Digital Signatures, Message Digests, Digital Certificates and their applications in Accountancy

Cryptography before the mid-1970’s used just one secret, known by both the enciphering and deciphering parties (Gladman et al). In the past, it was mostly used by diplomats, spies and the military but times have changed and it has become an indispensible part of electronic commerce and security. Some of the modern business applications of cryptography include secure messaging, e-commerce, online banking, secure storage, authentication, Digital Rights Management and Watermarking. Crucial to modern cryptography is the use of digital signatures, message digests and digital certificates.

Digital Signatures
Digital Signatures are a technology that gives 2 parties the ability to validate the authenticity of information that is transmitted electronically and also important documents. The Electronic Communications Act 2000 states that a digital signature is as legally binding as a hand written contract. Therefore, when a digital signature is added to a document, it provides assurance that the document’s sender is the person they claim to be. This eliminates the fear that sensitive data is disclosed to people for whom it is not intended (Grupe et al, 2003). The concept of how digital signatures work can be illustrated by the use of an example:

Alan is given 2 keys: a public key and a private key. The keys are used to encrypt information and only a person with the appropriate key can read that information. Either of the 2 keys can encrypt the data and the other can decrypt the data. Anyone can obtain Alan’s public key but the private key is kept by him.

Rishi, can encrypt a message using Alan’s public key. Alan then uses his private key to decrypt the message. This means that anybody could access Rishi’s message but they cannot decrypt it without Alan’s private key.

With the private key, Alan can place digital signatures on documents and other data. This places a ‘stamp’ (which is unique to Alan) on the document which is difficult to forge.


Message Digests
Following on from the idea of digital signatures, the signature can also be used to assure that any changes made to the data can be easily detected. This is by the use of a “Message Digest”. For example, Alan prepares a plaintext document which is a contract.

The plaintext document can be crunched down into just a few lines of code by a process called “hashing”. These lines are called the Message Digest (MD) and the same document will always produce the same MD. This means that if the document has been tampered with, a different MD will be produced, providing clear evidence that changes have been made. It should also be noted that it is not possible to convert a message digest back into the original plaintext document. Alan can then encrypt the message digest with his private key to create a digital signature.

This digital signature is appended to the document and this can then be sent to Rishi with the original plaintext document.

If Rishi can decrypt the signature file with Alan’s public key then this will prove that the document was signed by Alan as only he has the private key. Furthermore, if the hash algorithm produces the same message digest, then this proves that the signed data has not been changed. As a result of this, Alan cannot deny the document was sent by him. Following from this, Rishi can then create another Message Digest from the plaintext contract and if this is the same Message Digest that was just decrypted from Alan’s public key, then Rishi has bound his digital signature to the contract and now has a legally enforceable digitally signed contract. Rishi would also gain nothing by altering the contract as doing so would produce a different Message Digest to the contract Alan signed. Consequently, Alan would not be legally bound by it. The whole process is summarised in the diagram below.


Digital Certificates
Digital Certificates are used to instil extra confidence into being certain that a public key actually belongs to a particular person. They consist of 4 components: a public key, information on the key’s owner, a signature from a certification authority and information about the certificate including the period of validity and the serial number. It is method of authentication by vouching and merely binds the key to the information that is on the certificate; this can provide varying levels of assurance. Referring back to the previous example, the scenario can be expanded further to incorporate the use of digital certificates.

Supposing a digital certificate is created for Alan by a Certification Authority (CA), this means that Alan’s public key will be signed as well as some personal information about Alan. Now Rishi can check to make sure that his public key truly belongs to Alan. Firstly to verify the signature on the Alan’s certificate, the CA’s public key is used. After the certificate is decrypted, it is possible to check that Alan is trusted by the CA and that all of the certificate information relating to Alan’s identity is correct. Afterwards, Alan’s public key is taken from the certificate and is used to check Alan’s signature. If Alan’s public key successfully decrypts the signature then Rishi can be sure the signature was created using Alan’s private key, as the CA has certified the matching public key (www.youdzone.com).


Applications for Accountants
Digital signatures can improve internal controls and authenticity of data. All electronic and legally binding documents and records of transaction must be subject to a trustworthy process of authentication. As digital signatures are far more difficult to forge than handwritten signatures, this should mean that less extensive audit testing will be required. There are also a number of cost savings through using digital signatures. These come from reduced paper and communications costs, reduced transaction and administrative costs and elimination of process steps.

Accountants can use digital signatures to create paperless contracts and for financial reports. They can potentially be used for other human resources functions such as approval of holidays, payroll and supply chain transactions. As all documents are encrypted, then security is improved as even if vital documents containing sensitive information such as takeover plans are stolen, then this data cannot be read by people it is not intended for as they will not be able to decrypt it. It is clear to see that there are huge benefits of using digital signatures. The big 4 accounting firms have already started issuing digital signatures in partnership with private vendors such as Verisign (Grupe et al, 2003). I believe that eventually, every accounting department will follow suit and adopt the use of digital signatures.

References:

Gladman et al, 1999, Digital Signatures, Certificates and Electronic Commerce

Grupe et al, 2003, Understanding Digital Signatures, The CPA Journal

What is a digital Signature?, available at: http://www.youdzone.com/signature.html [accessed 31 December 2008]

How might the Internet affect the Pricing Policies and Profitability of Companies?

For a business, one of the most important decisions is pricing. This is something that has important consequences for the ‘bottom line’ and should be given just as much attention as all the other key decisions they must make. As soon as a customer learns the price of a product, they instantly get a first impression which may be vital to their eventual decision to buy or not. The innovation that is the internet has had major effects on the pricing policies and the profitability of companies.

The first question to ask is whether or not the internet has had the effect of increasing or decreasing prices. Building an internet store has a low entry cost as it is relatively cheap to set up a website. Operational costs are also reduced as there is no need to rent physical space. Consequently, a large number of internet stores have been set up and this has increased the overall market competition. Having the internet makes it easy for sellers to compare prices and as everybody will want to set the best price and this should have the effect of driving prices down. However it also makes it easy for sellers to collude on prices to keep them as high as possible. The net effect is that prices are reduced in some areas but are higher in others. Although internet stores may offer lower prices than conventional outlets for certain products, this does not necessarily mean that they should decrease their prices.

There are a number of services which conventional stores can offer which internet stores cannot. Some products are better evaluated through a physical presence such as food and clothes and we can also never underestimate the value of convenience. I believe that the ability to collect an item immediately is definitely worth something. Another service which the internet cannot really offer is retail assistance which is becoming more critical in ensuring that customers leave a store full satisfied (Lal, 1999). Reputation is significant and generally, known and trusted stores can command higher prices so therefore the pricing policies of high streets stores may not be affected a great deal by the internet.

Setting the right (optimal) price is extremely difficult to do and often takes considerable market knowledge, particularly with new products and also testing of different pricing options (www.knowthis.com). With the internet, price changes are easy to make and this means that the optimum price could change at any time. An example here is with airline ticket prices, which change dynamically in order to attempt to set the best price to beat the competition.

One method of letting the customers decide the optimal price is to hold auctions. The internet has made it much easier to sell through auctions. ‘Virtual Marketplaces’ such as Ebay (the clear market leader in online auctions) holds timed, public sales driven by bids, with items sold to the highest bidder. People can set up their own companies on Ebay and hope to make larger profits using the auction system as people may fall to the ‘winner’s curse’ – that is people become over-excited in the heat of the moment and overbid to win. Websites such as Ebay have had major adverse effects on the antiques industry. In one US antiques store, business had declined by about 35% since the end of 2004 and shop traffic dropped 15-18% during that time (www.thebizpress.com). Besides the antiques industry, the internet has been the worst enemy for a number of other businesses.

It can destroy entire market sectors (www.wikinvest.com) and a number of existing businesses which once thrived have been seriously damaged by the internet. For example, in the travel industry, the internet has devastated the profitability of travel agents as there is now very little that they can offer. Airlines and hotels can do business directly with customers as people can now check for best airline prices and book their own flights and hotel rooms without the need for a travel agent, which should save money for the customer.

Another industry which has been rocked by the internet is the music and video store industry. Buying music cds from internet stores is often cheaper than buying from conventional outlets which gave the industry their first blow. However as the market for digital music has grown and usage of digital music players has gained widespread adoption; the industry has taken a further hit as customers have turned to downloading their music online from places such as the iTunes store. This has a particular advantage for the customer as instead of buying an album, they can now save money by only choosing to buy only the songs they desire. As a result of this, music store stalwarts such as Tower Records have gone out of business but now exist as an online music store. Virgin Megastores has also had to embrace the new technology and have now incorporated digital music as part of their online business.

Piracy is a further issue which has increased exponentially since the internet’s mainstream arrival and perhaps no industry has been hit harder than the music industry. As a result of this, some rather bizarre pricing policies have been made by companies. For example, Radiohead adopted a policy of letting the customer pay what they wanted for an album, and a website called Amie Street have adopted a demand based pricing approach. The price of a music track starts at zero and increases as the demand for it increases (www.wikipedia.com).

Similarly, video rental stores have also faced changes due to the internet. Companies such as Blockbuster Video have struggled for some time as the internet has allowed for a home delivery video rental service but they have now added this kind of service to their business. However the future is still uncertain for this industry as video-on-demand is becoming more widely available (www.wikinvest.com).

In conclusion, the internet has been a major advance in commerce but in some industries, it has caused severe disruption. This has been particularly apparent in the music and video stores industry as well as the antiques and travel market sectors. On the whole, customers are probably benefitting from the internet as pricing information for products is easier to find and compare. Everyday, an increasing number of people are buying products from the internet, but conventional outlets should not be overly worried as they can still offer services which online stores cannot, and for some people, this may always be worth paying a small premium for.

References

Pricing Decisions, available at: http://www.knowthis.com/tutorials/principles-of-marketing/pricing-decisions/3.htm [accessed 29 December 2008]

The Internet Impact, available at: http://www.wikinvest.com/concept/The_Internet_Impact [accessed 29 December 2008]

Lal, R, 1999, When and How is the Internet Likely to Decrease Price Competition, Marketing Science, Vol 18, No. 4, pp485-503

Antiques Shops Struggle in the Web Era, available at: http://www.thebizpress.com/news/stories/BP_News_Local_D_bp0108_focus-antiques.e12ad2.html [accessed 30 December 2008]

Wikipedia - Amie Street, available at: http://en.wikipedia.org/wiki/Amie_Street [accessed 30 December 2008]

NHS IT Project

The National Health Service (NHS) is the publicly funded healthcare system provided by the UK Department of Health (DoH). It is mostly funded by taxation including national insurance payments and the majority of the DoH's spending is on the NHS (£98.6 billion for the year 2008-2009). They claim to be committed to providing quality care to meet the needs of everyone when they need it, based on a patient's clinical record and not their ability to pay (Heath, 2008). With such bold claims and with such vast sums of money spent on the service, they are instantly placed under huge pressure to deliver a high level of service. However, they have not always delivered to the standards that they strive and so they have had to try to redeem themselves. Hence, in October 2002, they established the National Programme for IT (NPfIT) and in April 2005, a new agency called NHS Connecting for Health (CfH) was formed to deliver the programme. This extremely ambitious project was an attempt to replace an ageing patchwork of 5,000 different computer systems with a single, centrally-mandated electronic care record for patients which would connect in excess of 100,000 doctors, 380,000 nurses and 50,000 other health professionals. (Heath, 2008)

There are 10 major components which are at the heart of the NHS IT project (Heath, 2008):

The Spine
The 'Spine' is the central database where electronic patient records known as summary cared records are stored. It is part of the NHS care records service (CRS) and only NHS staff that are equipped with smart cards and pin numbers will be able to access this information. The Spine also supports 2 other key components which are 'Choose and Book' and the 'Electronic Prescriptions Service'.

NHS Care Records Service (CRS)
This will provide doctors with instant electronic access to the medical records of patients, eliminating the need for paper and saves time in manually searching through documents. Each electronic medical record will be formed from information which may be held in various locations but is brought together when needed. A summary of the record is held on the Spine so that vital information such as name, address, date of birth and allergies can be readily accessed by doctors. More detailed information such as tests, X-rays and scans are held locally.

Choose and Book
This is an electronic booking service which gives GPs the ability to make hospital appointments at convenient times and places for patients. The system should cut lengthy delays between visiting the GP and receiving an appointment from a hospital which often takes weeks under the current system.

The Electronic Prescription Service (EPS)
Instead of using paper orders for prescriptions, EPS allows GPs to generate electronic prescriptions. This should improve accuracy and safety by ensuring prescription information is only inputted once. The EPS will also be combined with the CRS to record what medicines have been prescribed and actually given to patients. EPS is being implemented in 2 releases: the first adds barcodes to paper prescriptions to speed up repeat prescriptions while the second release will add electronic signatures to authorise electronic subscriptions.

N3 National Broadband Network
The N3 will replace the old NHSnet network infrastructure and will be one of the world's largest Virtual Private Networks (VPNs). The N3 is a high-speed broadband network vital for delivering new services such as X-ray storage service Pac (Picture Archiving and Communications System) and electronic prescriptions. The estimated savings from this new network are a massive £900m over a period of 7 years.

Picture Archiving and Communications System (Pacs)
This system allows images from X-rays and scans to be stored in a digital format, eliminating the need for using film. This will speed up the delivery of information as doctors will be able to access images remotely from laptops. Costs of storing and processing film will also be saved.

The Quality Management and Analysis System (QMAS)
QMAS is a national IT system which gives GP practices and primary care trusts feedback concerning the quality of care that is delivered to patients. It monitors the performance of each practice measured against national achievement targets. Additionally, it allowsGP's pay to be linked to performance, determining up to a third of their salary.

GP2GP Record Transfer
The GP2GP is a system which allows patient records to be transferred electronically between different practices and is particularly useful when a patient changes doctor. Currently, patient records are printed and posted and requires retyping at the other end but electronic transfers will not require this retyping, making it a more accurate, secure and faster approach.

NHSmail
The previous mailing system was known as 'Contact' but the new NHSmail is a more secure national e-mail and directory service developed by Cable and Wireless, and is freely provided for NHS staff. Users ofNHSmail have a permanent e-mail address which is kept as they move around the NHS. It also has some more advanced features such as calendars, shared folders and automatic encryption of e-mails.

Secondary Uses Service (SUS)
This is a database containing more than a billion confidential patient records used to improve NHS treatment and healthcare. Records are held on almost all patients in England who have stayed in hospitals, visited outpatients or attended accident and emergency. Data is analysed internally and encrypted data fromSUS is passed to the Dr Foseter Unit - an academic body which uses this data to analyse outcomes such as death rates in hospitals, with the ultimate intention of improving NHS Care.


Hailed as “the biggest non-military IT development in the world” (Guardian News and Media Limited, 2008), and is estimated to achieve savings of £1.1 billion by 2014 (National Audit Office, 2008). The National Audit Office expects the system to cost £12.7bn over 10 years and be complete by 2014-2015 (see table below). However, it was originally only expected to cost £2.3bn over 3 years and it is also now four years behind schedule. Worryingly, some officials involved in the program have been quoted in the media estimating the final cost to be as much as £20-30bn which exceeds the original budget by approximately 440-770%. (Fleming, 2004) This project may prove to be an over ambitious project by the government and appears to have fundamental flaws in its implementation and further delay could severely damage public confidence.

(National Audit Office, 2008)

Implementation of the programme was divided into 5 areas of England known as "clusters" and a different Local Service Provider (LSP) was responsible for delivering services to these regions. In total, 4 suppliers were contracted who were CSC Alliance, BT Health London, Accenture and Fujitsu. This strategy was effective in reducing risk as committing to only one supplier would mean that the whole project could fall apart if they did not deliver to expectations. However, the NHS has been putting its main suppliers under immense pressure as it has tried to keep within budget and there have been consequences. In July 2007, Accenture pulled out of the project and in May 2008, Fujitsu had their contract terminated and now only half of the of the original IT providers remain.

A number of these programmes have met their deadlines and have been implemented across the NHS such as the N3 broadband network,Pacs digital X-ray scheme and an Electronic Prescription Service. However the Summary Care Records Scheme has been delayed due to technical problems relating to iSOFT’s Lorenzo patient software and disagreements over patients being asked for their consent for their medical records to be digitized. Consequently the dates for the new systems to “go live” have been delayed.

One of the most important issues with regards to the patient record system is that information stored is kept confidential and secure. The NHS has developed ‘Care Record Guarantee’ guidelines which must be adhered to in handling this electronic data. Access to records through smartcards and passcodes are dependent upon the role and level of involvement within patient care and can be audited. Any departures from these rules result in strict disciplinary measures being taken for unacceptable misuse of this information.

It is questionable whether this level of security is enough, with 50 million people’s records on the database. In 2004, the NPfIT won the "Most Appalling Project" Big Brother Award for their plans to computerise patient records whilst neglecting the need for adequate privacy safeguards. Another reason which underlines the opinion that security is a fundamental issue is that there is actually no option to opt out of having your demographic details stored unless there are special circumstances such as if the police or social services requests these details to be kept off the database. Therefore many public and private sector workers can quite easily gain access to details such as your address and phone numbers from social workers and pharmacists for example. Reasons such as this have prompted civil liberties campaigners such as the anti-database state pressure group, NO2ID, and The Big Opt Out to voice their concerns over confidentiality and the security of medical data uploaded to The Spine. The adoption of encryption and digital signatures would help to reinforce the security of this information but question marks still remain over whether the level of security will be sufficient.

There are a number of issues that must be considered in the government’s decision to go ahead with this massive investment in the NHS. Past experiences highlight the government’s incompetence in the management of such large scale IT projects.

The Rural Payments Agency (RPA), who are responsible for managing farm subsidy payments in the UK were prevented from achieving targets they had set due to a combination of IT failures and poor management. A Single Payment Scheme was established by EC Council Regulation 1782/2003 which replaced eleven separate payments to farmers.

The RPA developed custom software and created databases where data was stored on computers disconnected from the main system. However this was a fundamental error as the system required the data in order to function correctly. Overall this project highlighted incompetence in terms of project management, inexperience and poor planning. This had a detrimental effect upon farmers who required such subsidies in order to maintain their activities.

Another example of mismanagement is the failure of the upgrade to the Air Traffic Control System (NATS). The failure of the project was due to poor management, its lack of managerial and technical competence. The use of three different service providers did not help to maintain effective control over the system and despite 450,000 hours of testing two million lines of code (Erskine, 2002) it still had a number of breakdowns. This was due to bugs, a lack of stability and reliability in the system which resulted in flight delays and cancellations.

In summary, the implementation of IT software to create an electronic patient database is necessary in order to improve efficiency and the standard of care. When the project is eventually completed, the benefits should become apparent, with patients benefiting from having shorter waiting times and faster treatments. However, it is essential that such an investment must provide significant savings in the long term to an already expensive health system. Otherwise taxpayer’s money which should be spent on patient care and wellbeing is squandered on untested technology.

This assignment was produced in collaboration with Rishi Chada


Bibliography

BBC News, (2008), NHS IT 'at least four years late'

Retrieved: 15/12/08, from

http://news.bbc.co.uk/1/hi/health/7403286.stm


BBC News, (2008), Privacy foes named and shamed

Retrieved: 15/12/08, from

http://news.bbc.co.uk/1/hi/technology/3933679.stm


Erskine, R., (2002), At last a silver lining around the troubled NATS Air Traffic Control System, Technical Report, Software Forensics Centre,

Retrieved: 12/12/08, from

http://www.cs.mdx.ac.uk/research/SFC/Reports/TR2002-02.pdf


Fleming, N., (2004), Bill for hi-tech NHS soars to £20 billion, Telegraph Media Group Limited

Retrieved: 13/12/08, from

http://www.telegraph.co.uk/news/uknews/1473927/Bill-for-hi-tech-NHS-soars-to-andpound20-billion.html


Guardian News and Media Limited, (2008), Four-year delay for NHS's new IT system

Retrieved: 15/12/08, from

http: /www.guardian.co.uk/society/2008/may/16/nhs.health


Heath, N., (2008), The 10 projects at the heart of NHS IT, CBS Interactive Limited

Retrieved: 14/12/08, from

http://www.silicon.com/publicsector/0,3800010403,39328119,00.htm

Krigsman, M., (2007), UK Rural Payments Agency (RPA): IT failure and gross incompetence screws farmers IT Project Failures, ZDNet

Retrieved: 15/12/08, from

http://blogs.zdnet.com/projectfailures/?p=536


National Audit Office, (2008), The National Programme for IT in the NHS: Progress since 2006

Retrieved: 16/12/08, from

http://www.nao.org.uk/publications/0708/the_national_programme_for_it.aspx


NHS, (2008), About the NHS

Retrieved: 14/12/08, from

http://www.nhs.uk/aboutnhs/Pages/About.aspx


Rural Payments Agency, (2008), About RPA

Retrieved: 16/12/08, from

http://www.rpa.gov.uk/rpa/index.nsf/UIMenu/F51B6B0D961521A7802570450051BAB9?opendocument


TheBigOptOut.org, (2008), About the campaign

Retrieved: 12/12/08, from

http://www.thebigoptout.com/?page_id=3


Wikipedia Foundation, Inc, (2008), National Health Service (England)

Retrieved: 14/12/08, from

http://en.wikipedia.org/wiki/National_Health_Service_(England)

SAP R/3 Implementation at Geneva Pharmaceuticals

Geneva Pharmaceuticals (US hub of Novartis International AG) is one of the world’s largest generic drug manufacturers. Revenues of $300 million were achieved in 1998 and it holds a portfolio of over 200 products in over 500 package sizes. Its main business processes are manufacturing and distribution, with the majority of orders emerging through Electronic Data Interchange (EDI). In 1996, Geneva recognised the limitations in its existing information systems in that they were not capable of integrating across the different functions. Manufacturing, for example, could not share information with accounting or sales and this led to entries having to be manually input twice. Geneva believed an Enterprise Resource Planning (ERP) software system would provide better integration of data across different functions making it more efficient, improve data accuracy and lower maintenance costs. The new system was to be phased in three stages.

These consisted of Phase I (focused on the supply side processes), Phase II (focused on the demand side processes) and Phase III (aimed at the integration of the supply side and demand side processes).


Phase I

This phase of the operation looked at the supply side of the process which included the manufacturing and procurement planning. Originally this type of work was carried out manually and was very labour intensive. All the data had to be re-entered at all the various stages and this increased the risk of error and additional costs. Thus the introduction of SAP R/3 appeared to be the most appropriate choice.

Geneva employed a consultancy firm Whitman-Hart who had previous experience in R/3 and also appointed Verne Evans to be project manager for the implementation process. The team opted for the accelerated SAP (ASAP) methodology as it promised a short implementation period of only six months. Four months after implementation and having spent an inordinate amount of money and time there was minimal progress made. This was due to the fact that there was no real commitment or co-ordination between the consultants. The project manager was inexperienced in R/3 and the other consultants were technical specialists and had no business experience. They failed to critically evaluate the problem and did not modify the software that was needed to meet the company’s requirement.

After this initial setback Randy Weldon was appointed the new project manager to resolve this problem. He had experience in R/3 and also management experience with ERP previously. This provided the foundation for successful implementation of a new system. He encouraged commitment from all members of the team to ensure that targets would be achieved.

A year into the implementation process proved to be quite successful and have shown improvements in certain areas but still required more refinement to the other integrated areas of the process.


Phase II

The second phase dealt primarily with the demand side processes but this phase presented a much greater challenge than the first phase due to the complexity of Geneva's sales and service processes. Since Phase I was fairly disastrous, a number of major personnel changes were made. Anna Bourgeois was assigned overall responsibility of the project as she had over 3 years of R/3 experience and an extensive knowledge of EDI. Arthur Anderson replaced Whitman-Hart as they were knowledgeable in the technical and configuration aspects of implementing SAP. Finally, another consulting firm - Oliver White was brought in as they had extensive experience of dealing with process changes in manufacturing businesses. They decided that Phase II would be carried out in 3 stages: conceptual design, conference room pilot and change management.

At the conceptual design stage, key users with the most knowledge of the existing process were interviewed with help from Oliver White consultants. A core team of 20 was split into 5 groups in the conceptual design stage to examine different areas of the distribution process. The use of small teams with the most relevant expertise was used to give the best results possible. They found 13 different areas which could be improved, 4 of which were key areas and emerged repeatedly from cross-functional analysis by the 5 groups. These 4 key areas were product destruction, customer dispute resolution, pricing strategy and service level. Models were constructed to identify how they could improve these areas using policy initiatives.

Results from the conceptual design stage were used to test prototype R/3 systems for each of the 4 key improvement areas in the conference room pilot stage. The prototypes were used to test different aspects of the redesigned processes in a simulated environment. This was extremely important for preventing errors from reaching the final versions.

In the change management phase, there was a huge emphasis on staff training. Firstly they wanted to make sure that staff knew about the changes that were taking place and did this by distributing newsletters, and displaying signs to tell them that their jobs were changing. A dedicated telephone line was created allowing employees to voice any concerns they may have. There was also an intensive, full-time training period which lasted 3 weeks. This would ensure that they could deal with not only the technological changes, but also the changes in work process, culture and habits.


Phase III

The principal aim of Phase III was to integrate supply and demand and Verne Evans (who was also in charge of Phase I) was brought back in to lead Phase III. This decision was a little strange as this person was also responsible for the shortcomings of Phase I. SAP added a new advanced Purchase Optimiser (APO) module to assist with data analysis and this was exactly what Geneva needed for their sales and operation planning (SOP). In the previous manual SOP system, too much time was wasted on data re-entry and validation and one of the most important benefits of the ERP system is that it can save a lot of time, allowing staff to direct their efforts to other important tasks. The key business metric targeted for improvement in Phase III was that they wanted to fulfil a customer order by a promised time. They also wished to implement "just-in-time" production scheduling which would allow the company to continuously update its manufacturing capacity and scheduling in response to changing customer demands. They believed that top quality customer service would be a driver of success.


Conclusion

Implementing an ERP system into a business is a huge project but it is definitely evident that the benefits of having an ERP system are enormous. Geneva encountered various issues during their implementation and these should be avoided by any company hoping to use ERP. They employed the wrong personnel for the tasks required in Phase I and as a consequence, changes frequently had to be made. Another failure from Phase I was that they did not meet the time constraints they set themselves but perhaps the biggest problem was that the time frame was never set appropriately in the first place. After Phase I, there were massive improvements and in particular, they provided excellent training to ensure that staff would have no problems coping with the changes that ERP would bring.


This assignment was produced in collaboration with Rishi Chada


Bibliography

Bhattacherjee, A., (1999), SAP R/3 Implementation at Geneva Pharmaceuticals

Sandoz, (2006), Sandoz U.S. History
Retrieved: 08/12/08, from
http://www.us.sandoz.com/site/en/company/profile/history/content.shtml

Permalink to Zoho Accounting Application Form

http://creator.zoho.com/alany1987/accounting_application_form/form-perma/Job_Application/

Is The UK becoming a Surveillance Society?

Surveillance is any collection and processing of personal data, whether identifiable or not, for the purposes of influencing or managing those whose data have been gathered [1]. Until modern times the scale of surveillance was generally small and the watching unsystematic. There were cost limitations as people would have to watch over each other and this could be impractical. Today, the most important means of surveillance comes from the use of computer power rather than people watching over each other. The massive growth in computer application areas and technical enhancement makes communication and IT central to surveillance and makes the idea of a ‘Big Brother’ type society possible.

All societies that are dependent on communication and information technologies for administrative and control processes are surveillance societies [1]. Nowadays, routine and mundane surveillance, usually mounted by organisations and agencies is embedded into every aspect of life. Everyday life is subject to monitoring, checking, scrutinising and it is now difficult to find a place that is totally secure from some form of purposeful tracking, tagging, listening, watching, recording or verification device. All of this is due to the various low cost ways to conduct surveillance.

The United Kingdom in particular is viewed as a pioneer of a mass surveillance society. At the end of 2006, a surveillance studies network described the UK as ‘the most surveilled country’ among the industrialised Western states. Since October 2007 telecommunications companies have been required to keep records of phone calls and text messages for one year. In 2008 plans were being made to collect data on people’s phones, e-mail and web-browsing habits. The database would hold information such as telephone numbers dialled, websites visited and addresses to which e-mails are sent but not actually the content of e-mails or telephone conversations. All of this would all be included in the Communications Data Bill [2]. Perhaps the most worrying part is that Britain is suggested to be the worst Western democracy at protecting individual privacy. This suggestion is not too far-fetched as there have been many embarrassing cases of data loss such as in 2007, when 2 computer discs were lost which included bank details of 25 million people [3].

Although mass surveillance is widely viewed with negative opinion, there are a number of reasons to justify why it is used on this scale. The most obvious reason is security – the UK is swamped with closed circuit television (CCTV) cameras. It is reported that there are 4.2 million CCTV cameras in Britain; that is about one for every 14 people [4] and on average, people appear on CCTV about 300 times per day. The effectiveness of CCTV is yet to be fully proven but one review concludes that CCTV does have a significant desirable effect on crime, even if the overall reduction is only 4% [5]. Sometimes the convenience of using telephone or credit cards means that we rarely think twice about the fact that calls and transactions are traceable and that others may profit from obtaining this data. In fact, Mr Bowden, the chief privacy advisor, EMEA Microsoft, suggests that 10-20% of the population will not even care much about privacy [6].

Another case of where convenience is the over-riding factor in people’s acceptance of being surveilled is with Oyster travel cards. Around 5 million Londoners who use this have records of their bus, tube and train journeys kept for the previous 8 weeks. Police have also been quick to take advantage of this to track the movements of criminals [7]. Mobile phones are also being used to track the movements of people. As long as a phone is switched on, mobile phone triangulation has now made it possible to establish the location of a mobile phone up to an accuracy of a few metres. In the UK, a request by the government means that the location of everybody’s mobile phone is recorded continuously by telecommunications companies and the data is kept for at least twelve months [8].

In the UK, there is anything up to 160 store loyalty card schemes. People may think that store loyalty cards are a great idea as using them can earn you discounts. However what some people forget is that the primary purpose of these cards is to collect information on shoppers spending habits. Nectar is the biggest loyalty scheme and they collect only data on how much is spent, where and when but this information can also be matched to other databases which include demographic information and so offers can be tailored to suit individual customers.

MP’s in the UK believe that the UK is not becoming a surveillance society but they admit that function creep (information collected for one purpose is gradually allowed to be used for other purposes which people may not approve of) still poses a danger. In particular, they were concerned that the increasing use of databases to store information on children could be used for predictive profiling, with the government able to single out children deemed by computers to be likely future criminals [9]. There are numerous rationales behind why politicians do not want the UK to be seen as a surveillance society. There are dangers present in large-scale surveillance systems as power does tend to corrupt or at least skew the vision of those who wield it. An example of this is in the USA, where many Muslim Americans find it difficult when trying to reserve flights as they will be subject to more intensive scrutiny than people of other races. This clearly goes against human and civil rights as white Americans will never really have to experience such problems. This is why people generally do not trust other people who know “too much” and consequently, this is why the UK government does not want their country to be viewed as a surveillance society.

In conclusion, it is evident that the UK is in fact becoming a surveillance society. MP’s may try to deny this but a 36-nation survey pointed out that Britain is one of the bottom five countries with “endemic surveillance”, with the 2 worst countries being Malaysia and China.
We are constantly being watched every day and with the exponential growth of technology, surveillance systems are always becoming cheaper to operate while also becoming more sophisticated. Police can find out information about your conversations, your contacts and friends, where you have been and the truth is: almost anything can be found out about anyone and nowadays, it is nearly impossible to remain unseen and anonymous.

References:

[1] Lyon, D, Surveillance Society – Monitoring Everyday Life, 2001
[2] http://en.wikipedia.org/wiki/Mass_surveillance
[3] http://news.bbc.co.uk/1/hi/uk_politics/7103566.stm
[4] http://news.bbc.co.uk/1/hi/uk/6108496.stm
[5] http://www.crimereduction.homeoffice.gov.uk/cctv/cctv31.htm
[6] http://news.bbc.co.uk/1/hi/technology/6107764.stm
[7] http://news.bbc.co.uk/1/hi/england/london/4800490.stm
[8] http://mrslippery.blogspot.com/search/label/data%20retention
[9] http://www.theregister.co.uk/2008/06/08/home_affairs_report_surveillance/

Compound Case Study

Compound UK is the selling division of a multinational pharmaceuticals company mainly concerned with selling products in the UK health sector. They also undertake clinical trials of new drugs with participating doctors. In the late 1980s and 1990s, the UK health sector underwent a period of major reform resulting in a reorganisation of the NHS and hospitals became more autonomous. Compound UK would have to deal with more complex sales situations and they responded to these changing conditions in 1993 by reorganising themselves into eight regions. The main purpose of this was to give each region a considerable degree of autonomy in planning and dealing with their own locality. Knowledge sharing was difficult as all members of the commercial function with the exception of the director would work from home, while employees from other departments would work at head office in Compound Square. Senior management believed that their selling activities could be improved by sharing information and knowledge across functional and geographic boundaries. Lotus Notes was viewed as the package that could meet those requirements. In addition it was believed it would also enhance team work between staff.

The Lotus Notes system failed to be introduced in time for the restructuring in 1993, there was a 6 month delay in this process. Compound should have introduced Lotus Notes at the same time as the restructuring and most importantly, training should have been provided for all staff and not just the new employees. Lotus Notes was certainly an improvement over the previous Jaguar system it replaced. However, there were problems that needed to be addressed. The issue regarding contact recording and the resulting league table performance put an inordinate amount of pressure on the sales reps. This resulted in low morale and eventually led to inaccurate sales figures being produced for the company.

League tables were devised to indicate centrally how many contact records and strategic selling sheets had been completed by each sales representative. However the use of league tables worked against the interests of Compound as many of the reps became disillusioned and believed that the whole intention of the system was merely to increase surveillance and control of their staff. Another problem that is inherently problematic with most league tables is that they measure only the results which in this case are contact records; they do not measure the quality of any work done. Some reps abused this system by going against the ethos of only recording 'relevant' calls and recording all the doctors, managers, accountants and even nurses they met. Lotus Notes was misused by the reps to enhance their position in the league table and hence further their careers within the company. Perhaps the idea of having league tables should have been abandoned. Alternatively, if league tables were to be incorporated then it should not only be dependent on customer contact but rather on sales which follow on from customer contact. To resolve this issue an idea might have been to limit the number of contacts within the practice or hospital so that reps could concentrate on developing and building upon relationships that they have already established. Additionally, the league tables could use a number of different indicators to measure performance in order to accommodate for quality of work as well as quantity.

The sharing of information and motivation of staff was effectively demonstrated in the approach that James Black, a Senior Manager, adopted to the programme. He developed a rapport with the reps, outlined what was required and encouraged a two way approach so that reps would feel confident enough to contact him for assistance whenever they needed to, even if contracts were unsuccessful. This approach should have been further developed and encouraged so that the company would ultimately benefit from increased sales contracts.

The rewards scheme could also have been managed differently. Compound wanted to encourage and motivate sales staff to collaborate within and between regional boundaries. When Lotus Notes was being introduced into the system the reward structure should also have been updated and improved. There were inconsistencies regarding rewards between different area managers and nothing introduced to encourage proper use of Notes. Some managers would award 30% of the reps salaries at their own discretion. However, others would allocate rewards depending upon whether reps worked overtime or surpassed targets. It could also be rewarded for more qualitative work such as training less experienced staff. A rewards scheme is a good idea as it is fairly unrealistic to rely on people's altruism to always work to their capacity but there should be a clear measure for the rewards scheme which should be using Notes in the proper way, i.e. collaborating and sharing knowledge. The only drawback of having a clear target is that staff will focus solely on achieving this in order to be rewarded. This is acceptable providing this measure is not detrimental to the interests of Compound.

In conclusion, the introduction of Lotus Notes was not a failure by any means. It could have proved itself to be more successful if management had provided better training for all staff and not made it a culture of pitting employees against each other by the use of league tables. In addition, the reward system adopted did not lend itself to encourage employees to be successful in gaining new contracts. They could have adopted a better method of measuring performance and also an improved rewards scheme, than the one they have currently employed. For example, rewards could be given to the entire team for achieving targets, which would result in greater motivation amongst the workforce. If Compound were to implement these new measures and consider the existing flaws in their system then the staff would feel more motivated and this would encourage growth in the company’s sales targets.

This assignment was produced in collaboration with Rishi Chada

Bibliography

Walsham, G., & Hayes, N., (2000), Sharing Knowledge through Lotus Notes in a Pharmaceuticals Company, Judge Institute of Management, University of Cambridge

MySQL - Advantages and Disadvantages of Open-Source Software in Business

Open-source generally refers to any program whose source code is made available for use or modification as users or other developers see fit. Usually, open-source software is developed as a public collaboration and made freely available to everybody (searchenterpriselinux.techtarget.com). More detailed information on the rules of distribution concerning open-source software is available at www.opensource.org/docs/definition.php. MySQL is a database software built using the open-source concept which has actually become the world's most popular open source database (www.msql.com). It has also made a real impact in the overall database market, competing with closed-source software produced by huge companies such as Microsoft, IBM and Oracle. Businesses can adopt a strategy of using only open-source software, only closed-source software or a combination of both. This is a major business decision which has to be assessed by weighing up the numerous advantages and disadvantages of using open-source software in business.

The most obvious advantage of using open-source software is cost. Many start-up companies see cost as a major factor (www.tamingthebeast.net) and want to use a fully open-source solution to run dynamic web sites or servers. ‘LAMP’ is a software stack where the L refers to Linux (operating system), the A stands for Apache (web server), M is for MySQL (database server) and the P refers to PHP (Perl/Python programming languages). This presents an extremely low-cost solution for companies which is often too good to refuse, particularly for smaller companies. Examples of companies which have benefitted from this include Google, Yahoo!, and Travelocity who have now become very successful and profitable (Case Study). Using open-source software in a business also allows employees to work from home as the software is freely available. This may be important to a company and it was to MySQL, who in June 2006 had 320 employees of which 70% worked from home (Case Study).

Another advantage is that the software can be developed by anybody. Many internet-enabled start-up companies value the ability to modify parts of the software to differentiate themselves in their own markets. As companies are free to modify the code to suit their own needs and it can also be developed collaboratively by the public, this allows for rapid implementation of new features and security fixes. Using open-source software also has the benefit of not being tied to a single software vendor. Being reliant on one company means that you are dependent on them to solve your problems and maintain the software which can be expensive. With open-source software, the communities of programmers can act as an invaluable resource for providing support and suggesting enhancements (www.tamingthebeast.net). However there are no guarantees with the support that the public can give and it may not always be a reliable resource. MySQL realised that not everybody would need comprehensive technical support but some would and this is the reason why they introduced the ‘MySQL Network’ in early 2005. This is a subscription service that provides updates, alerts, notifications, knowledge base and production level support (Case Study). Out of all the advantages, cost-saving is probably seen as the most obvious advantage, but a survey conducted by Computer Economics shows that this is not the case and in fact less dependence on vendors was the top advantage with 44% of the votes (www.computereconomics.com).

Despite these advantages, there are also a number of drawbacks with open-source software. In fact, in the survey conducted by Computer Economics 14% of voters actually believe there is no real advantage of open-source. One of the reasons why businesses may prefer closed-source software is that they are usually more feature-full and more powerful. In comparison to the huge corporations such as Microsoft and Oracle who can bring in revenues in the region of $15 billion, MySQL are tiny as they only generate revenues of around $30-40 million. With less financial support, it may be difficult to create a software package which can do everything that the commercial software can do. In some cases, a weakness of open-source software is that it sometimes suffers from not having the reputations or brand names that closed-source solutions have. Most of the time, open-source programs are only advertised on the internet as they have no substantial finance to undertake marketing campaigns. However this cannot be said of MySQL as despite their small size and small marketing budget, they are extremely well-known – a household name (Case Study).

Another issue is the level of support that open-source software gives. Although MySQL got round this problem by setting up ‘MySQL Network’, support is generally quite poor for their programs. Nobody is responsible for dealing with issues as all the software is free and therefore, there is no guarantee that problems can be fixed. Finding solutions is also sometimes tedious and requires reading through lengthy online discussions in order to find what you need.

As open-source companies are usually very small, they are easy targets for their larger closed-source competitors to ‘attack’. For example, In October 2005, Oracle announced the acquisition of Innobase – a company which exclusively provided a key input component called the transactional engine for MySQL. Major enterprise customers like Travelocity needed this component and in fact 30-40% of MySQL’s users required this component. In February 2006, Oracle pulled off another similar stunt when buying over the embedded database maker Sleepycat, who were expected to make a replacement component for MySQL. It was even reported that Oracle has tried to acquire MySQL but they declined the offer (Case Study). If a business uses open-source software, there is always the fear of open-source companies being bought over which would result in no further updates and also no support. The consequences could be fairly disastrous for a business relying on that particular software to make their business function.

In conclusion, for small companies with a low budget, the best and perhaps only solution is to use open-source solutions but for companies with more capital, the better solution is probably to use a commercial solution as they often provide better support. I believe that open-source is the significantly cheaper but higher risk option while closed-source is the expensive but reliable solution. It is vital that businesses asses all of their needs before making the choice on using open or closed-source software. For example, they should weigh up whether they value reliability and support over cost-savings as this could ultimately be a deciding factor. Every business is different; it is not always the case that one option is better than the other.

References:

MySQL Open Source Database in 2006 (B), Case Study, Stanford Graduate School of Business

http://searchenterpriselinux.techtarget.com/sDefinition/0,,sid39_gci212709,00.html

http://www.opensource.org/docs/definition.php

http://www.mysql.com/why-mysql/

http://www.tamingthebeast.net/articles5/open-source-software.htm

http://www.computereconomics.com/article.cfm?id=1043

The ICAEW Website – How Could it be Improved?

For most companies, having a web site is a necessity but it’s not enough to merely have a web site – it has to be good. A website can be thought of as your most persistent communication vehicle with customers and prospects. Perhaps the best thing about a web site is that it can be accessible by a huge amount of people from almost any location in the world and it can be updated whenever you want, unlike with an incorrect listing in the Yellow Pages for example (www.allbusiness.com). On first glance at the ICAEW’s (Institute of Chartered Accountants in England and Wales) homepage, it is clear to see that the site is in fact very well-designed. It is difficult to find any major flaws but nevertheless, there are some suggestions which can be made which may improve the site to some degree.

A survey indicated that major factors for a successful web page include page loading speed, business content, navigation efficiency, security and marketing/customer focus (Gehrke, 1999). The ICAEW homepage loads very quickly with respect to the internet connection speeds that are widely available today and does not contain too many large graphics. However for users with slower internet connection speeds (e.g. 56k dial-up), perhaps it could be useful to offer a text-only (or low graphics) version of the website just as BBC do with their website. This would accommodate almost everybody who has internet access.

Another minor adjustment which can be made to the homepage is to reposition the central message slightly. “The centre of the homepage is the lead story. It is easier to get the eye to focus on one lead story than multiple stories of equal importance, where the eye tends to skim. The lead story acts to anchor the reader and help ‘lead’ them deeper into the website” (http://www.gerrymcgovern.com). The “Inspiring Business Confidence” box could be positioned more centrally to catch the focus of the reader and the text inside it could be made larger or put in bold to make it stand out more. This will ensure that ICAEW gets their message across to their intended audience.

Navigation efficiency is one area that the site can definitely be improved on in a number of ways. First of all, instead of directing you to another page to log in, it is much more convenient to be able to log in to your own account regardless of what page you are viewing on the site. This could be achieved by having a login box at the top of the page, similar to the style used on the ICAS (Institute of Chartered Accountants in Scotland) website. The tabs near the top of the homepage allows the user to navigate to specific sections of the website such as ‘qualifications’, ‘members’, ‘students’, etc, but in order to find the subsections for each category you have to access the relevant page first. For example to find the subsections for qualifications you must first access the qualifications page. For some people who are familiar with the site and know what they are looking for, this can be a slightly drawn-out process. One way to speed up navigation is to show all of the subsections for each category in a menu which appears when you hover over the link or click the link with your mouse.

Colour schemes of websites are also important. “Many times good layouts get spoiled because of the wrong selection of colour schemes. In real sense, colour scheme is a good weapon to enhance a layout. If you use colours carefully you can make wonders out of it” (http://www.layoutgalaxy.com). As ICAEW use red as their main colour, it is appropriate that they use red as the colour of all their links and headings but perhaps it is better to make use of various colours in order to improve navigation. On the ICAS website the tabs which direct you to different sections of the website are also colour-coded (blue for ‘home’, red for ‘about ICAS’, green for ‘members’ and yellow for ‘CA Students’). Once a section is selected the subsections appear on the left side of the page and these tabs for the subsections are also colour-coded in the relevant colour.

My personal belief is that functionality and usefulness are far more important to the success of your website than how nice and elegant it looks. In the case of ICAEW’s site, I believe that they use only one colour and small fonts to give the site a more ‘professional’ and stylish look. However using various colours would make it easier to navigate through the site and using a larger font size would make the text easier to read and more practical.

“Web 2.0 describes the changing trends in the use of World Wide Web technology and web design that aim to enhance creativity, communications, secure information sharing, collaboration and functionality of the web” (www.wikipedia.com). The ICAEW website does not contain many of the features of a Web 2.0 website. For example, a feature which is not available at the moment on the ICAEW website is RSS (Really simple syndication) feeds. This is a useful feature of modern-day websites. The feature itself is extremely useful for keeping users up-to-date with the latest news regarding the accountancy body. This could include news of upcoming events and changes in accounting standards. Having an RSS feed available would allow users to log on to their own RSS reader (e.g. www.bloglines.com) and then download all the news which they have not read yet. This is much more convenient than always checking out the news section on the ICAEW website.

Overall, the ICAEW website is a well-designed site and there are not many major flaws with it. The site has the layout and design of what a professional site should look like but the trade-off here is that the site suffers from a few practicality problems. In my opinion the content on a website is of vital importance; users do not spend time looking at websites but in fact, they spend their time reading the content that is on them.

References:

http://www.icaew.com
http://www.icas.org.uk
Gehrke, 1999, Determinants of Successful Web Design: Relative Importance and Recommendations for Effectiveness
http://www.allbusiness.com/marketing-advertising/product-positioning/3878710-1.html
http://www.gerrymcgovern.com/nt/2004/nt_2004_02_02_ms.htm
http://www.layoutgalaxy.com/html/htmnewletter7-page1.htm
http://en.wikipedia.org/wiki/Web_2.0

Auctionwire

In early 2004, the online auctions industry was young but was enjoying a period of enormous growth. Josh Gold and David Romeo, both in their mid late 20s and coming from entrepreneurial families spotted a gap in the market – no online auction business focused on dealing with corporate and charity customers. They decided to take advantage of this opportunity and formed Auctionwire – a business which aimed to be a new sales channel, allowing corporations in Canada to sell excess goods and capital goods through online auctions and also providing a fundraising tool for charities as they would be able to sell donated items online. Their main source of revenue would come from charging clients a commission but this would only be from successful auctions. In exchange for this fee, they would manage the complete auction process and absorb all listing fees. Auctionwire’s plan was to maximise the gains of the client through using eBay’s massive customer base, their own auction management process and their own experience in making successful auctions.

Although they are operating in a potentially lucrative market, there are a number of flaws to their business model. Gold and Romeo may both have some business and online background but they both have little experience in the online auction industry. Only charging commission on successful sales is risky, particularly for charities selling donated items. If goods do not sell then they have to pay the listing fee and this cost will not be recovered. Timing is also crucial for setting up a business and May 2004 is possibly too early as the market is so young and a decent software package for online auctions is not currently available.

Central to Auctionwire’s success will be their decision concerning their choice of software. Firstly, they required the software to be compatible with eBay, but other crucial factors included reliability and ease of use. They also planned to have a multiple client module, Canadian market functionality and preferably have good customer support. They also wanted to limit spending to $15,000. They have 4 choices of software which they can buy in: SuperAuction, Canauction, Clear-Bid, Blackthorne Pro. A further option is to make the software themselves from scratch. Each of these options fitted their needs differently and all of them are far from perfect.

In my opinion the first option that should be ruled out is the option of designing their own software. Although this option could possibly allow for a perfectly tailored system, it has too many drawbacks. They require the software as soon as possible if they are to meet the projected launch date and this option would require a great deal of time from both the developers and also Gold and Romeo themselves. The software would also be completely untested presenting too great a risk for them.

Out of the 4 buy-in choices, I feel that 2 of them should not be given much consideration. Clear-Bid is perhaps the worst option. At a cost of $5,000 to set up, $1,000 per month in ongoing costs and $10,000 for the multiple client module, this would exceed the budget that was set. At such a great cost, it is also not a perfect fit to their needs as it lacks a Canadian shipping calculator, has downtime issues and a customer service which does not offer immediate assistance. The cheapest option would be Blackthorne Pro. It would cost $5000 to set up with running costs of only $24 per month. However cost cannot be the deciding factor as this software is still in a beta testing phase making it far too high risk. It is also designed exclusively for the US and it could take too long for their planned expansion to Canada to actually happen.

I believe that the other 2 options, SuperAuction and Canauction are the best of a bad bunch. SuperAuction, on paper is a very strong package. It boasts both an online and offline solution meaning that downtime would not be an issue provided that the offline solution is continuously updated by the users. They have targeted the US customer but with some additional investment from Gold and Romeo, I think they could adapt their service for Canada also. It would cost $5,000 to set up and $300 per month in ongoing costs. However the reason why SuperAuction cannot be selected is because of their past record. In January 2004, eBay halted access to its Checkout Redirect feature through the SuperAuction platform. They have repeatedly failed to live up to the expectations that they agreed in the Service Level Agreement and many sellers are upset with their services and eBay have also stated that the outages have been a major problem. Launching Auctionwire with this kind of bad publicity would be detrimental to their success.

This leaves only Canauction – a brand new online auction software based in Toronto, which means the Canadian shipping calculator will definitely be there. It is run by a very small team of software developers and also offers both an online and offline solution. They have not yet secured many clients but at least they start from a clean-slate. They have a software solution that is believed to be well-suited to managing multiple clients but having said all this there are also considerable risks associated with this package. There are still bugs that need fixing, and many features are not fully working yet. Customer service is weak and inflexible but the software cost is reasonable at $5,000 plus $250 per month. Minor software modifications may be pricy but Auctionwire’s budget is probably large enough to cope with any necessary modifications. I believe that Auctionwire should select Canauction as their software package but they should definitely invest some extra finance into the software to ensure that nearly all of the bugs are ironed out and that all of the features are working properly in time for their May launch date.

TAURUS and CREST

TAURUS and CREST were two projects aimed at tackling the same issue but with very different philosophies to their approaches. TAURUS was the first project to take on the huge task of creating a computerised system for the London Stock Exchange (LSE) which would ensure that share certificates and cash changed hands between the interested parties after the trading transaction. The dematerialisation of stock certificates would also be embedded in this process. However Taurus was ultimately a failure and was eventually scrapped in March 1993, costing the LSE a massive £75 million. Following this failure, the LSE decided to undertake another project (CREST) as they still required a computerised system. There are a number of vital differences between the two projects and countless mistakes were made in TAURUS. CREST aimed to learn from these mistakes and that is exactly the reason why CREST was successful.

Taurus was a colossal project with hundreds of contract staff drafted in to deal with the design and build. One of the main reasons why Taurus failed was because they wanted to make their system “all things to all men”; they wanted to make their system compulsory and so they also faced pressure from all the stakeholders. Some of these stakeholders were also opponents of the system who would have an obvious conflict of interest. For example, the Treasury stood to lose £800 million per year of revenue from stamp duty if the system was successful. The government involvement with the project resulted in a 150 page legal document which the system would have to adhere to. They took on 21 “Corporate Actions” or “Events” to try and satisfy all of the stakeholders but the downside of this was that the business requirement became too complex and the designers simply could not cope. In contrast CREST usage was optional but anybody could potentially be a user. This was a key issue as this would allow CREST to exclude any opponents to the project. They published a minimalist specification comprising just 2 business processes: stock movement and cash movement (or both). The designers chose these 2 business functions as this would be enough to deal with 85-90% of all transactions. CREST adopted the policy of only including a business function in their design if over 80% of customer representitives in an area demanded it.

TAURUS made another wrong choice when selecting their software for the project. They chose a package from Vista Concepts of New York but this required a great deal of modification in order to cater for all the business functions they required. The project team wasted too much time travelling across the Atlantic, and there were also the obvious risks of using unproven software. CREST decided to write a completely new system but took on the expertise of an IT Manager from the Bank of England who already had experience of building a similar system to what they envisaged. The testing of CREST’s systems was conducted independently, ensuring that the maximum amount of faults could be identified early on as there would be no bias during the testing.

CREST also took a different approach to TAURUS when it came to how the project teams were structured. Whilst TAURUS used hundreds of contract staff, CREST took most of their staff from Admiral Software. There was a 20 strong team and a programming team. A high-level design team of just 4 or 5 managed the whole project. There was plainly too many staff involved in TAURUS and this made project co-ordination impossible. CREST’s approach was much better thought out, far more structured and all teams stuck to their own field of expertise.

On 19 July 1996, CREST’s system went live right on schedule and the team also managed to get the system fully operational earlier than expected. In stark contrast, TAURUS suffered numerous delays and failed to meet their budgets and time constraints. TAURUS was always destined to fail; not because it was too difficult to complete but because they had too many opponents who sought to sabotage the project. CREST learned from past mistakes and very carefully managed to exclude these groups from being involved in their project.