M&N is a successful firm dealing in refurbished cars and 2 wheelers. Over the last 8-10 years it was expanding rapidly across India with over 200 dealerships. It used Inorganic growth techniques as well by acquiring small players and regional players. The problem faced was- Whenever a new merger or acquisition happened in the company, the new dealership data is never integrated into the main IS solution of the company. Acquired dealers data continued to be managed in a stand-alone fashion. Thus, this hybrid data management ( standalone +integrated) started creating problems for the management of the organization.
In order to get an effective solution, the management invited proposals from solution providers. 2 solutions were received. Lets have a look at both:
Proposal I
· This tries to make optimal use of existing IT infrastructure by upgrading it whenever required.Details as follows:-
· Dealers will collect data from source and from all dimensions (Financial, Sales, Inventory etc) , verify it and load it on regional database
· Regional centers continue to consolidate data on their networks and generate daily reports
· Use Hub & Spoke model to interconnect regional centers with headquarter using Internet based connectivity
· Virtual database would be created at the Headquarter integrating all regional centers
· Proper portioning of database is important to offer maximum authorization to regional heads and sharing relevant and required data only across locations. This would help in reducing telecommunications cost and improve data reliability
· Implement Data warehouse for further analysis
Proposal II
This is more “State of the art” solution trying to capitalize on the existing IT/IS infrastructure. It recommends:
· Inter connect all locations using intranet application
· Data is captured at each location and consolidated at each regional database and into a data warehouse at headquarters. This warehouse can be accessed by headquarters and all regional sites
· All client and application processors would be connected with LAN within each site and a WAN among sites, allowing all users to communicate seamlessly with all local and regional users.
· Head office would have neural network technology for high level real time processing
· Powerful web based application is also proposed to serve new generation customers
The management needs to select the better of the 2 options. What would you recommend???
I would recommend the second proposal since the hub and spoke model seems to have quite a few drawbacks.
ReplyDeleteChanges at the hub, or even in a single route, could have unexpected consequences throughout the network and it may be difficult or impossible to handle occasional periods of high demand between two spokes.
Also manual intervention in the 2nd proposal seems minimal which adds to the robustness of any setup. There is also more scope for fast data transfer between regions in it which is good to maintain a strong database.
Hi!I think, this is a valid argument. But you probably have ignored the cost part of the proposal.If you see, in Proposal I, we would be using the existing IT infrstructure and building on it. While there is no denying the drawbacks of Hub& Spoke model,I believe it would score high on "cost benefit" scale as it is easy to develop and mantain, gives real time access to business information and in short raises efficiency. Considering the business we are talking about, real-time information is really crucial and thats what Hub & Spoke model can provide. Please let me know if you agree/disagree.
ReplyDeleteThanks for your response.