Business and Support Systems
NAME
American InterContinental University
Date

Abstract
Virtual reality and augmented reality are two different versions of reality. The use of electronic systems caused a flash crash because the systems were not set up to catch things like the selling off futures at a rapidly dropping rate. The productivity of Valero is being measured on a dashboard that has access to current and historical production data.

Business and Support Systems

Introduction

There are different digital realities that are currently available; two of these are augmented reality and virtual reality. A flash crash happened because electronic systems were not programmed to stop the sale of futures if the price dropped. Valero is managing their business using a dashboard to measure the productivity of their refineries.

Reality Gets Better
Augmented reality and virtual reality use similar technology, however, virtual reality immerses a person into an entirely new reality, while augmented reality enhances the real world reality. In augmented reality, a computer can supply a person with sensations, images and sounds. Digital data is added to the real world, so the virtual reality world is not nearly as exciting as the enhanced real world. Virtual reality immerses the user, and all of their senses, into a digital world that is entirely made up of media. Users of virtual reality generally have to wear a headset that provides them with a way to block out the real world while supplying them with a 3-D space.

Marketers have found an exciting option, augmented reality, in which they can attract consumers with this new technology. Consumers are now expecting high performance cellular phones that can do what a home computer can (Laudon & Laudon, 2012). New applications are being created for phones every day. An example of this would be the “Shazam” application. If you hear a song on the radio, or TV, or anywhere else, but do not know the name of the song or the artist and would like to find out, all you have to do is press the application button and then hold the phone up so Shazam can hear it. It will scan databases to find that song for you.

Augmented reality can be a very nice tool for individuals looking for a home to purchase. This is because there are applications being created that will allow buys to point their phone towards a house and it will provide detailed information about the house as well as the value for that home (Laudon & Laudon, 2012). This means that people who do not want to spend a lot of time searching with a realtor can go and shop without feeling pressured. This also takes pressure off the realtors because homebuyers are doing some of the legwork on their own. Manufacturing, military training, medical, engineering, and entertainment are all areas that could use augmented reality (Vallino, 1998).

The Flash Crash: Machines Gone Wild?

At the time, the potential for Greece to default on their debt, caused concerns in the European debt, and investor confidence was low (Laudon & Laudon, 2012). In 2010, prior to the crash, the New York Stock Exchange (NYSE) only controlled between 15% and 17% of the trades, the rest were made by new electronic exchanges. The NYSE kept the process of human trading, which is otherwise known as slow-mode, for times when there are big fluctuations in the market (Vallino, 1998). Some of the new electronic exchanges have been set up to stop trading when slow-mode goes into effect. This means that the different exchanges can have wide variations in prices. All of these issues were happening simultaneously, and are believed to have contributed to the flash crash.

Ease of access, cost, self-directed investing and convenience are all benefits of electronic trading. People can invest with a funded checking account, a computer, and access to the internet through online trading sites. Online trading is far more economical than using a human stockbroker because of the automation of the trades. Trading can happen, without going through a third party, whenever the investors choose. Electronic trading means that an investor can do their trading from anywhere with their computer and an internet connection.

Electronic trading of the futures contracts by Waddell & Reed Financial was executed so quickly that there was not time to try to stop it (Laudon & Laudon, 2012). The algorithm that was used by the firms’ computer did not take into account the price that the futures were being sold at. High-frequency traders (HFT’s) quickly bought up the futures that were pouring into the market, which caused the Waddell & Reeds computer to transfer faster (Laudon & Laudon, 2012).

I do not believe that this crash could have been prevented because no one can think of every possible contingency to put into the computers to keep this from happening again. Of course, after a failure like the flash crash, it is imperative that the systems be re-evaluated, and come up with a way to keep these specific problems to happen again. In the future, something else that has not been thought of is likely to happen, at which point the cycle will begin again.

Piloting Valero with Real-Time Management
Valero management had to take into account what factors they wanted to be included in their dashboards. The organization as a whole needed to provide information on exactly how the process works, so that Valero’s dashboard could be built to show useful information. Technology had to find a way to track all of the information to a series of monitors in the operations building. They overcame that obstacle by using information straight from their manufacturing software.

Information from each refinery is displayed on the dashboard; this includes data about energy consumption, safety, equipment reliability, plant reliability, and inventory management (Laudon & Laudon, 2012). Valero’s dashboard also allows management to compare actual production against planned or budgeted production and then take corrective action if necessary (Laudon & Laudon, 2012). In addition, management could change the staffing at locations that are over-performing or under-performing. With the information from the dashboard, Valero can see where inventory is getting too large and adjust performance of that specific location.

Valero has set up their dashboard to pull information straight out of their SAP Manufacturing Integration and Intelligence application, which has all of the information from current production as well as the history for each plant (Laudon & Laudon, 2012). Since that system had already been in use, it did not require extensive reworking of their information systems. They had to purchase a large number of monitors to create the dashboard.

Valero’s management has decided that their dashboard is so successful that have determined they want more dashboards (Laudon & Laudon, 2012). Since management can compare planned production versus actual production, they can make decisions accordingly. It would not be worth the cost and effort to create a dashboard for things that are out Valero’s hands because they cannot change them.

Conclusion
Augmented reality and virtual reality are two versions of reality, that are different based on how immersed the player or viewer is within the reality. Electronic trading systems were to blame for a flash crash because the computers were not set up to stop the selling off of futures as the price dropped, instead it sped up as the futures were being purchased by the HFT’s as they were released. The productivity of Valero is being measured and managed using a dashboard that is linked directly to their manufacturing software. As technology continues to change the business world, it is important for companies to keep up with the trends so they can continue to be competitive.

References

Cohan, P (2010, August 8). The 2010 flash crash: What caused it and how to prevent the next one. Retrieved from http://www.dailyfinance.com/2010/08/18/the-2010-flash-crash-what-caused-it-and-how-to-prevent-the-next/

Laudon, K.C. & Laudon, J.P. (2012). Management information systems: Managing the digital firm (12th ed.). Upper Saddle River, NJ: Pearson Education, Incorporated.

Vallino, J.R. (1998). Introduction to augmented reality. Retrieved from http://www.se.rit.edu/~jrv/research/ar/introduction.html