Final Questions of IT for the global manager
Theme 1: Role of the CIO
What CIO characteristics do you think were important in this hiring decision?
The Sarbanes Oxley Act requires the SEC to review 1/3 of the companies registered with the SEC each year. While congress increased the SEC budget from $514m to $716m they could not hire accountants and examiners quickly enough to comply with the law. Effective utilization of technology to automate much of the review process was the only available solution.
Mr. Booths had significant experience helping develop IT strategies for Large Financial Service companies. These companies had been subject to strict regulatory compliance for many years and had large IT budgets that allowed them to experiment with a wide variety of new technologies. As an MBA graduate from Stanford he had quickly shown his problem solving abilities at McKinsey and rapidly advanced to the position of Associate Principal within the Business Technology practice. This made him an obvious candidate for the job.
Source: Information Week August 17th, 2004 Beth Bacheldor.
What would your major objectives and priorities be in this scenario?
SEC Chairman William Donaldson said there was a need to focus on and improve the effective utilization of technology within the SEC and saw a need to develop a long term comprehensive strategic plan to serve its primary client - The American Investor.
The major objectives for Mr. Booth’s IT organization would be:
1) Provide the American investor with appropriate and timely information that would allow them to invest more effectively.
2) Provide the technological framework and support to allow the SEC to comply with the Sarbanes Oxely Act and other regulatory bodies.
The Priorities to meet these objectives would be to:
1) Assess the current capabilities of the SEC IT organization.
2) Assess the current and near to mid term business needs of the SEC.
3) Develop an Enterprise Architecture to meet the needs of item 2 within the capabilities of item 1. This would include:
i) Electronic Information Discovery - to help identify non-compliance.
ii) Workflow and content management - to facilitate collaboration between departments, companies and customers.
iii) New data tagging formats - to effectively archive large volumes of data and facilitate search.
Source: SEC website.
What “best practices” of CIOs will be important for Mr. Booth?
“Best practices” would include:
1) Quick incremental role outs of solutions (within 90 days) to show quick successes for management.
2) Attract key management talent who have had success implementing the new technology in similar industries to minimize risk of failure.
3) Provide targeted training for technical staff.
4) Provide mentors for end-users to help with initial applications and change management.
Theme 2: The Role of IT
Based on the discussion and your readings - “Does IT Matter?” - what would you describe as the five most persuasive arguments Carr makes to support his argument? What are the five most persuasive arguments from the other side? (reference comments of people you use if not your own thoughts). (5 points)
Nicholas Carr does not believe that IT matters. His first major point is that IT is in many ways like the railroads of the mid 19th century. in that we are currently investing way too much money in IT. One day he predicts that like the railroad company’s the bubble will burst and profits will dry up. Another argument that he makes, is that IT is highly replicable. Why make your own software, when you can buy or use someone else’s state of the art software platform? Carr also states that IT is subject to rapid price deflation. After the Internet bubble burst in the late 1990’s Carr and others have been asking, aren’t the IT functions that we have now sufficient and can things really get much better before they get worse? He also points out that studies of corporate IT spending consistently show that greater expenditures rarely translate into superior financial results. In fact, the opposite is usually true. I on the other hand think the role of IT does matter. Comparing the IT industry to the railroad industry is ludicrous. Even if there is a correlation between the two industries, the railroads are still very important in our everyday life. Just like IT will most likely be very important in everyday life for business people in 100 years. Sure there are mistakes that many companies make when making IT decisions, but that doesn’t mean that IT isn’t important in the business world. More than $2 trillion is spent on IT every year. It’s a little crazy to brush that off as insignificant. Sure we may have exhausted some of the value from IT innovations in business practices, but who is to say the next innovation is not around the corner. Carr states that IT is nothing more than a tool. I agree with this, but building a successful company with an IT department is like building a house without a hammer. Carr’s statement that IT can’t offer competitive advantage is outrageous too. Widespread IT solutions from different vendors will help make the world a better place. Paul A. Strassman believes there is competitive advantage in IT, that it hasn’t lost its strategic value, IT is not a commodity, that doesn’t offer competitive distinction, and that the influence of IT will not be macroeconomic like Carr stated and thus have a means for differentiation, and lastly that because it can be easily acquired it only makes it more valuable because it promotes competition.
I tend to agree that IT does matter. Without it, my father would be out of a job, and the business world would be a much different and difficult place to function in. I believe that Carr is right in stating that the price of IT will decline in the future, but that’s typical of any marketing development cycle. I think its rather pessimistic to say that we can’t be any more innovative in the IT world than we already are.
Theme 3: IT and Competitive Advantage
We have talked about how companies in the future will compete on the basis of attention, experience, information, innovation, resilience and how companies will be networked across supply chains. Suppose you were asked to write a book on “The Future of Competition.” Write the summary of the major points that appears on the inside jacket of the book. (5 points).
If you think that your company’s reputation will speak for itself, you are dead wrong! Attention is a large part of the future of companies. Companies need to manage their customers attention to make sure that they get repeat buyers. Experience is also vital, customers are looking for an experience when they shop, not just a service. This book will show how several companies made their product an experience, and profited from it. If you want to stay competitive you must be able to innovate. There are ways to innovate: continual reconstruction (resilience), creative reconstruction (renewal), and creative deconstruction (revolution).
According to Gary Hammel, companies must reinvent themselves into resilient companies. Give an example of a company you believe fits the definition of resilience. Why? (3 points).
The company that we talked about in class, is Apple Computers. Through an excellent marketing department, they have been able to stand the test of time even against a powerhouse like Microsoft. Apple only has about a 5% share of the personal computer market, but they continue to spawn out new, faster, and easy to use computers. They have created a large fan base. Apple has given up on trying to convert business to use their computers, but they do realize that their G platform Powerbooks are much better for graphic designers and video editors. Being resilient means continual reconstruction. It also means knowing what you are good at, and giving up or getting better at what you are bad at. Apple thrives with change. In the past couple years they have dominated the file sharing/digital media player sphere. Economist expected Apple to be dead years ago, but they continue to be resilient and innovative.
What does this mean to you as you begin your career?
In talking with ex SAP employees and industry insiders, it appears that Mr. Aggassi was a founder of TopTier a California start-up “Portal” company that SAP bought at the height of the dot.com era at a highly inflated price. The product was redeveloped to become “mySAP” and has not been particularly successful in generating revenue for SAP. While he was successful at selling his vision for NetWeaver to the chairman of SAP, he has not been as successful in selling it to the rest of the board nor to the rank and file employees of SAP, particularly in Europe. Many SAP insiders believe that it will be difficult for NetWeaver to be successful against IBM’s WebSphere, and that SAP would be better competing at an applications level against Oracle and Microsoft, rather than taking on IBM. They also comment that while he might have been a good entrepreneur, that he has little experience in managing a 30,000 person multi billion enterprise. It is also rumored that he is not happy at SAP and is looking at other opportunities.
What this means to me as I start my career is that I would want to work for a company with similar values and culture where I could grow and develop skills that would be of value to that company and be appreciated by that company. If my company were to be acquired I would want to reevaluate whether the new company had the same values and culture and that they would allow me to continue to develop and would appreciate my skills.
Theme 4: Outsourcing and Running IT as a Business
Companies today are trying to better understand how to leverage IT strategically and how to use it as a driver of business success. The trend today is to run IT as a business. Explain what it means to run IT as a business. Provide an example of a company that is running its IT function this way (rather than as a cost center). Explain. (4 points)
The myth in business is that IT is nothing more than a cost center. It is essential to run an IT department like a strategic business partner. IT might not always generate profits (although it can.) but it should generate value. One company that viewed IT as a business partner is Intel. Doug Busch, Intel’s CIO views IT as an obligation, not a choice. The reason why IT has been a disaster for many companies, is that there wasn’t a process management in place. Companies should think of IT as customer service. There needs to be managers watching over the IT department to make sure for quality control. Many people in the IT world are not used to working in environments that are very “business-like” but it is necessary to get IT employees on board as soon as possible. At Intel, Busch has made measuring the dollar value of IT a top priority. The IT department launched its own business value program with a goal of delivering $100 million in new value for Intel and its customers.
http://www.cio.com/archive/050104/howto.html
Offshore operations of IT have become more prevalent in companies. Low wage foreign labor has posed a threat to American call center workers - but their counterparts in India and other countries also face being replaced by increasingly sophisticated voice automation technology. The VP of Technology Research at Meta Group says we will see more clients automating their offshoring. Will this be the trend for the future? Explain your view. (3 points)
Considering that Dell recently got rid of their call center in India, I doubt this will eliminate real life call workers. Consumers like to talk to people, not computers. They complained of the language barriers and the accents of some of the Indian workers that were answering their phone calls for Dell, thus Dell brought their call center back to the US for North American Customers. Until voice activated computers become smarter than humans, I don’t see them replacing humans anytime soon in call centers. There are too many variable to consider.
What are the pros and cons of offshore outsourcing for IT? Discuss the role of globalization- a company like Dell, for example, has a global strategy -the world is its market. Dell’s core belief is “Build anywhere, not everywhere.” (4 points)
Pros: Saves money, strategic step in becoming a global enterprise, more skilled talent overseas, great short-term solution.
Cons: Taking jobs from American workers, can be considered unethical, risky, lack of trade laws makes intellectual property up for grabs, IT workers overseas need to be watched by a company employee, most outsourcing contracts end up failing, it can end up being more expensive then having an in-house IT department, you can’t always get answers due to the difference in time zones, the drive for local innovation is diminishing as most IT jobs are going overseas, and fewer US students are studying computer science.
Dell doesn’t consider itself a US company, it considers itself a global enterprise. The US is no more of a stakeholder than India is. If it wants to be competitive globally, it can’t be concerned with only thinking about supplying Americans with jobs. It’s motto is to “do what it does best and outsource the rest.”
Theme 5:
Provide a specific company example of the application of a decision support system Office Depot used a DSS. This helped their sales force keep up to date with all of the info that the DSS decided was relevant.
Provide a specific company application of an expert system.
Armstrong Engineering a private Canadian company in Toronto sells water pumps.
Using an expert system it allows customers (sanitation engineers etc.) to access their website, design a water pump, based on usage requirements and volume of water to be pumped; then interfaces to a supply-chain management system and robotic assembly line to manufacture the customer specified pump. The pumps are guaranteed to be shipped to anywhere in the world within forty eight hours.
Give a specific example of the use of the following technologies:
a. Neural Networks
Customer Relationship Management: Neural Networks can identify behavior that a customer might engage in before terminating that service and can prescribe corrective solutions to ensure that the customer does not terminate the service.
b. Intelligent Agents
Currency conversion: A global sales forecasting system, global accounts payable or receivable application could all use the same Intelligent Agent to perform real time currency conversions to give up to the minute accurate financial results.
c. Collaborative Systems
Drug Research: Collaborative Systems are used by Pharmaceutical companies to document their research, document clinical trails. This information is then forwarded on to the FDA for approval. Millions of documents can be archived searched routed and edited by hundreds of people over a period of many years to confirm effectiveness of the drug and to identify possible side effects.
Theme 7: Technology Clusters
Which technology cluster other than the one you presented did you find most interesting? Why?
I think the most interesting tech cluster that was presented in class was Canada’s Tech Triangle. The reason I found it so interesting, is because Open Text, the company that I worked for started because of this cluster. Without the help of the University of Waterloo, the company would have never gotten off the ground. Today the Chancelor of the University is still on the board of Open Text. Having not known the history of Open Text, I would have figured that the only good things to have come out of Canada are maple syrup and a few well-known comedians. I have only visited Waterloo once, but you can’t drive very far without seeing office buildings for biotechs, telecoms, and software giants.
Theme 8: Reengineering Processes / ERP / SCM
In the early 90’s companies went through several years of reengineering processes within their companies. At the same time they were implementing ERP (enterprise resource planning) systems. The agenda for the next ten years according to Michael Hammer is to reengineer processes along the supply chain across company boundaries. Using a company example, describe the concept of reengineering and the relationship to the design of ERP systems. (5 points)
Wal-Mart is in the process of reengineering its ERP system. The reason being, was there was a need to control rapidly fluctuating material purchase costs and to reduce a significant increase in raw material and finished goods inventories. The primary goal, however, was the need to give all levels of management immediate, rapid, and accurate views of financial and operating information. Its also very important for their suppliers to be connected through their ERP system and that their RFID rollout will work in conjunction with it. Since supply-chains are basically the relationship between the distributor and the supplier, it is essential for both to be connected through ERP.
7-Eleven refers to it supply chain as 24-hour “centrally - decentralized.” This means managers make on the spot decisions based on their knowledge of the neighborhood. For example, during hurricane Isabel managers ordered additional supplies based on anticipation of customer needs. How might this supply chain evolve over time in order to squeeze out more overhead and address “the agenda” of the next decade. (5 points)
Perhaps an ERP system can automate the supply chain. Perhaps the system could be linked to Doppler weather stations in the area. If a storm is near, the system will automatically order more emergency supplies. The supply chain wouldn’t have to be centralized, but it could be regionalized.
Theme 9: Security and Privacy
What are some “best practices” for companies facing a security attack? (3 points)
It is important to understand the risk between consumer image of the company and the public’s image of the company. You do not want to act on behalf of the customers so not to lose them. Prior to any attack you should have a plan established that should dictate what the company does in the scenario that they become under attack like in the iPremiere case. It should be followed and there should be a chain of command clearly in place. It is also a good idea to have a good PR department. After an attack, it is best to do an internal audit, and perhaps even take the system down for a day or two to prevent further attacks. This means you might lose customers, but it’s in their best interest that their personal information isn’t compromised. It’s also a good idea for companies to have a good working relationship with their ISP and to let them know company procedure in case of an attack.
What privacy issues are you concerned about as an employee or consumer? (3 points)
I’m very concerned that my information can get into the hands of somebody else. Just recently my Spidercard ID number got into the hands of some of my drunk friends. They then charged more than $200 worth of pizza on it over a span of 3 weeks. I suppose it could have been worse it could have been a credit card number or even my social security number. As an employee I’d be concerned about fellow employees discovering how much I make. I believe in privacy, but it seems like it’s getting easier and easier to access confidential information
Theme 10: Customer Revolution and CRM.
Many argue that the customer revolution has had a more significant impact on business than any other aspect of the internet era. How have businesses responded and what does it mean to reinvent your company from the customer perspective? Give a specific company example to explain. (3 points)
A company can’t be successful without catering to the customer’s needs. The customer is always right. One company that does its best to cater to its customers needs is Amazon.com. Amazon will ship anything to you and all you have to do is click a mouse. Amazon will also recommend items that you might like based on past purchases. Amazon is also known for its security and privacy measure. I don’t think any customer feels unsafe giving Amazon their personal info.
Customer metrics have become more important since customer capital has taken on added significance. Companies use CRM to measure these new dimensions of customer relationships. CRM systems have become necessary to remain competitive.
Why have customer metrics become so important to companies today? (3 points)
CRM systems are very useful in identifying several key components of their sales. They include customer retention, satisfaction, growth, spending habits, and defection. By monitoring all of these, companies are better able to tailor their products towards their target consumer audience. In the long run, this helps keep customers happy and gives advance warnings of what a company may be doing wrong in terms of customer defection. It is very important to have a CRM in place for consumers who place large orders on a regular basis.
Permission marketing has become even more significant in the context of wireless CRM. Using a specific example, explain the six step permission process and give your opinion as to its usefulness. (3 points)
The 6 step permission process is :opt in, opt on, opt when, opt where, opt how, and opt now. One company that utilizes this with mobile devices is United Airlines. When I signed up for their frequent flier miles program they asked for my cell phone number and asked permission to call me at certain times when I get a flight cancellation or a change in my flight itinerary. I opted out from them calling me about special deals though
Theme 11: Competitive Intelligence
How would you set this up in terms of where it fits in the organization, who it reports to, mission, staffing etc. What five critical success factors will be the most important for you to work towards?
If I were hired to set up a competitive intelligence unit for Open Text a $500 million ECM company I would set it up as follows:
Open Text is organized along the lines of “product segments”. A product segment manager decides to build a new product based on an analysis of a given market and the revenue potential for such a product. They develop a business plan which would include a description of what the product would do or how it might be used by potential customers. This description would then be given to a technical “product manager” who would develop a technical product specification document. This would be given to a team of software developers who would build the software to the specifications. Once the product is developed it is given to a product marketing team, who develop a go to market plan which includes: pricing, product positioning, competitive “knock-offs”, product training and role-out. It is then handed to the field sales organization who proceed to prospect and sell the product.
b
In many companies, competitive intelligence is set up in the “product marketing” department. I would want to change this and set it up in the segment management department reporting to the segment manager. The mission for the competitive intelligence unit would be (Based on the current core competencies of Open Text):
1) Maintain database of information regarding how current customers are buying and using the product(s).
1) To identify potential products that would have great ROI for a customer but where there was no or little competition.
2) Where there was competition to identify their products strengths and weakness and to build a strategy for minimizing their strengths and maximize their weaknesses.
Staffing: With the right technology we would need only one person per product line. In Open Text’s case this would be a team of three people.
Critical success factors:
1) An in-depth knowledge of the target market and an understanding of the current issues (where money is being spent) for those markets.
2) An in-depth understanding of the competitions products, pricing and market positioning.
3) Push Technology that will allow us to dynamically capture information about customers, prospects and competition.
4) An effective communications channel that will allow is to quickly react to change and influence the necessary departments (Development, product marketing, sales etc.).
5) An innovative approach to identifying new products and markets.
Do you think CI will become more important for companies in Future? Why?
Yes. In the global market place it is becoming more and more difficult to create new products and markets with “Disruptive Technology” and to sustain market share and profits from more mature product lines.
Effective CI will allow companies to more effectively identify potential “Disruptive Technologies” and help maximize profits and sustain market share from more mature product lines.
Theme 12: Information and Knowledge Management
Information has become the most important asset to many companies today. Measuring its value as an intangible asset is a challenge for companies. Studies have shown that intangible assets contribute more to company value today than tangible assets.
Give a specific example of how a company has moved away from tangible assets to more emphasis on intangible assets. (4 points) A great example of company concerned primarily with intangible assets is Richmond’s own Capital One. Capital One is not a credit card company, it’s an information database company. If you asked anybody ten years ago though, they would tell you that it was a credit card company. Information is an intangible asset. Information is power, and without it, a company can’t make money. The problem with intangible assets, is that it can lead to ethical dilemmas for companies. Whether or not to sell a customer’s information, even if it’s legal has a lot of people in outrage. Companies are moving more towards handling intangible assets, because information is usually much more valuable, as well as you don’t need to spend millions of dollars on rent to store it, you just need a secure database and perhaps a DSS to mine information and determine what is valuable and what isn’t.
How can the Value Dynamics Framework be used to help companies evaluate their assets and their contribution to overall company value. Give an example. (4 points)
Many investors and financial firms use the Value Dynamics Framework when making investment decisions. This framework doesn’t look at mere book value when evaluating a company. This system rates a company’s ability to increase it’s future market share. Instead of just taking tangible assets under consideration, this framework also looks at intangible assets like: ideas, intellectual capital, systems, brand recognition, culture, and even ethics. It is foolish to invest solely on tangible assets, especially since intangible assets are usually more valuable then tangible assets
admin on May 19th, 2008 | File Under Business essay | No Comments -