Volvo Group Of Companies and the challenges it faces Essay

1 Introduction

AB Volvo & lt ; www.volvo.com & gt ; is the female parent company of the Volvo Group of companies with its caput office in Gothenburg, Sweden. The company was formed in 1924, with the first Volvo truck turn overing off the production line in Sweden in 1928. The Volvo Group is one of the universes taking providers of conveyance solutions for commercial usage, besides supplying complete solutions for finance and service. This mission statement for the company is ‘By making value for our clients we create value for our stockholders. We use our expertness to make transport-related difficult and soft merchandises of the superior quality, safety and environmental attention for demanding clients in selected sections. We work with energy, passion and regard for the person ‘ ( AB Volvo – Group Presentation 2011 ) .

Volvo as a group is enormously proud of the nucleus corporate values of, Safety, Quality and Environment and has retained and lived by these values from the start of the administration. These three values are apparent in every facet of the concern. The Volvo Group has now grown to go the 2nd largest maker globally of heavy trucks, and every bit illustrated in Figure 1.1 incorporates many different trade names.

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As illustrated in Figure 1.2, the Volvo Group is separated into concern countries and concern units. The concern countries are responsible for bring forthing grosss for the company and the concern units are the recognized support units to back up all concern countries. Volvo Information Technology ( Volvo IT ) is the recognized support concern unit for information engineering scheme and systems support. Volvo IT does non restrict their concern to the Volvo Group, outsourcing their expertness to such administrations as the Ford motor company and the Stockholm Government. This ensures the Volvo IT is continually benchmarking the Volvo Group to other concerns in the unfastened market to remain in the market head.

Volvo Group works with external involvement groups to go on to develop and drive advancement in the transit industry, particularly on undertakings that align with the corporate values of quality, safety and environmental attention. An illustration undertaking necessitating the cardinal engagement of Volvo IT is the Alternate Fuels undertaking. This undertaking is analyzing a feasible replacing of fossil fuels for commercial applications ( Alternative Fuels 2011 ) . In the Alternative Fuels undertaking, the Volvo Group is working with clients, providers and authoritiess to look into feasible dodos free fuels, with all concern countries and units working towards doing this possible. Volvo IT is involved to present package alterations for engine direction systems to guarantee clean combustion of these fuels. The solution is to use a centralized and shared IT substructure, platform and package application functioning content to authorized users over the web.

In this study we discuss the IT substructure issues and challenges for the Volvo Group and the concern benefits and costs of a modern IT theoretical account called Cloud Computing. Recommendations are provided as to the acceptance of Cloud Computing by the Volvo Group followed by reasoning statements.

2 IT Infrastructure: issues and challenges

2.1 IT substructure challenges

Two of the major constituents { Laudon, 2010 # 159 } of an IT substructure that must be coordinated by a house include computing machine hardware platforms and endeavor package applications ( Laudon & A ; Laudon 2010, p. 203 ) . These two indispensable constituents of an administration ‘s IT substructure ecosystem ( Laudon & A ; Laudon 2010, p. 203 ) are concentrated on in this study as they exhibit the most hazard to the Volvo Group ‘s concern, but they besides provide the most chances for an information engineering scheme to add concern value to the Volvo Group.

An information system is defined by Laudon & A ; Laudon ( 2010, p. 46 ) as ‘a set of interconnected constituents that collect ( or recover ) , procedure, shop, and distribute information to back up determination devising and control in an administration ‘ . In modern administrations, most information systems are implemented via IT substructure that includes computing machine hardware platforms and endeavor package applications. These systems are ‘typically the anchor of an administration ‘s information flow and the chief vehicle for consolidating concern information ‘ ( Bisbal et al. 1999, p. 103 ) and their failure can hold a important impact on the concern.

2.2 Legacy information systems

Information systems that have been in being for a long clip and go on to be immune to alteration and development due to a high replacing or redesign cost are called bequest information systems ( Brodie & A ; Stonebraker 1995, p. 103 ; Laudon & A ; Laudon 2010, p. 634 ) . The development or visual aspect of bequest information systems in an administration can besides typically occur due to amalgamations and acquisitions ( Macknight 2005, p. 14 ) .

As described by Bisbal ( 1999, p. 103 ) , legacy information systems can do an administration a figure of jobs:

  • Runing on old or disused hardware.
  • Expensive package care.
  • Inflexibility in widening the systems.
  • Difficult to incorporate with other systems.
  • Long failure or catastrophe recovery times.

Old and disused hardware can be power hungry. Replacement can be expensive or sometimes impossible due to miss of accomplishments or unavailable parts. Some administrations need to keep spares keeping and accomplishments within their administration to extenuate such hazards. Similarly accomplishments in package care and fault-finding may be difficult to out-source or outsourced service degrees may non aline with the demands of the concern. The system may necessitate to be flexible and able to incorporate with other systems in order to react to altering concern demands ( Bennett et al. 1999, p. 153 )

2.3 The development of Volvo ‘s planetary information systems scheme

Volvo Group has seen an addition in their bequest information systems chiefly due to the impact of company acquisitions over the old ages. Many countries in the IT substructure ecosystem ( Laudon & A ; Laudon 2010, p. 203 ) required peculiar attending during acquisitions to guarantee conformity through coordination of the many constituents of the ecosystem. Hardware platforms differed as did cyberspace platforms. Data direction and storage needed to be centralised. The demand to alter and centralize was apparent.

Throughout these acquisitions, the focal point of the information direction scheme of the Volvo Group has been to guarantee cardinal endeavor systems are incorporated into the acquired administrations. The ERP system based on SAP is an illustration one of the cardinal endeavor systems common throughout the full Volvo Group. In contrast, supply concatenation systems have remained as point solutions unique to each concern country and physically deployed on a geographically detached footing.

As specified by ( Ives & A ; Jarvenpaa 1991, p. 34 ) , a ‘global information engineering application contributes to accomplishing a house ‘s planetary concern scheme by utilizing information engineering platforms to hive away, transmit and manipulate informations across cultural environments ‘ . With AB Volvo being a true planetary corporation sing on-going growing through acquisition, challenges have presented themselves in most states with bequest systems across the supply concatenation. Cultural diverseness such as different linguistic communications utilised from regional country to regional country continue to deter the ascent of bequest supply concatenation systems. Besides, the attendant point solutions all require local IT support.

Obviously, holding multiple point solutions poses many challenges for the Volvo Group, but it besides causes misalignment with their core corporate values. For illustration, the Volvo Group core value of environmental attention leads to ends to cut down energy use in attempts to cut down the company ‘s C footmark. With the multiple point solutions, and many of these being bequest systems, there would be a leaning for inordinate energy use due to the hardware platforms non following with environmental demands and other inefficiencies. There are better solutions available. Hospitals in the USA have started to utilize energy efficient, environmentally friendly hardware, every bit good as utilizing cloud like engineering for patient files entree and plan entree ( ‘Does Green Really Pay Off? Ideas from Hospitals That Say ‘Yes! ”AA 2009 ) .

3 Cloud Computing and its concern benefits and costs

3.1 Cloud computer science explained

Cloud computer science is referred to as a ‘model of calculating ‘ by Laudon & A ; Laudon ( 2010, p. 196 ) ‘where houses and persons obtain calculating power and package applications over the Internet, instead than buying their ain hardware and package ‘ . Typically ‘cloud calculating substructure resides in a big information Centre and is managed by a 3rd party ‘ ( Jaeger et al. 2008, p. 270 ) .

Gilbert ( 2010, p. 1 ) provinces that ‘Cloud calculating has been recognised as one of the most of import developments in information engineering in the past 60 old ages ‘ . Globally, administrations are implementing cloud calculating solutions in order to cut down costs ; be more antiphonal to market demands ; to portion information more readily and quickly ; ( Gilbert 2010, p. 1 ) ; to supply better client service, and much more. Cloud computer science has been enabled through technological drivers such as cut downing communicating costs, the cyberspace and its turning velocity, smaller footmarks required for more processing power and informations storage, progresss in internet security, virtualisation and much more.

Figure 3.1 describes farther features of the cloud environment.

3.2 Cloud calculating service theoretical accounts

Cloud calculating services can be provided in three theoretical accounts ( Gilbert 2010, pp. 18-9 ) Infrastructure as a service ( IaaS ) , Platform as a service ( PaaS ) , and Software as a service ( SaaS ) . These theoretical accounts are described in more item in Figure 3.1.

For administrations such as Volvo, the cloud calculating service theoretical accounts tend towards the usage of IaaS and SaaS. The staff of Network World ( 2007, p. 28 ) quote eBay ‘s Paul Strong as saying ‘companies must make up one’s mind what is core to their concern and what can be commoditised as a public-service corporation served up by a SaaS ( package as a service ) supplier ‘ .

Cloud service suppliers are able to consolidate computing resources enabling cost decreases derived from centralized direction and economic systems of graduated table, go throughing on these cost nest eggs to the user of the cloud service who can use the service without the initial capital spending and care of a dedicated substructure ( Jaeger et al. 2008, p. 270 ) .

3.3 Cloud calculating bringing theoretical accounts

Cloud bringing theoretical accounts can be public, private, intercrossed or community ( Gilbert 2010, p. 19 ) . These are described in more item in Figure 3.1.

For administrations, cloud calculating ‘presents many major jobs of information policy, including issues of privateness, security, dependability, entree and ordinance ‘ ( Jaeger et al. 2008, pp. 269-70 ) with statute law dawdling commercial involvement in this calculating theoretical account. In measuring their possible use of a cloud calculating service, administrations would necessitate to see a scope of issues. Two typical issues revolve about trust in the unity of the service supplier. Administrations would necessitate to swear in the ability of a cloud service supplier to guarantee the security of their valuable private information. There must besides be trust in the concern continuity of the service supplier, along with the ability of the service supplier to keep their quoted service degrees guaranting the appropriate entree and dependability of the service.

Subsequently administrations are more likely to take up a private cloud bringing theoretical account for endeavor package applications and computing machine hardware platforms. For larger planetary administrations with multiple concern units, such as Volvo, a intercrossed theoretical account of a private cloud and community cloud bringing theoretical account would be more desirable. Such a theoretical account is illustrated in Figure 3.2

3.4 Cloud calculating concern benefits to Volvo

The Volvo Group can profit greatly from the usage of cloud calculating. With the group holding its ain concern unit that handles and manages IT demands, Volvo Group has an chance to cut down costs from substructure and hardware duplicates, have competitory advantage via velocity to market of new services for clients and cut downing the costs of good sold into markets via supply ironss. Other benefits to the group include much lower cost of entry and capital outgo, low and crystalline cost of ownership, and revenue enhancement advantages ( O’Sullivan 2009, p. 21 ) .

The supply concatenation systems within the Volvo Group are characterised as bequest point solutions with regionally located and managed informations Centres lodging multiple package applications and hardware platforms, each supplying the same concern map. These legacy supply concatenation information systems would look to be premier campaigners for replacing by a cloud calculating solution. Indeed, supply concatenation systems are one of the types of systems that are rapidly traveling from their traditional platforms to the cloud calculating theoretical account ( O’Sullivan 2009, p. 20 ) .

4 Recommendation of cloud calculating adoption/adaptation

4.1 Volvo ‘s five twelvemonth scheme

The five twelvemonth scheme from the Volvo Group is to go on to cut down their environmental impact, produce quality merchandises in all countries of their concern and go on to make value to clients and stockholders. A cardinal facet of the Volvo Group ‘s five twelvemonth scheme is to go on to cut down the C end product in all countries of the concern ( Volvo Truck Corporation Sweden 2011 ) .

Laudon & A ; Laudon ( 2010, p. 223 ) provide six factors that should be used to reply the inquiry “How much should our house spend on IT substructure? ” . They are:

1. Market demand for Volvo ‘s services – These are of all time increasing with more services being provided to Volvo Truck Customers through the complete life of the vehicle.

2. Volvo Business Strategy – The group will go on to develop services and vehicles that cut down CO2 footmark and lead to better ways of commercial transit.

3. Volvo information engineering scheme, substructure and cost – A cloud calculating theoretical account should be considered for the replacing of supply concatenation information systems and considered for farther system replacings and debuts.

4. Information Technology appraisal – The acceptance of a cloud calculating theoretical account would non be considered to be dawdling behind the engineering curve, nor would adoption at this phase be considered early. A reappraisal of the hazards associated with policy associated with the execution of a cloud calculating theoretical account should be undertaken before following the theoretical account.

5. Rival houses services – Many other European rivals are experimenting with cloud computer science.

6. Rival houses IT Infrastructure investings – Mercedes Benz are besides puting in future services for clients, demoing a tendency of high IT substructure investing for the planetary market ( Daimler Trucks Germany 2011 ) .

7. Investing can be sought into cloud calculating on a concern instance footing, bring forthing grosss for Volvo IT, and cut downing costs for Volvo concern countries on a user wage system.

Investing in IT substructure will give a competitory advantage to the Volvo Group. Investing can be sought into cloud calculating on a concern instance footing, bring forthing grosss for Volvo IT, and cut downing costs for Volvo concern countries on a user wage system.

4.2 Plan to consolidate of bequest supply concatenation information systems

For the replacing of bequest information systems, Volvo Group Australia has the option to upgrade the current local bequest systems and waiters. This would ensue in high upfront and on-going costs. Another option is to travel to centralized systems hosted by Volvo IT with all storage, care and upgrading performed centrally for well less cost. Supply concatenation system workflows typically extend beyond the internal administration, typically to traders ( retail merchants ) . A cloud calculating theoretical account can link full webs of providers and service suppliers supplying efficiency and cost nest eggs ( Ford 2010, pp. 57-8 ) .

It is recommended that the Volvo IT section adopt a cloud calculating theoretical account for the replacing of bequest supply concatenation systems. This theoretical account should be based on a planetary policy taking into history the issues environing cloud computer science and its characteristic slowdown behind appropriate statute law and legal precedency. It is expected that the most appropriate theoretical account will be a SaaS service theoretical account delivered via a loanblend of a Private and Community theoretical account with the cloud service supplier being Volvo IT. The cloud community members in this theoretical account would be the Volvo Group ‘s Business Areas.

The recommendation would be to place all bequest supply concatenation information systems across the Volvo Group as campaigners for replacing by a SaaS solution under the intercrossed theoretical account. A concern instance alining with the Volvo Group ‘s corporate values should be completed for the replacing of each system or groups of systems.

A pilot execution of a cloud calculating solution should be utilised as a cogent evidence of construct before a larger roll-out. The recommended pilot execution is the TruckShop SaaS.

4.3 TruckShop SaaS Pilot

Volvo Group Australia has the demand to upgrade an online catalogue buying supply concatenation information system called TruckShop that allows traders ( retail merchants ) to buy truck parts via providers of the Volvo Group.

The TruckShop SaaS theoretical account would stand for the features of Cloud computer science, viz. on demand service, internet handiness, pooled resources, elastic capacity and use based charge ( Goodburn & A ; Hill 2010 ) . The service developed for the TruckShop undertaking will be able to be sold to other concern countries in AB Volvo to supply similar solutions.

TruckShop is presently running on a bequest system platform with local waiters in Sydney. Maintenance and upgrade costs are on the addition, with restrictions besides being apparent on public presentation and capableness to run into current user demands. Energy ingestion costs were noted as increasing due to more waiters being required to hive away informations. Whilst the costs of hardware had reduced in the last 10 old ages, the Volvo Group Australia wanted to capture more informations to analyze concern tendencies, something apparent in most industries globally ( Tallon 2010 ) . The bequest systems besides are prone to downtime, bing 1000s of dollars in lost gross while non being available to the trader web.

4.4 Post TruckShop pilot

Should the TruckShop pilot prove successful the system is recommended to be rolled out into other concern countries. The go oning success of the TruckShop axial rotation out is expected to ensue in high handiness, high dependability, low entry cost and ongoing cost effectivity for all users of the system.

All new supply concatenation endeavor system undertakings, and so other campaigner endeavor systems within the group would be recommended to continue with this cloud calculating service and bringing theoretical account to guarantee overall cost decreases, efficiency additions, centralizing and amortizing care, ascents and betterments across all concern countries.

5 Decisions

For cloud calculating solutions, Volvo IT would bring forth their gross by bear downing the Business Area sections based on the figure of users. Users could use for merely the entree to systems that they required. System updates and betterments would be performed centrally in Sweden, and users would non hold to concern themselves with updates nor have to show their hardware to IT to update.

The pilot of TruckShop should turn out to the company what cloud calculating can accomplish. Many other concern countries in the Volvo Group can profit from following cloud computer science patterns. With engineering being built into Volvo Trucks, and the focal point on supplying concern partnerships more on-line services will be developed into the future.AA

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