IT Business Value

& WHR (1)

Theo Stratopoulos
Agenda
1. Setting
2. Our contract - Professionalism and Respect
3. Whirlpool
4. Course Outline
5. IT spending
Setting: Whirlpool (WHR)
What is an Enterprise Resource Planning (ERP) system?

Do you think that they should proceed with the ERP
investment ?

From an investors standpoint: do you think that the
ERP investment would affect their market value?

Should the CFO/Controller of the company deal with
these issues?
Setting
Accounting/investment Firm/project: AFM241
Client/Project: WHR
Roles: Partner (Mentor) & Junior/Staff
Accountant/Analyst
Objective: Be prepared for a comprehensive
presentation and Q&A with board members of WHR or
advise investors on the implications of ERP investment
on firms relative performance.
Our contract - Professionalism & Respect
Attendance and Participation
o Arrive before meeting (class) starts.
o Do not interrupt a class in progress.
o Place your name card in front of you. Either use
the card that was provided to you or create one
using provided template. If you dont have a proper
card or display your card you will be marked absent
from the meeting.
o Turn off and put away your cell phone during class
time.
Our contract - Professionalism & Respect
Communications
o Use your uwaterloo.ca email.
o Include a subject that always starts with AFM241.
o Include a proper salutation such as Dear Prof.
Stratopoulos or Prof. Stratopoulos.
o Create and include your signature in all business
related emails.
o Always perform a spell check before you send your
email.
Whirlpool (WHR)
What is an Enterprise Resource Planning (ERP) system?

Do you think that they should proceed with the ERP
investment ?

From an investors standpoint: do you think that the
ERP investment would affect their market value?

Should the CFO/Controller of the company deal with
these issues?
Whirlpool (WHR)
Evaluate costs and benefits of investment (NPV, IRR)
o Assumptions: Firms internal environment
o Assumptions: Firms external environment
o Estimated Incremental cash flow - role of users
o Cost of capital - Risk
Does it make sense to go beyond NPV? Why?
o Sensitivity of results to change in assumptions
o How to mitigate risk (reduce variance)

Whirlpool (WHR)= Business Analytics?
Decision making under uncertainty
Leveraging qualitative and quantitative information to
reduce uncertainty
Business analytics (BA) - refers to the use of large data
sets and statistical analysis to support decision making.
o How does this relate to the WHR case?
o Is there any evidence of BA at WHR? Hint: Read the
discussion about the firms inventory.

Course Outline
Part I - Business and IT Strategy
1. IT Business Value Proposition
2. Business Strategy
3. IT Strategy
Part II - Foundation for Competing with Analytics
4. Business Analytics
5. Database Theory
6. Enterprise Systems
Part III - Governance & Evaluation of IT investments
7. Capital Budgeting
8. IT budgets and IT portfolio management
9. IT Balanced Scorecard
10. IT Governance

Source: https://www.gartner.com/doc/2694417
IT Spending - Visualize $4 Trillion
In 2013, worldwide companies and organizations are
expected to spend $3.8 trillion on IT, i.e., hardware,
software, IT services, and telecommunications. This
amount reflects a 4.1% increase compared to 2012, and
it is expected to rise by another 4.0%, to $3.9 trillion,
in 2014.
The following link will let you visualize one trillion
dollars: http://www.pagetutor.com/trillion/index.html you will
have to multiply by 4.