monat jahr characteristics of essential it components and conceptual system design especially taking...

Characteristics of essential IT components and conceptual system design especially taking into consideration the requirements of knowledge management and empirically proven experiences

Processing of Information in Retail Industry Using Innovative

Information Technologies: The RIS

Michael Schulte – Doctoral Thesis| Business Information Systems – WINFO 2 | Feb. 2006

Michael Schulte – Paderborn, 10. February 2006

Faculty of Business Administration

Business Computing 2

2 Michael Schulte – Doctoral Thesis | Business Information Systems – WINFO 2 | Feb. 2006

Agenda



General methodology

Fundamentals

The Retail Information System (RIS): Concept introduction

Solution verification


Evalutation of secondary sources: Literature and document analysis

Empirical analysis: Demand and trend evaluation

Fundamentalsof business admin.

Retail industry processes and general industry IT challenges

Business computingbackground: Knowledge mgmnt.

Frame of business admin. and

business comp.

As-is analyis(problem def.)

Software technology selection:Literature analysis and empricalanalysis (industry trends)

Software modelling: RIS architecturespecification (problem oriented andon basis of selected technology)

RIS design

Software technological frame(fundamentals of informationtechnology)

RIS architecture specification

General methodology

Solution derivation

To-be concept

Solution assessment

Validation of information technological frame

Verification of value of benefit

Architecture affirmation

Benefit and risks

Retail industry demand fitverification


time1st wave 2nd wave 3rd wave 4th wave(today &midtermfuture)

Major changes in global society

hunter-gatherersociety

agriculturalsociety

industrialsociety

post-industrialsociety

available expertise

Characteristics

„Every employee, customer, business partner peripheral device or computing unit has accesson all mandatory information“ (Österle 2000)

Business operations are formed byprocessing information in the meaning of generating knowlegdeabout products, markets, customers,competition and company-ownrange of capabilities

Reach individual targetsfaster and better (efficiency)

Market positioning byunique product and serviceoffering (effectivity)

Retail business gets important (Tietz 1993)

Fundamentals:General society development


Market acceptance:High agility regarding to changes in demand chain

Competitive differentiation:Hardly imitable marketingand sales concept

Market positionSecured or growing degreeof entrepreneurial coverage

IT efficiencyReduction of applicationinfrastructure complexitiy(TCO & COI optimization)

End-to-end business processesIntegration of retailbusiness processes(e.g. crosslinking of information pools)

Competitive StrengthCost reduction andprocess improvement

Efficiency Effectivity

Mission oriented company tasks

Information oriented company tasks

Procurement market research Selling market research

Basics Assortment mgmnt. Revenue mgmnt. Market communication Socializing functions

FundamentalsStrategic goals & retail

Requirements Retail IT strategy

Synchronization


Fundamentals:Company organization

Addressed consumer market

(commercial / private)

Manufacturers

Headoffice /Branch office

Headoffice (Regional) branch office

Main or regionalwarehouse

Retail stores

Wholesales

Retail industry

Sales Autonomous

unit

Logistics Autonomous

unit

Administration Autonomous

unit

Administration Autonomous unit

Logistics and sales Autonomous unit


Selection of retail IT building blocks is primarily driven by local process (business rule) requirements to ensure cost optimization of a given use case

Generation of multi-application IT environments No reusability of common or proven business rules High efforts for change management and general IT maintenance No end-to-end view on business processes (island – principle)

Restricted availability of current business data / information„Due to strong focus on individual functional requirements when designing a company IT platform both the horizontal integration (of amount-oriented operative systems) and vertical integration (of operative systems and ERP systems) is not rarely done.“ (Becker 2004)Costly mechanisms to ensure cross-company data consistency are required even when using unified base of data

Restricted interaction between retail IT management and retail management

„… general orientation of IT infrastructure and processes of information admininstrationto open up additional potentials of benefits…“ (Ahlert 1997) not given

No adequate link of IT architecture and operated set of company tasks

Fundamentals:Status quo at a glance


Fundamentals:Example infrastructure

ERPBI

Multimedia contentmanagement

Goods receival /sending devices

Repenishment

Inventory

EPOS server

EPOS 1 - n

SCO server

SCO 1 - n

?

Instore prom.mgmnt.

Online kiosk

ElectronicPrice labelling

Labelprinting


EPOSApplication and

hardware for digitalsupport of

instore sales processes

Device specific peripherals(Data input and output) Scanner (EPOS-) Printer Operator display Customer display MCR

Business data:POSlog

Change in stock& monetary funds

Purchase patternanalysis

Shopping: Goods and payments

Electronic protocolof instore

sales process (TLOG)

ERP

BI

Fundamentals:Example system interaction


The perception of information technology as a core competenceof retail companies (54 %) in addition to store operations (81 %)and merchandising (71 %) represents a proof of modern IT‘simportance for individual economic success. (Zentes 2004)

Traditional operating and thinking in IT strategy definition andimplementation obstruct (re-)engineering of given IT infrastructures.

Fundamentals:Essential requirements

Requirements on next generation IT platform Business use case independent application approach to ensure unified support

of operated business task bundle Unification of business data storage Time- and location independent but use case optimized access on business data

(horizontal integration) Support of vertical integrations to generate cooperative network of specialists

(e.g supplier, banks, manufacturer, retailer) Migration of IT infrastructures


RIS designSoftware technological frame

Component based development Application fragmentation in reusable softwarecomponents to avoid redundant code development

New code development only for new requirementimplementations

(Use case) application generation on basis ofmodular design principle

1

Web service based softwarearchitecture

2 Reduction of dependeny to legacy data

exchange mechanism due to XML for datarepresentation

Strong and clearly defined service functionality(SOA approach / agile enterprise)

Loose coupling of business applications on basisof internet / intranet infrastructures

XML based distribution of business rule descriptionand profile based application configuration(XML parsing)

Company-wide data model:ARTS

3 Established industry standard for business

and master data storage in retail 10 years international model design by

vendors and retailers


RIS designArchitecture model

Application tier (retail frontend)

Sales supporting applications

(e.g. EPOS, PSA, kiosks)

Business intelligence(e.g. analysis of purchasing

patterns)

Enterprise administration(e.g. centralized assortment

management)

Tier of transformation

<<Service>>Device Profile Controller

<<Service>>Data Requester

<<Service>>Transaction Processor

Tier of data

System profiles Address book for data sources Data selection rules

Master data (ARTS based structure) Functional data (ARTS based structure) Business rule description

RIS Data Repository RIS Business Data

Business rules System parameters Business data (ARTS based structure)

Functional data(ARTS structured tlogs)


RIS designRIS component model

<<Service>>Device Profile

Controller

<<Service>>TransactionProcessor


<<File>>SpecificSystemProfile

<<File>>Business

RuleDefinition

<<File>>TLOG

<<Executable>>Integrated

Business Rule

<<Executable>>Integrated

Business Rule

<<Storage>>RIS

Data Rep.

<<Storage>>Central

BusinessData

<<Storage>>Subset

BusinessData

CutlineAssigning dependency

Existential dependency


RIS designRIS transformation model

XSLprocessor

- executed byDevice Profile

Controller -(e.g. MSXML)

StyleSheet 1

Transformingrule:

XML HTML

StyleSheet 2

Transformingrule:

XML SVG

XML

Executable businessrule plug in of retail

frontend

RIS-data object

(e.g.business rule

definition)

HTML

SVG

JavaScript

XSLT XSLT

Data input TransformationApplication ofretail frontend


RIS designModul interaction example

Requesting retail frontendapplication

Coordination ofdata request


Request: Running total, customer master data

Parameters: Customer ID (4711)Context: Goods sales to known

customer

RIS Data Repository

Business Data Pool

Reply.XML

Business Data:4711Erwin Mustermann1.000 Points

ReplyOperator activity(Initiating event)

Swipe of customer loyalty card


RIS designKnowledge management

RIS Data Repository

Applicationof data selection anddata enrichment rules

TotalRIS business

data pool

Use case focusseddata combinations

Factualknowledge

Direct reflow ofexpertise

Direct reflow ofexpertise

indirect reflow ofexpertise

NexusUnder-standing

Taskaccom-plishment


Solution verificationInnovation and benefits

Retail industry

Retail industry

Change management

Retail industry

Retail industry

IT infrastructuremaintenance

Business processdigitalization

Global data model Simplified application

integration

Knowledgemanagement

Business processintegration

Retail ITplatform design Innovation

Retail device definition Retail frontend

abstraction


Solution verificationRisks and open issues

Security aspect(Not considered)

Web Service based data transportation requires either Web Service encryption or authentification

Possible approaches (not considered): HTTPS, XML Signature, XML-Encryption, SAML

1

Performance aspect:(General risk)

2 Strong dependencies between size of XML file, XML processor time (parsing) and XML file structure

Danger of significant increase of network traffic slow down of device reaction times

System implementationefforts:(General risk)

3 XSL transformation represents new approach limited availability of expertise

Web Service based design implies higher implementationefforts (e.g. API definition)

Integration of legacy applications or non-RIS dataconversions imply generation dedicated adapters(even customization efforts is reduced through reusability)

System recovery(Not considered)

4 Fallback concept to restart RIS key services in case ofbreakdown






Thank you for your attention.






Backup slides and appendix


Appendix & BackupInstore IT integrated to POS

Wireless handhelddevices for merchandisemanagement tasks: 26 %

Customer item & pricelookup systems: 28 %

Shelf labelsignage: 17 %

Customerself checkout: 4 %

Promotiondisplays: 6 %

Anti-thefttag readers: 2 %

Others (e.g. queue busting devices): 17 %

Source: 2005 POS Systems Benchmark Survey, Retail Systems Alert Group


Past Presence Future

Assembler (machine code)

Unstructured coding

Procedural coding

Object orientation

Component based dev.

Services (next 10 years)

Appendix & BackupEvolution of sw engineering

Source: Pfeifer, J.: Die Microsoft .NET Vision: Das programmierbare WebVortrag Software Technologie Forum, November 2001


Appendix & BackupWeb technology benefit growth

Benefits

time

Low

Medium

High

1990 1995 1999 2005

„Plain“HTML

Scripting client + server(JavaScript, VBScript etc.)

Dynamic HTMLCGI + online forms

Java, ActiveX

XML (RDF) + XSL +CGI applications

XML + XSL + SOAP+ Webservices

Based on: Kurz A:. Data Warehouse Enabling Technologies, 1999


Source: 15th annual retail technology studyGartner / RIS 2005

0% 20% 40% 60% 80% 100%

I

Web Services (.NET, Java Web Services, Web Sphere)

Application Integration

Integrated Enterprise Suite

Multichannel integrationto store level

37 % 21 % 12 % 12 %

16 % 26 % 14 % 13 %

20 % 22 % 6 % 11 %

16 % 16 % 14 % 11 %

Up-to-date tech in place

Started but not finished tech upgrade

Major upgrade planned within 2 years

Major upgrade planned for 2006

Appendix & BackupPlatform rebuilding in retail


Appendix & BackupRIS design – data model

Total_Set_System_Profiles

* 1

Specific_System_Profile

* 1..*

* 1..* 0..*

1

1..*

1

10..*

<<uses>>

<<generates>>

<<affects>>

Total_Set_Business_Rules

Integrated_Business_Rule Business_Data

TLOGSubset_

Business_DataTotal_Set_

Business_Data

CutlineRIS specific data class

ARTS structureddata class

monat jahr characteristics of essential it components and conceptual system design especially taking...

Documents

processing information

frame of business

business operations

effectivity retail business

retail information system

mandatory information

retail industry processes

general industry