Case study summaries

Kazim Raza Syed (ME3) Industrial Management and International Negotiation

Instructor: Prof. Jorge Gonzalo Escuela Técnica Superior de Ingenieros Industriales (ETSII)

Universidad Politécnica de Madrid

Case I : IT doesn’t matter – by Nicholas G. Carr Main theme of article:

IT has become a commodity. Affordable and accessible to everyone, however it no longer offers strategic value to anyone. We must focus on its risk more than its potential strategic advantages. The greatest IT risk is overspending on a commodity which is widely available. Companies should instead of seeking a strategic advantage by using IT, try to manage IT’s cost and remain cautious about expected returns before investing in IT. Arguments offered:

• Core functions of IT – data storage, data processing & data transport have become available and affordable to all, thereby losing its strategic advantage.

• IT is similar to infrastructural technology and the window for gaining advantage from infrastructural technology is open briefly, until it becomes ubiquitous.

• Similarities with other infrastructural technologies: o IT is a transport mechanism- it carried digital information. o IT is highly and perfectly reproducible at virtually no cost. o Internet has aided in commoditization of IT by providing a channel for general

applications. o IT is subject to rapid price deflation o IT vendors are increasingly positioning themselves as utilities or commodity

suppliers. • Most of the IT-spurred industry transformations have already happened or are in process

of happening. The best practise have already been built into IT systems and thus IT as an infrastructural technology has reached the stage where it offers no strategic advantage.

Suggestions offered:

• Rapid fall of cost of IT ensures that any new capabilities are quickly shared. Thus companies should try to better manage the spending and reduce wastage. Ex. High processing power computers to carry out daily low computation demanding work.

• Managers should negotiate hard with vendors to ensure long-term usefulness of their hardware investments and impose strict limits on upgrade costs.

• Reduce frugal usage of IT resources such as storage space by limiting employee access to resource utilisation.

• Delaying IT investments until standards and best practises are incorporated into the IT systems. They should refrain from hasty purchases and allow impatient competition to shoulder responsibility of overspending.

• The key to success is to no longer to see advantage aggressively but to manage costs and risks meticulously.

Counter-arguments from other writers:

• The way companies organize processes and use information plays a critical role in their ability to distinguish themselves from competitors. (John Seely Brown and John Hagel III)

• The value of being a first mover hinges on the speed with which fast followers catch up. Companies such as Walmart and Dell continue to lead this example. (Warren McFarlan and Richard Nolan)

• IT never mattered.What matters are the people who invent technologies and who deploy and use them. (Mark S. Lewis)

Case II : IT does matter – by Robert M. Metcalfe Main theme of Article:

The author tries to come up with reasons against the article “IT doesn’t matter” by Nicholas G. Carr. The mode of reasoning is based on real life examples where IT is playing significant role in governing corporate strategy of companies.

Reasons that I.T Matters (against Carr article):

• According to a 2003 IDC survey, almost 60% say that the strategic importance of IT is increasing, only 2% say that it is decreasing. The results also point that 55% feel their companies should use IT more aggressively whereas only 43% feel their usage is just right and 2% feel that they should be less aggressive.

• In contrary to Carr’s argument that IT managers are not frugal and upgrade to things which vendors want to sell, the real world IT managers already exercise their IT budgets wisely.

• The author also criticizes Carr’s use of title for article “IT doesn’t matter” which misleads readers, as Carr himself clarifies in the article that IT does matter however at this point of time offers no competitive advantages.

• The author also criticizes Carr’s wrong equivalence between IT and electricity. He points out how Carr has assumed electricity to be static, which is not the case as modern electrical grids still struggle with controlling of electric power along with development of innovative methods in generations such as wind, solar, fission, fusion, hydrogen and batteries. The author points out that IT is even bigger and more complex than electricity, however its significantly recent and still very much evolving.

• Carr has concluded from his study in article, which states that 25 highest economic return companies spend on average just 0.8% of revenue as compared to typical companies spending 3.7%, that IT spending doesn’t guarantee more returns. The author dismisses this conclusion by countering that companies which invest wisely in IT increase revenue much faster than those who do not.

• The author ridicules Stephen Roach, Morgan Stanley economist, about his claims that investment in IT were showing no benefits as per U.S productivity numbers, by reasoning that Robert Solow, a nobel prize winner, is unsure about the methods used in measurement of productivity. The author also questions the attitude of critics such as Carr and Roach towards IT.

• Carr suggests managers to invest only in proven technology which offer low risk and high value. However author states that this step might hamper the spirit of managers in U.S where they try to strike a balance between risk and significant returns by effective use of IT in their companies.

• The author gives example of Avistar company which offer network desktop videoconferencing solutions. He points out that the issue is not with IT however the growth of company is restricted by coming up with innovative adoptions of IT to bring values worth the risk for customers.

• Finally author argues against Carr’s statement that things which are widely available cannot be used for sustained advantage. However Harvard Business Review is still subscribed by many companies despite old versions being easily available for everyone.

Case III: TECHNOLOGY HELPS NVIDIA ANTICIPATE THE FUTURE

Business challenges

• Accurate forecast of customer demand • Planning inventory

Information Systems

• Monitoring lead times • Better Forecast • Inform Presentation

Management level changes

• Plan production • Selection of the solutions • Financing the change

Organizational changes

• Centralized data • Revise supply chain

Technological changes

• Install SAP Business object web based intelligent system

• SAP dashboard • Integrate with SAP APO

Business Solutions

• Better Communication • Reduce costs • Better tracking of

inventory • Accuracy of the

forecast increased • Better decision making • Finance being able to

work with Business production team

Case IV: Four Cloud ERP Providers on the Salesforce Platform Difference between four ERPs

Financial Force Kenandy Rootstock Ascent ERP Core

Business solutions

offered

Accounting and billing system

Accounting and billing system

Manufacturing ERP Manufacturing ERP

Additional Features

• Revenue recognition • Credit control • Configure-price-quote

(CPQ), order fulfilment, service contracts, inventory management & supplier management modules.

• Light warehouse management capabilities

• Core HR, talent management, recruitment compensation, time management & absence management.

• Integration with payroll systems.

• Multi-company & multi-currency support

• Multiple plants with multiple locations in single tenant

• Lot tracking & serial tracking

• Multiple revisions allowed in inventory

• Integration with third-party systems for EDI, warehouse management & transportation scheduling.

• Custom system coding.

• Customer order management

• Accounting system through collaboration with FinancialForce.

• Purchasing, production engg, lot&serial tracking, MRP, MPS, capacity planning, shop floor control, manufacturing costing, PLM/PDM integration

• Multiple companies, multiple divisions & mulyiple sites within single tenant

• Project based manufacturing

• Production mode of build-to-order, assemble-to-order & configure-to-order along with repetitive manufacturing.

• Conversion of opportunities from Salesforce.com into sales quotes and into sales orders in production system

• Complete manufacturing with master planning, purchasing, production & shipping.

• Reverse logistics supported through RMA process

• Accounting function through FinancialForce

• Easy integration with other SaaS systems such as Intaact & Quickbooks

• Advanced manufacturing functions – workflow & alerts, multi-plant & multi-location support, and production scheduling & tablet computer data collection.

Company strategy with

respect to ERP

Acquisition of companies with previous joint projects to gain access to additional potential targets.

Indigenous expansion & dynamic integration with other third-party systems.

Rapid software development, collaborations with other SalesForce platforms such as FinancialForce for added features.

Collaboration with FinancialForce for added accounting features. Targets smaller companies still using quickbook & Intaact. Offers 30 day free trial on its website.

Disadvantages of Cloud based ERP systems:

• Relatively new systems • Some short term technical glitches in the systems which need to overcome while in usage.

Advantages of Cloud based ERP:

• Speed and flexibility of overall system. • Rapid addition of functionalities & Quick integration with other systems on similar platform • Cloud deployment can offer companies strategic advantages if they are able to completely

exploit the capabilities of the system.

Case V: DP WORLD TAKES PORT MANAGEMENT TO THE NEXT LEVEL WITH RFID

Business challenges

• Traffic congestion at port entry points • Delays introduced by lengthy procedures

and paper-based logistics.

Information Systems

• electronic custom release of cargo

• Electronic Data Interchange (EDI) reporting

• two- way digital radio communications

• “e-token” advanced booking system

Management

• several months performing proof-of-concept trial involving several suppliers tested.

Organization

• Trucks that visit a port terminal are equipped with active RFID tags

• RFID reader, which is integrated with an automated gate system

Technological changes

• RFID-enabled automatic gate systems

• optical character recognition (OCR) system

Business Solutions

• the loading and unloading of containers operate on “just in time” principles to improve container turnaround

• eliminate traffic congestion • eliminate lengthy procedures • increasing productivity at the ports • improving customer satisfaction • Truck delivery time check automatically. • increase the productivity of container

handoffs • Speed the entry and exit of trucks through

terminal gates, and increase fuel efficiency. • enhancing the efficiency of customers’ supply

chains • reduction in manual data input errors • trans- port companies to save time, increase

revenues, and reduce costs • tighten security by providing better accuracy

on inbound and outbound truck movements

Q1. How did Identec Solutions’ RFID-based technology help DP World increase the efficiency and effectiveness of its customers’ supply chains?

Identec’s RFID-based solution has also enabled DP World to improve customer satisfaction by enhancing the efficiency of customers’ supply chains through smoother, faster, and more effective delivery of their containers at terminal gates. The elimination of lengthy paper transactions and manual inspections at gates and the reduction in manual data input error helped to deliver a superior level of service.

Q2. Describe two improvements that resulted from implementing the Identec RFID based solution.

• Eliminate traffic congestion but would also help to eliminate a number of lengthy procedures, increasing productivity at the ports, and improving customer satisfaction. This in turn, increased the turnaround of shipping goods.

• Tighten security by providing better accuracy on inbound and outbound truck movements through the terminals

Q3. How does the concept of supply chain execution relate to this interactive session?

DP World’s management wanted to improve the performance of the port based on the philosophy of “Just-in-Time” which is based on minimization of inventory in a storage point. This greatly reduces the operating cost of supply chain of a company.

Case VI: SAP roll-out issues

Roll out challenges

• Local management not motivated and not trusting the system • Wrong people in the local team dedicated to the implementation • Team members with low English skills • Local Project leader without knowledge and leadership • Wrong planning, badly allocated time to the different phases of the

project • Wrong and untidy management of the project documents and files • Wrong local implementation partner (local consulting company) • Messy data; • Shallow analysis • ………..

Information Systems

SAP

Organization level suggestion

• Project consulting company to be familiar with Sika SAP solution package.

• the differences of the old way of working discussed

• a separate test room away from business area.

• Proper training of company people involved •

Technological suggestions

• clean-up as much as possible the master data existing in the old system • Fit/Gap analysis should be done by process “from A to Z” cross functions • Financial & control posting to be included in process analysis. • Old interface knowledge important • Hardware (PC) should be SAP compatible.

Business Solutions

• SAP will help to underline the internal problems

• Medium & Long term economic benefits due to SAP efficiency & effectiveness.

Management level suggestions

• people with the better knowledge of the local processes & ability to communicate in English need to participate

• Project leader with best skills, personal behaviour

• Organisation of a master data team for correct migration & maintenance after go-live.

• Customers and vendors to be communicated about go-live date.

• Some members may quit job due to inability to work with SAP

Case VII: Is Your Company Encouraging Employees to Share What They Know? 1. What percentage of Knowledge Management is IT?

IT in this scenario play as a tool for sharing of management rather than helping company employees in solving their particular problem. It can offer them to communicate among themselves to share knowledge, however it cannot provide a guarantee on the solving of employee problem.

Therefore in my opinion, it will be safe to say that it plays 25% of the role.

2. What ideas can you find to improve knowledge sharing?

The leaders have to think of ideas to remove barriers in knowledge sharing vicariously. It can be done in three steps:

• Create a designated space for vicarious learning. o Creating a common space that individuals recognize as the gathering place

for sharing ideas and experiences lays the foundation for these interactions to unfold.

• License and endorse vicarious learning. o Acknowledging and rewarding instances when people engage in interactive

learning and recycle (rather than reinvent) a “wheel.”

• Plant starter seeds of vicarious learning. o Leaders can encourage greater learning by jump-starting the process.

leading by example.

3. What are you missing in the article?

• Role of knowledge management systems is missing; in the sense of how to relate a physical interaction of employees with IT-based knowledge management system.

• All the solutions pointed out were for physical interaction. What if the employees are working in geographically separate locations? In that case, may be a virtual interaction session can be prepared.

Case VIII: Edward Snowden Argument presented in the case:

Edward J. Snowden, a former Central Intelligency Agency Officer and National security Agency contractor reveals that US government has been violating the privacy rights of ordinary citizens by monitoring every phone call and mass data collection.

NSA’s claim was that this surveillance was necessary since the Sept.11 2001 attacks and was necessary for maintaining national security.

Effect of revelation:

• The NSA’s invasive call-tracking program was declared unlawful by the courts and disowned by Congress.

• United Nations declared mass surveillance an unambiguous violation of human rights.

• Recognizing the critical role of informed citizens in correcting the excesses of government, the Council of Europe called for new laws to protect whistle-blowers.

• Basic technical safeguards such as encryption — once considered esoteric and unnecessary — are now enabled by default in the products of pioneering companies like Apple, ensuring that even if your phone is stolen, your private life remains private.

Counter-effects :

• United States government charged Snowden under World War I-era espionage laws • The journalists were advised by lawyers that they risked arrest or subpoena if they

returned to the United States. • Spymasters in Australia, Canada and France continued to exploit tragedies to seek

intrusive new powers despite evidence such programs would not have prevented attacks.

• UK also declared statements that they will go ahead with the surveillance program.

My opinion:

The articles which claim actions of Snowden where not right since he was part of the NSA and should have been more loyal to the organisation. However the motive of the revelation is lost in this argument. We should consider the activities of the organisation NSA instead of scrutinising the behaviour of Snowden.

Snowden’s revelation forced public & companies to reconsider their perceptions about national security violating constitutional rights. Even if this violation occurs for one day, it is unconstitutional and should not be tolerated.

The NSA’s claim that post-snowden revelation laws have weakened the capabilities of organisation against potential threats is negated by the lack of program to detect and prevent even a single case of terrorism.

The issue of unlawful claim of a citizen’s right to personal security against compromising of national security, is increasingly becoming more complex with continued growth in world connectivity. However before the security agencies want to monitor an individual they should take prior permission from the judiciary and a present a strong case of suspect before going ahead with the monitoring. This step will keep the agency in check and the agency will have to submit their monitoring results to judiciary back while simultaneously elimination of data from their databases.