make the software more user-friendly and the results it produces easier to understand. Associate professor Lech Janczewski has been running the course for the last 25 years. He says it started as a typical student project but gradually became a course where a student team worked closely with the sponsor in resolving a real systems problem in their business.
Students learn to work in a team with a minimum of outside supervision, to interact with end-users and successfully identify and satisfy their requirements, integrating their course work from several disciplines.