College of Graduate Studies

MISM613: Management Information Systems

GROUP ASSIGNMENT I REPORT

Management and Organizational Support Systems

For the Digital Firm

By

SB20896 RISHNI PREMARAJAN

<ID. No: Member’s Name>
<ID. No: Member’s Name>
<ID. No: Member’s Name>
<ID. No: Member’s Name>

UNIVERSITI TENAGA NASIONAL

1.0 Introduction

Information system is used in providing support to manufacturing industries which

involved in a global race for survival. Information system provides an environment
that involves global cost reduction in operation and manufacturing as well as
engineering. Development period is shortened by sharing information from all the
departments of manufacturing line. Nissan Motor Co., Ltd. is one of the world's
leading vehicle manufacturers, well-known all over the world for delivering high
quality and value to customers.

Nissan Motor Company, Ltd., founded in 1933, is a global automobile

manufacturer employing approximately 120,000 people around the world. (See
Appendix 1). On March 27, 1999, the Renault group and Nissan Motor Co., Ltd.
made automotive history by entering into an agreement to form an alliance the first
industrial and commercial alliance of its kind between French and Japanese
company. The intent is to create a powerful automotive group by boosting the
performance of both Renault and Nissan through wide-ranging cooperation, while
preserving the two companies’ distinct identities.

Nissan Motor Co. owns manufacturing and sales operations in Japan, Europe and
the United States. Nissan is expanding its sales operations in global markets,
including the Middle East, the Near East, and Asia. As a part of its reorganization,
this company achieved a 20% reduction in costs by reducing its number of
suppliers and centralizing financial reporting system.

2.0 Nissan Information Technology Infrastructure and Information System

"For Nissan, which stands at the front line of a global corporate competition,
improving information flow is an essential factor in the reduction of development
times and product costs, which is necessary for success.

Mr. Takashi Kawakami, Chief of the Nissan Development Group

2
Nissan Motor Co. performed a thorough evaluation of its overall organization. This
meant scrutinizing not only the department’s IT system, but also other support
system to the company. The information systems department of Nissan Motor
Company then applied this procedure companywide and implemented e-business
approaches to provide comprehensive support across the enterprise areas and to
help it manage relations with customers and partners.

As an organization grows, so does the difficulty of its financial consolidation and

reporting challenges. Like many large international companies, Nissan must deal
with multiple currencies, various accounting standards, and a host of reporting and
compliance regulations, including International Financial Reporting Standards
(IFRS) and electronic filing of financial statements in Extended Business Reporting
Language (XBRL) format. Through all this, the organization must balance the need
for precise financial reporting and corporate governance with the needs for
timeliness in meeting reporting deadlines. Nissan has a constant need for real-time,
accurate information on which good business decisions can be based. The company
also needed to monitor its strategy against its competitors. To do all this
successfully, Nissan needed highly efficient financial reporting. The consolidation
processes that were in place were largely manual, involving the extensive use and
exchange of spreadsheets. With operations all over the world and a growing need to
get accurate financial information to senior management as quickly as possible,
Nissan’s current financial reporting didn’t provide the transparency needed.

Figure 2: Information System Configuration

3
 Specifically, Nissan aimed to reduce the monthly close-down and consolidation
period from some 33 days to just 10 days, and improve monthly and quarterly
management reporting. The company also wanted to move to a system where a
single chart of accounts was used, to centralize all information, ensuring
consistency and maximum data quality. The new solution also should support the
implementation of a new matrix management organization. These requirements
called for multidimensional capabilities, so Nissan could analyze data in a number
of different ways. For example, Nissan wanted to be able to analyze data by region,
product, or function such as sales and marketing, human resources, research and
development. To comply with regulatory requirements, Nissan also needed its
financial reporting solution to support reporting for multiple generally accepted
accounting principles. Additionally, Nissan sought to automate cash flow
statements for the whole group.

After a detailed evaluation process, Nissan selected the Financial Consolidation

System application to provide streamlined data collection from systems around the
globe. Some 550 users, working at over 100 different operations across the globe,
now use the application. This solution provides Nissan with streamlined data
collection capabilities, and shares information between Financial Consolidation
System and local systems as well as companywide and database applications.
Available in all major international languages, including Japanese, Nissan can use
the application in any of its subsidiary offices. The solution is also completely open
and scalable, and accessible via a standard web browser. Deploying Financial
Consolidation has enabled Nissan to implement important aspects of strategic
initiatives. By delivering tangible performance improvements to its management
processes, the Financial Consolidation System solution helped Nissan achieve all
the main goals, namely, to increase car sales by one million units, achieve a gross
profit of above 8%, and reduce interest liabilities to zero.

3.0 Advantages of the Financial Consolidation System

The IT infrastructure for Nissan Motor Co., Ltd. had grown independently in each
of the three major regions in which the global automaker operated - and it showed.

4
Global collaboration and remote data access were difficult, and the plethora of
domains and e-mail servers hiked costs. In response, Nissan updated its technology
infrastructure. More and better collaboration is projected to save the company’s
cost by introducing Financial Consolidation System.

Financial Consolidation System offer rich financial reporting and multidimensional

analysis capabilities, along with a robust and integrated product line helping Nissan
achieve its quality standards and leverage an open, flexible, and scalable reporting
solution. For Nissan, meeting regulatory requirements and providing accurate
financial information is vital to the maintenance of the company’s perception
among shareholders and for accurate decision-making. By deploying Financial
Consolidation System in 100 global locations, the manufacturer has streamlined its
financial reporting, thereby reducing costs, providing management with rapid
access to accurate information, and boosting market confidence.

Invoice & Customer Data To general ledger

Accounts
Receivable Management
AR System Reports
Master
File

Online
Queries

Figure 3: Monitoring Financial Performance

The application enables the automotive giant to increase speed, quality, and
reliability of financial consolidation and reporting, and improve overall business
performance. Financial Consolidation System is clearly a unique and integrated
solution that helps us drive and control business. This is a major improvement
compared to the previous system. Nissan now produces monthly profit and loss
(P&L), balance sheet, and cash flow statements for every business segment, with all
related analysis and comparisons, within 30 minutes. Information details for its

5
operations, is processed automatically. As a result, finance teams focus on
understanding the business rather than preparing consolidated figures. Nissan
achieved its target of 10 days, from the point where the monthly period is closed to
when accurate financial data can be published, well ahead of the industry standard.
A full and comprehensive audit trail and the built-in data quality features of
Financial Consolidation System ensure that results are totally reliable.

Nissan performs complete and reliable reconciliation on a frequent basis, extremely

useful as the company needs to combine data from the different accounting periods
that are used in different operations across the globe. Frequent and reliable
reconciliation reassures management and shareholders, and makes it easier for
Nissan to meet specific quarterly and annual reporting requirements. The finance
team analyzes data in depth, and with all financial information gathered and
processed within a single application, the company achieves considerable time and
cost-savings. Additional benefits resulting from the deployment of Financial
Consolidation System include time-off for staff. Previously, no member of the
consolidation team was able to go on holiday when all of the most crucial work
needed to be completed. Now that the process is quicker and more automated, staff
can take time off work at the same time as their friends and family.

Financial Consolidation System also supports efforts to take the company even
further forward, having achieved the objectives, Nissan has put a new strategic
initiative in place which aims to drive further performance improvements with the
specific objective of achieving sales if 4.2 million cars in 2008, maintaining at least
current levels of operating profit, and a 20% return on investment capital. The cost
reduction with the Financial Consolidation System is great. The cost reduction in
this form led to a reduction of the sales cost. NRP set a target of 8% cost reduction
in March 2001. After one year, the reduction rate reached 11%, surpassing the
target figure of 8%. Financial Consolidation System is beneficial both for Nissan
and the parts makers. This merit is; however, open only for Nissan and the parts
suppliers who passed through screening. Using Financial Consolidation System,
Nissan has tightened the screening of parts makers, many suppliers were deprived
of orders from Nissan. Then, Nissan and Renault purchased jointly.

6
 The table of purchase cost of raw materials (Chart 1) shows that Nissan spent on
stand-alone basis 2,255,350 million yen on raw materials, 111,233 million yen
down from 2,136,768 million yen of the same period of the previous year. The cost
of processing by outsiders included the total cost is not published separately and
therefore not available. This diminution in the cost of raw materials increased the
consolidated profit by 287 billion yen. The cost of purchased products, sales cost
shrank from 2,607.2 billion yen in March 2000 to 2,469.3 billion yen in March
2001, the amount of decrease reaching 161.2 billion yen. As a result, the profit rate
of total sale increased from 13% to 17.11%.

Chart 1: Nissan Cost Reduction Using Financial Consolidation System

4.0 Other Nissan’s Information System

Nissan has to develop a next-generation dealer management system. The system

enables customers to interface with the company’s dealers, and is critical to
maintaining smooth operations and prompt service. This will eliminate the cost and
complexity of maintaining disparate dealer applications, unifying information and
enabling Nissan to communicate effectively with its dealer network. The system
also can collect and store customer data in a single repository, ensuring Nissan staff
can access accurate, up-to-date information to build customer profiles and support
sales and marketing campaigns. Data had to be consolidated to be of any real use.

7
The lack of real-time information became increasingly problematic as competitive
pressures required faster decisions. Nissan required dealers to transmit data every
day at a certain time, causing the system to slow down significantly and frustrate
users. Other problems included the text-based user interface, rising mainframe
maintenance fees, and the poor system integration capabilities of the distributed
client-server architecture. To resolve these issues, Nissan decided to build a new
information system equipment and technology; also helps enable standardized
online supply chain and procurement systems that will streamline supplier
interactions.

To support this transformation, Nissan is upgrading its data center and adding
storage area networking capabilities to handle the large quantities of information
that will be moving across the network. The system needed to fulfill four criteria:
deliver real-time channel management capabilities; support unlimited, multi-brand
interfaces; offer flexible management tools; and be cost-effective to maintain.
Nissan wanted to use the new system to deliver integrated information in real time.
For example, service stations must fill in customer service logs and send the
information to Nissan. Whenever a customer used a service station other than their
usual outlet, a separate document would be created. This led to multiple service
logs for the one customer, making it difficult for Nissan to build a complete and
accurate customer profile.

Apart from that, Nissan has a goal of saving 20 minutes per day per engineer,
which it expects to achieve with the new solution's collaboration information
system tools. Because engineers don't waste time arranging meetings through e-
mail, collaboration among the worldwide engineering staff is easier to implement
and, consequently, there is more of it. That increased collaboration, in turn, can
have significant impact on Nissan's operations. Because engineers are working
together more extensively, they have been able to reduce the complexity in the
parts used in Nissan vehicles. The company cut the number of new parts 30
percent, from 20 to 14 per automotive platform. (An automotive platform is a group
of cars sharing a common parts infrastructure.) It cut the total number of parts by

8
 50 percent. And it cut the number of unique parts by 60 percent. Fewer parts, in
turn, have contributed to faster time-to-market for new vehicles. Apart of that
Nissan has announced the addition of "Nissan Motor Company - SWOT
Framework Analysis" to their offering. SWOT Analysis, is a strategic planning tool
used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in
a project or in a business venture. It involves specifying the objective of the
business venture or project and identifying the internal and external factors that are
favorable and unfavorable to achieving that objective. The aim of any SWOT
analysis is to identify the key internal and external factors that are important to
achieving the objective. SWOT analysis groups key pieces of information into two
main categories:
Internal factors - The strengths and weaknesses internal to the organization.
External factors - The opportunities and threats from external environment.

The internal factors may be viewed as strengths or weaknesses depending upon

their impact on the organizations objectives. What may represent strengths with
respect to one objective may be weaknesses for another objective. The factors may
include all of the 4Ps; as well as personnel, finance, manufacturing capabilities, and
so on. The external factors may include macroeconomic matters, technological
change, legislation, and socio-cultural changes, as well as changes in the
marketplace or competitive position. The results are often presented in the form of
a matrix. SWOT analysis is just one method of categorization and has its own
weaknesses. For example, it may tend to persuade companies to compile lists rather
than think about what is really important in achieving objectives. It also presents
the resulting lists uncritically and without clear prioritization so that, for example,
weak opportunities may appear to balance strong threats.

5.0 Achieving Core Competency from Information System

Being global means that Nissan need to provide information in real time, to achieve
core competency for the overall business. Through information system it benefits
not only the employees but also to customers, suppliers, and dealers. Nissan are

9
working very closely in France, in Japan, and in the United States to deliver a
strategic information system.

This system is able to provide tools and technology to take Nissan to the next level
in terms of communication and productivity. For instance, it offers human resource
capabilities through self-service applications, as well as through real-time access to
people and information. Moreover the network which is based on equipment and
technology, enable standardized online supply chain and procurement systems that
will streamline supplier interactions.

Nissan is also upgrading its data center and adding storage area networking
capabilities to handle the large quantities of information that will be moving across
the network to achieve core competency. In parallel, speed of the system is also
given importance where speed is necessary for design, engineering, manufacturing,
and retail and is a key factor of success in Nissan’s business. For instance, instead
of having to travel or use the telephone, Nissan employees can be in contact with
hundreds of people in a true online collaboration.

Information technology is an enabler and that’s why they are developing a lot of
programs inside Nissan, but the programs by themselves are not the goal. It’s how
the programs are used that is important. Information system allows more people at
Nissan to communicate and exchange ideas instantly to improve the productivity of
every employee by two hours per day. This savings is significant in an industry
where speed to market is a compelling differentiator. It takes a long time to make a
new car, and by using more and more digital tools, the intention is to reduce the
lifecycle by 50 percent. With digital tools it can reduce the time between design and
production of new products from 20 months to 10 months.
It is also believed that restructuring the network and making the existing system
more efficient will also reduce costs. As a result the company is also working
towards enhancing individual network competitiveness which focuses on
dealerships and new channels of distribution such as e-commerce.

10
 The core purpose of information system is to cut development time while
improving quality and accelerating innovation. Shorter development times will
enable the company to respond more quickly to shifts in demand, and promote
product variation, improving the group's product variety. For instance, Renault is
relying on Nissans' recognized expertise in this area and in the techno centre, which
would suggest that one of the benefits of this alliance is the ability to learn from
each party and finally achieve core competency from its information system.

6.0 Complementary assets

Successful companies recognize that information technology can fundamentally

alter the very nature of work. Since, information system are a foundation for
conducting business today, organizations adapt their internal structures, processes
and culture to extract the greatest value from the technology. Some firms invest a
great deal and receive a great deal in return and vice versa. Information technology
cannot provide these values unless it is accompanied by supportive changes in
organization and management called the complementary assets. Complementary
assets are assets, infrastructure or capabilities needed to support the successful
marketing of a technological innovation, other than those assets fundamentally
associated with that innovation.

There are a few major complementary assets that firms need to invest on to realize
the value from their information technology investment. Some of this investment
involves, tangible assets, such as buildings, equipments and machinery. It can be
divided into organizational assets which includes, appropriate business model,
decentralized authority and efficient business processes. Managerial assets include
strong senior management support for technology investment and change,
incentives for management innovation and collaborative work environments.
Another complementary asset is the social assets which include the internet and
telecommunication infrastructure, law and regulations creating fair and stable
market environments.

11
 Those are the assets required to derive value from a primary investment. Since
Nissan Motor Co. Ltd is an automobile organization, it requires substantial
complementary investment in highways, roads, service centers, petrol station and a
legal law system to set the standard and control drivers. These assets have made
Nissan one of the world's leading vehicle manufacturers, renowned all over the
world for delivering high quality and value. This shows that, firms should make
appropriate investment in these complementary assets in order to receive superior
returns on their information technology investment.

7.0 Conclusion

Auto manufacturers are required to both accelerate innovation and reduce operating
expenses to be competitive in the industry. Nissan has shortened product cycles,
reduce costs, and increase sales volume. Their IT infrastructure has been evaluated
and improvements which would have the most impact are identified. The
information system that has been deployed and implemented has helped Nissan
Motor to deliver the desired improvements worldwide and also to the company’s
business overall. Information system has help Nissan to reduce operation cost,
provide more secure and reliable information technology infrastructure and grow in
the industry.

According to observation, Nissan is practicing Management Information System

(MIS). MIS summarize firm’s basic operation using data from Transactional
Processing System which is compresses and then presented in reports. Middle
managers receive reports of Nissan’s current performance and use the information
to monitor, control and predict the future performance

12
8.0 REFERENCE

Ang, T. F., Hu, H, S., Por, L. Y and Liew, C. S., IOAS: An Intelligent Online Assessment
System, WSEAS Transaction on Computing, Issues 3, Vol. 6, Pp.552-559, 2007.

D. Boddy, A. Boonstra, and G. Kennedy. Managing Information Systems: An

Organisational Perspective (2nd Edition). Prentice Hall, 2004.

J. O'Brien and G. Marakas. Enterprise Information Systems (13th edition). McGraw-

Hill, 2006.

K.C. Laudon. and J.P. Laudon. Management Information Systems: Managing the Digital
Firm (10th Edition). Prentice Hall, 2007.

Magee, David. Turn Around: How Carlos Ghosn rescued Nissan. New York:
HarperCollins Publishers Inc, 2003.

Thibodeau, Patrick. "Q&A: Nissan CIO reshapes automaker's IT,"

http://www.computerworld.com/action/article.do?
command=viewArticleBasic&articleId=110024&intsrc=industry_list March 29, 2006.
Downloaded January 02, 2010.

"The Short History of Nissan Motor Company",

http//global.nissan.co.jp/Japan/History/Photo_E1.html#4, Downloaded January 02, 2010.

"Nissan receives the Deming Award". http://www.hoovers.com/offsite/1,2118,,00.html?

url=http://global.nissan.co.jp. Downloaded January 01, 2010.

"Nissan North America Diversified Operations".  http://www.nissan-

na.com/4.0/index.html, Downloaded January 01, 2010.

"A New Order at Nissan". http://www.businessweek.com/search.htm, Downloaded January

05, 2010.

"Nissan Revival Plan". http://www.nissan.co.jp/NRP/NEWS/news-e.html, Nissan Motor

Company, Ltd. Press Release, Downloaded January 05, 2010.

13
Appendix 1

ORGANISATION OF NISSAN MOTOR

(Source: http//global.nissan.co.jp/Japan/History/Photo_E1.html#4)