June 4, 2012
    Managing risk is a constant balancing act for successful businesses. Choices need to be made because business decisions are often constrained by cash flow, credit availability and amount of risk. IT can be just a small part of these decisions. IT needs to be able to provide risk-related information to the business so more informed decisions can be made. In many cases this work will involve the use of predictive modeling tools to perform sensitivity analyses on IT systems.

    Why is this work important? IT processes the transactions, records them in general ledger or similar repository for financial/audit purposes, and then archives them at later date in compliance with regulations and laws. For example, IT can process a gazillion sales orders but if the supply chain can't deliver the parts or the shipping department can't ship the product in a timely fashion, IT's work could actually be hurting the business by creating large numbers of unsatisfied customers. When trying to address the problems, sufficient cash or credit may not be available if computer system upgrades are needed at the same time the warehouse or supply chain needs to expand. Business executives will have to balance the costs of increasing business volumes versus the inherent risks of not being able to deliver their quality products or services. The executives may choose to expand the warehouse and have lesser performance on computer systems if that action provides the least risk and best opportunities for the future.

    Capacity Management and specifically Predictive Modeling helps your business executives make those tough decisions. Using modeling tools and techniques, capacity managers can predict individual service performance at different transaction volumes. Costs can be applied to those different points in time and supplied to your executives. This work is no different than what the warehouse manager, supply chain director or loss manager is doing in other areas of your business. By providing this information, you become a partner, not just the "IT guy or gal".

    Until the next time

    Ron

    Tags:
    Category: best-practices