ICIS 2010 Proceedings 2010 IEEE International Conference on Intelligent Computing and Intelligent Systems October 29-31, 2010, Xiamen, China Edited by: Wen Chen (Shanghai Jiaotong University, China) Shaozi Li (Xiamen University, China)
Proceedings 2010 IEEE International Conference on Intelligent Computing and Intelligent Systems Copyright and Reprint Permission: Abstracting is permitted with credit to the source. Libraries are permitted to photocopy beyond the limit of U.S. copyright law for private use of patrons those articles in this volume that carry a code at the bottom of the first page, provided the per-copy fee indicated in the code is paid through Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923. For other copying, reprint or republication permission, write to IEEE Copyrights Manager, IEEE Operations Center, 445 Hoes Lane, P.O. Box 1331, Piscataway, NJ 08855-1331. All rights reserved. Copyright 2010 by the Institute of Electrical and Electronics Engineers Print Version IEEE Catalog Number: CFP1057H-PRT ISBN: 978-1-4244-6583-5 Publisher: Institute of Electrical and Electronics Engineers, Inc. Printed in Beijing, China
Preface Welcome to 2010 IEEE International Conference on Intelligent Computing and Intelligent Systems (ICIS 2010)! Welcome to Xiamen, China! We believe that the solid conference program and the amazing city of Xiamen will offer you irresistible attraction. This year s ICIS 2010 is co-sponsored by IEEE Beijing Section, Xiamen University, Fujian Association for Artificial Intelligence, Shanghai Jiaotong University, Iwate Prefectural University. Much work went into preparing a program of high quality. At this very moment, we would like to thank the program committees and the organizing staffs for their hard work. We would like to especially thank Xiamen University for hosting this conference. We would like to deliver our appreciation to the keynote speakers for their great contribution to this conference. The scope of this conference is to gather researchers from different areas and disciplines to present results and participate in discussions under the common theme of intelligent systems and computing. These interactions will facilitate a better understanding of the diversity of the different approaches as well as of their similarities. In addition it will open the way for applying approaches that have been successful in one area to problem solving in different areas and applications. We wish each of you successful deliberations, stimulating discussions, new friendships and all enjoyment that Xiamen can offer. While this is a truly remarkable Conference, there is more yet to come. We look forward to seeing all of you in Xiamen. October 10, 2010 Mengqi Zhou, IEEE Beijing Section, China Wen Chen, Shanghai Jiaotong University, China 7
TABLE OF CONTENTS Vol.3 of 3 3-0001-11240 ANALYSIS, MATHEMATICAL MODELING AND ALGORITHM FOR SOFTWARE PROJECT SCHEDULING USING BCGA Dinesh Bhagwan Hanchate 3-0002-11243 A SHADOW ELIMINATION METHOD BASED ON COLOR AND TEXTURE Yihua Zhou, Lina Sun, Jianbiao Zhang 3-0003-11244 RESEARCH AND IMPLEMENTATION OF THE NEURAL NETWORK MODEL SIMULATING HUMAN IDENTIFICATION Min Liu, Hua Teng, Xiao-Bo He 1 8 12 3-0004-11245 FUEL-BALANCED SATELLITE FORMATION KEEPING RESEARCH 16 Huang He, Zhou Jun, Liu Yingying 3-0005-11251 A NEW METHOD OF HYBRID MULTIPLE ATTRIBUTE DECISION MAKING WITH WEIGHT INFORMATION UNKNOWN Lv Yue-jin, Cheng Hong-tao, Yang Wu-song 3-0006-11254 MULTIPLE ATTRIBUTE DECISION MAKING OF INTERVAL NUMBERS BASED ON GREY RELATION PROJECTION Weijian Jin, Hanhui Hu 3-0007-11255 DESIGN AND IMPLEMENTATION OF CROP POTENTIAL MODEL SYSTEM BASED ON KNOWLEDGE MODEL AND COMPONENTWARE TECHNOLOGY Hao Zhang, Fuchao Li, Hui Zhang, Zhihui Feng, Lei Xi1, Xinming Ma 21 26 30 3-0008-11256 CONNECTIVITY OF WIRELESS MULTIHOP NETWORKS 35 Gui-Lin Lu, Han-Xing Wang 3-0009-11258 ALGORITHM OF FERTILIZATION KNOWLEDGE MODEL BASED ON FUZZY-NEURAL NETWORK YANG Yushu, Cao ran, Liu Wenyang 3-0010-11260 INFORMATION SUPPORT OF CORPORATE GOVERNANCE AND STRATEGIC MANAGEMENT USING ANALYTICAL SOFTWARE Dmitry Isaev 40 44 3-0011-11261 THE DIRECTION OF FAMILY PARTICLE SWARM OPTIMIZATION 49 Zhenzhou An, Xinling Shi, Junhua Zhang 3-0012-11265 WATER-IMPACT FORCE ANALYSIS FOR OVER-SEA AIRCRAFT IMPACTING WATER Lin Peng, Zhou Jun, Sun Qi 3-0013-11269 FEATURE SELECTION BASED FILE TYPE IDENTIFICATION ALGORITHM Ding Cao, Junyong Luo, Meijuan Yin, Huijie Yang 54 58 1
Information Support of Corporate Governance and Strategic Management Using Analytical Software Dmitry Isaev Business Analytics Department Higher School of Economics (HSE) Moscow, Russian Federation disaev@hse.ru Abstract In the paper an information aspect of corporate governance and strategic management is considered. Relying on analysis of merits and limitations of current developments the concept of performance management information support system and the appropriate modeling approach are proposed. Finally, the possibilities of use of analytical information systems for corporate governance and strategic management are discussed. Keywords corporate governance; strategic management; performance management systems; business intelligence; analytical applications. I. INTRODUCTION At present the matters of corporate governance and strategic management become more and more important for organizations of different types and industries. However it should be noticed that both corporate governance and strategic management are based on certain information. That s why an information support of management processes is critical for general performance of organizations. In the paper an information aspect of corporate governance and strategic management is considered. The following section of the paper outlines current developments (strategic management issues, corporate governance codes, public reporting requirements, theoretical developments in the field of performance management systems, analytical software products and their design and implementation). In this section merits and limitations of current developments are summarized. Section III puts forward the performance management information support system (PMISS) concept, with its theoretical development. Section IV outlines different classes of analytical software (including business intelligence systems and analytical applications) and possibilities of their practical use within the PMISS. This is followed by a conclusion and a references list. II. CURRENT DEVELOPMENTS Current developments, which are relevant to information aspect of corporate governance and strategic management, may be subdivided into four groups: theoretical studies and statutory documents, which determine general requirements to the output of performance management systems (and thereby of their information components). This group contains developments in the fields of strategic management, corporate governance (including corporate governance codes) and public reporting (including corporate reporting standards); theoretical developments in the field of performance management systems (PMSs) and similar concepts, including information components of such systems; information systems developed by leading international software vendors (SAP, Oracle, Microsoft, SAS, Infor, etc.) to support organizations performance management processes; different strategic oriented approaches to information systems design and development, including the Enterprise Architecture concept. These four groups of developments may be considered as important sources of studies in the area of information aspect of corporate governance and strategic management, covering points of view of different stakeholders groups managers, investors, authorities, public, software developers and analysts. A. Strategic Management, Corporate Governance and Corporate Reporting Over the past years, much emphasis has been placed on the importance of such interrelated areas as corporate governance and strategic management. Corporate governance can be defined as the way a corporation is directed, administered or controlled, including relationships among the many stakeholders involved (shareholders, management, employees, customers, creditors, suppliers, regulators, the community at large). In this area information aspect is very important, especially for large incorporated businesses that are owned by one group of people (shareholders) whilst being managed by another group of people (directors). Imperfect corporate information is one of the reasons why special rules of corporate behavior and strategic decision making (corporate governance codes) were established. The most important developments in this field are: the Organization of Economic Co-operation and Development (OECD) Principles of Corporate Governance, Sarbanes-Oxley Act (US), Combined Code (UK) and some others. Each of these documents establishes strong requirements to corporate data processing and information disclosure, providing the possibility for information-based 44
decision making for all the stakeholders. For example, one of five sections of the OECD Principles is titled Disclosure and transparency. It is pointed out in the document: The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation, including the financial situation, performance, ownership, and governance of the company [10]. All the corporate governance codes highlight the role of corporate reporting as a main informational channel connecting a company with its stakeholders and providing required informational transparency. The main component of corporate reporting is a set of financial statements. The International Accounting Standards Board (IASB) specifies that the objective of financial statements is to provide information about the financial position, performance and changes in financial position of an entity that is useful to a wide range of users in making economic decisions [1]. If several companies are combined into a group (business combination) then consolidated financial statements are used. These financial statements represent the group (a parent company and all its subsidiaries) as a single economic entity. Consolidated financial reporting is based on individual financial statements (i.e. statements of separate entities members of the group), and in the case of a large group (hundreds or thousands of subsidiaries) consolidation becomes a very sophisticated task of financial data gathering, reconciliation, storage, processing and presentation. Another component of corporate reporting is so called non-financial reporting public information that is out of financial reporting standards, but that is also useful for external and internal stakeholders for decision making and specific purposes. One of the most considerable developments in this area is proposed by Global Reporting Initiative (GRI). A set of GRI developments represent a framework for reporting on three parts of organizations performance: economic, environmental and social [15]. Strategic management is closely interrelated with corporate governance because sustainable development of an organization may be ensured only by efficient strategic planning and decision making. Strategic management processes are also based on information. The classic approach of strategic management (so called rational model ) involves three stages strategic analysis, strategic choice and strategic implementation. Any of these stages requires analytical data processing. Strategic analysis stage is associated with analysis of external information (environmental analysis, identification of opportunities and threats, predictive analytics), analysis of internal data (position audit, identification of strengths and weaknesses) and also with corporate appraisal (combination of external and internal information, e.g. SWOT analysis). Strategic choice stage includes modeling and evaluation of strategic options (development scenarios) and formulation a set of quantified targets described in terms of key performance indicators. Implementation of strategy is associated with deployment of key performance indicators across an organization, formulation of strategic plans and budgets and analysis of feedback information. Therefore, any stage of the strategic management process is based on data processing and management communications. Moreover, different advanced approaches to strategic business planning and development, which are considered as alternative to the rational model, may be explained from point of view of informational aspect, as a result of difficulties with information processing required by the rational model. The examples of such approaches are: combination of intended and deliberate strategies [9], incrementalism [7] or beyond budgeting approach [6]. Therefore the developments of this group establish requirements to informational transparency of organizations and informational support of strategic management processes, representing points of view of all stakeholder groups, both manages (directors) and external stakeholders (first of all, investors). However these developments do not answer a question how to reach the desired information support of decision making and what exactly is to be done by organizations to fulfill the requirements and to provide the compliance with the corporate governance codes and best practice of strategic management. B. Performance Management Systems Historically one of the first concepts related with informational aspect of organizations strategic management processes was a concept of management control system (MCS). In 1965 Antony defined management control as the process by which managers assure that resources are obtained and used effectively and efficiently in the accomplishment of the organization s objectives [2]. However this approach has a considerable limitation a disconnect between management control and two other Antony s managerial functions strategic planning and operational control [11]. Later a number of alternative definitions of MCSs were proposed. For example, Simons defined MCSs as the means used by senior managers to successfully implement their intended strategies [13], while Chenhall views MCS as the systematic use of management accounting in conjunction with other forms of control such as personal or cultural controls to achieve some goals [4]. Finally a broader content of MCSs that covers the entire strategic process, including both formulation of strategies and strategy implementation was proposed by Merchant and Otley [8]. In one of the most recent studies Ferreira and Otley proposed the more general concept of performance management system (PMS), defined it as the evolving formal and informal mechanisms, processes, systems, and networks used by organizations for conveying the key objectives and goals elicited by management, for assisting the strategic process and ongoing management through analysis, planning, measurement, control, rewarding, and broadly managing performance, and for supporting and facilitating organizational learning and change [5]. In this study Ferreira and Otley proposed a performance management systems framework, based on 12 aspects (questions). One of them, Question 9 Information flows, systems and networks, reflects the information component of performance management. The question is: What 45
specific information flows feedback and feed-forward, systems and networks has the organization in place to support the operation of its PMSs? [5]. In 2005 another considerable development, Business Performance Management (BPM) Industry Framework Document, was issued by BPM Standards Group, formed by few large software vendors, consulting companies and market analysts. The document puts forward the following definition: Business performance management (BPM) is a methodology to optimize the execution of business strategy that consists of a set of integrated closed-loop, analytic processes, supported by technology that address financial as well as operational data. BPM enable a business to define, measure and manage its performance against strategic goals. The core financial and operational processes of BPM include planning, consolidation and reporting, analysis and the deployment of linked key performance indicators (KPIs) throughout an organization [3]. It may be noticed that the BPM concept seems very close to the concept of performance management systems (PMSs). Therefore the developments of this group establish a comprehensive performance management framework, which is very important from theoretical point of view. In this framework the significance of information aspect of performance management is highlighted and some practical recommendations are formulated. On the other hand, these developments do not provide a detailed view on the information support system which would cover specific methods, models, processes, information systems and personnel competencies, being a part of a comprehensive performance management system. C. Analytical Software According to above mentioned BPM Industry Framework Document, performance management processes are to be supported by appropriate software solutions. These solutions may be subdivided into four groups, according to four key BPM processes strategize, plan, monitor and analyze, take corrective actions [3]. This classification is based on performance management functions and the role of software products in the performance management cycle. Another classification, based on the types of software products, is presented in BPM Software Buyer s Guide, which is annually published by Business Finance journal [12]. The software products are subdivided into two large groups financial performance management capabilities and advanced performance management functionality. Anyway, at present almost all the leading software vendors have either comprehensive performance management product lines (SAP, Oracle, SAS, IBM, Infor, Microsoft) or separate performance management solutions. Usually software companies and market analysts distinguish two broad classes: performance management applications (solutions oriented on specific tasks scorecarding, budgeting, consolidation, etc.) and business intelligence (BI) systems (data warehouses, on-line analytical processing systems, reporting and dashboarding tools, data mining software, etc.). However there are some other types of software products that usually are not considered as performance management applications or as BI systems but that are also useful in some areas of corporate governance and strategic management. The examples of such products are: statistical packages, modeling software, decision making systems, etc. All the mentioned software products may be combined into a comprehensive integrated system and may form an efficient and reliable analytical environment of an organization. D. Information Systems Design and Development Nowadays it is recognized that information systems have a great impact on the all elements of an organization its production and management processes, organizational structure, personnel skills, etc. That s why all the matters related with corporate information systems require strategic approach to their design, development and implementation. Close interrelation between information systems and other elements of an organization brought to appearance of a modern concept of Enterprise Architecture (EA). One of the most popular and widely used approaches for engineering Enterprise Architecture is Zachman Framework [14]. The Framework represents a logical structure that helps to organize the information infrastructure. According to the Framework, an enterprise is modeled by answering six questions: What?, How?, Where?, Who?, When? and Why?. These questions respect to six role perspectives: Planner, Owner, Designer, Builder, Subcontractor and Functioning Enterprise. The model is platform neutral and both comprehensive and readily understood by non-technical people. This approach seems very useful and may be used as a methodological background for design, development and implementation of information systems, supporting corporate governance and strategic management processes. On the other hand, Zachman Framework is just a generic approach, it can t be considered as a detailed methodology of systems development. The same refers to other EA-models, similar to Zachman s approach. E. Merits and Limitations of Current Developments The analysis of current developments in the field of information aspect of corporate governance and strategic management shows that at present there are a number of considerable results that form a foundation for further research in this area. The main outcomes in this area are: requirements to informational support of corporate governance and strategic management, the concept of performance management system (PMS) and similar concepts, analytical software for performance management tasks, strategic approach to information systems development. On the other hand, each of mentioned developments has some limitations. It allows drawing a conclusion that at present there are no any holistic, strategically oriented methodological approach to design, development, implementation and utilization of information support systems for the purposes of corporate governance and strategic management. 46
Therefore the development of a holistic methodological approach to planning and development of corporate governance and strategic management informational support systems may be considered as a very important task. The value of such approach follows from its usability both for management systems theory and for practical implications. So the following points seem important: it is necessary to have a focused and integrated view at all the matters of information support of both corporate governance and strategic management, considering these two areas as very close and interrelated; it is necessary to consider an information component of a performance management system (PMS) as a relatively independent object of research (for theoretical purposes) and management (for practical implications). Thus it is preferable to introduce a special descriptor for the PMS s information component performance management information support system (PMISS); PMISS (as an information component of PMS) should integrate a broad range of tools not only information systems, but also methods and models, management processes and personnel s competences. III. PERFORMANCE MANAGEMENT INFORMATION SUPPORT SYSTEM Performance management information support system (PMISS) may be defined as a set of methods, processes, information systems and personnel skills, focused into the tasks of gathering, reconciliation, storage, analytical processing and presentation of information, which is critical for an organization s information transparency and strategic decision making performed by external and internal stakeholders. PMISS represents an information component of a performance management system (PMS), on the other hand, this term is broader then a set of software products for performance management purposes. Design and development of PMISS should be based on a modeling approach and on an assessment of its characteristics from point of view of corporate strategic requirements. This approach includes such elements as major functional blocks of PMISS, more detailed functional modules (within the functional blocks) and of information flows, including as internal (the flows between PMISS functional blocks and modules) and external (the flows between PMISS and other data sources and information systems). Generic PMISS model includes four functional blocks, representing such broad functional areas as strategic analysis and strategic choice, management by key performance indicators, corporate planning and budgeting, consolidated financial reporting. The functional block of strategic analysis and strategic choice (BSASC) is relevant to all the stages of strategic management process: strategic analysis (external and internal analysis, corporate appraisal), strategic choice (strategic options generation, evaluation and choice), strategy implementation, feedback control. The block performs an informational interaction with all the other PMISS blocks, accounting systems and other management systems within an organization and also with data sources outside an organization. The functional block of management by key performance indicators (BKPI) is relevant to such stages of strategic management process as strategy implementation (developing of KPIs), control (recording the gaps between targets and actual results) and strategic analysis (investigation of causes of these gaps). The block interacts with two other PMISS blocks (the block of strategic analysis and strategic choice and the block of corporate planning and budgeting) and also with accounting systems of an organization. The functional block of corporate planning and budgeting (BCPB) is related with strategy implementation (development of a set of corporate plans and budgets as a base for detailed operational planning). However this block also takes part in the processes of control (determining the gaps between actual and planned data) and strategic analysis (investigation of causes of the gaps). The functional block of consolidated financial reporting (BCFR) provides the main corporate governance information channel, which allows a company to communicate with its external stakeholders (first of all, investors). The block is also an important source of information for management purposes, including control and strategic analysis. The four blocks of PMISS get relevant information from certain sources, including business environment (BE), accounting systems (AS) and sources of qualitative information (SQI). In turn, the PMISS provides information for enterprise resource planning systems (ERP) and external stakeholders (ES). Information flows related with PMISS and its functional blocks are presented in Table I (the abbreviations are similar to mentioned above). TABLE I. INFORMATION FLOWS Information flows From To Enviromental information BE BSASC Accounting information AS BSASC BKPI BCPB BCFR Qualitative information SQI BSASC Strategic objectives BSASC BKPI Global initiatives accepted BSASC BKPI Forecasts BSASC BCPB Non-financial reporting BSASC ES KPIs (target values) BKPI BCPB Development scenarios accepted BKPI BCPB Performance metrics BKPI BSASC Corporate plans / budgets BCPB BCFR ERP Planning / budgeting metrics BCPB BSASC Consolidated financial reporting BCFR BSASC ES Consolidated management reporting BCFR BSASC Consolidated reporting metrics BCFR BSASC 47
IV. USING OF BUSINESS INTELLIGENCE SYSTEMS AND ANALYTICAL APPLICATIONS PMISS modeling involves determination of the types of information systems that may be used if the frames of different functional blocks and modules. Among those information systems the key roles belong to business intelligence systems (BI systems) and analytical applications. Different types of analytical software may be used for different functions of corporate governance and strategic management. At the same time many functional modules allow using of several types of products, either alternatively, or in some combination. Information systems that may be applied within different functional blocks and modules of a performance management information support system are presented in Table II. TABLE II. USING OF INFORMATION SYSTEMS Functional blocks and modules Information systems Block of strategic analysis and strategic choice (BSASC) - Monitoring - BI systems - Forecasting - BI systems - Statistical packages - Corporate appraisal and positioning - BI systems - Strategic options evaluation / choice - Decision making systems - Targets setting - BI systems - Financial modeling Block of management by KPIs (BKPI) - KPIs setting - Scorecarding applications - Scenarios evaluation / choice - Financial modeling - Simulation software - Scorecarding applications - Decision making systems - Targets achievement analysis - Scorecarding applications - BI systems Block of corporate planning and budgeting (BCPB) - Plans / budgets preparation - Budgeting applications - Plans / budgets execution analysis - Budgeting applications - BI systems Block of consolidated financial reporting (BCFR) - Consolidated statements preparation - Consolidation applications - Consolidated statements analysis - Consolidation applications - BI systems It also should be noticed that few functions in the model have creative, informal nature (the examples are goals setting or strategic options generation). Such functions are almost entirely performed by a human, with a little impact of information systems. However even in such cases managers have an opportunity to rely on some types of intelligent systems, such as artificial intelligence or knowledge management systems. In addition, some types of supporting systems should be mentioned. These systems do not perform analytical functions, but they provide a common foundation for analytical software. The examples of such systems are: portal solutions, master data management systems, data quality management software, extract/transform/load (ETL) systems and some others. These types of software are also important for setting up integrated corporate information systems. V. CONCLUSION The proposed concept of a performance management information support system (PMISS) and its generic model may be considered as common for organizations of different types and industries. The model may be useful for a range of tasks, including definition of functional requirements, assessment and choice of analytical methods and software, description of business processes and communication schemes, development of personnel competency models, detailed planning of implementation projects. ACKNOWLEDGMENTS The author is grateful to Prof. Tatiana Kravchenko for her comments and suggestions. The author also gratefully acknowledges the financial support of academic mobility, provided by the Academic Fund of the Higher School of Economics (Moscow, Russian Federation). REFERENCES [1] A Guide through IFRS. International Accounting Standards Board, 2009. [2] R. Antony, Planning and control systems: a framework for analysis. Boston: Harward Business Press, 1965. [3] Business Performance Management industry framework document. Final version 5.0. BPM Standards Group, 2005. [4] R. H. 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