Strategic Analysis of Network Designs,

Strategic Analysis of Network Designs, Inc.

Despite enormous progress in recent years to help level the playing field for women and minorities in the United States, some interesting patterns remain firmly in place in terms of how some occupations continue to be gender related, with some fields being feminized and others mostly males. The introduction of computers and the Internet, as well as the need for the right hardware and support services to make these systems work has changed this gender-related playing field in a number of substantive ways, though, and many women- and minority-owned enterprises are emerging as healthy competitors in this fiercely competitive industry. According to Fisher and Williams, "At the beginning of the last decade, the Internet as we know it did not exist. Today, industry uses the Internet to conduct electronic commerce routinely, making business-to-business transactions. While government has lagged behind, several federal agencies have implemented electronic initiatives" (p. 17). One such federal agency is the Office of Rulemaking (ARM), which uses a customized database developed by Network Designs, Inc. An analysis of this company's software applications development division is provided below, followed by a summary of the research and salient findings in the conclusion.

Review and Analysis

Background and Overview of Network Designs, Inc.

Today, Network Designs, Inc. (hereinafter "Network Designs" or alternatively, "the company") describes itself as "a small, women-owned business" and "an information technology (it) solutions provider that integrates new technologies into proven, enterprise-wide solutions. Network Designs provides networked video surveillance, data and physical security, and computer forensics and training in support of Force Protection Initiatives and homeland security" (Fact sheet, 2007 p. 1). The company maintains offices in the Washington DC Metro Area and in Asia and holds General Service Administration (GSA) Schedule GS-35F-4707H, COMMITS, and FAA Blanket Purchase Agreement contract vehicles. The company's primary divisions are described in Table 1 below.

Table 1.

Major Divisions of Network Designs, Inc.

Division

Description

Network Design & Integration

This division is responsible for network architecture, implementation, integration, and management. This division provides clients with solutions for the following operations and corporate functions: call centers, customer profiles; federal supply service automatic call distribution center; desktop-managed upgrades; and, computer installation and support (LAN, WAN, MAN, and wireless applications).

Software Applications Development

This division employs the Capability Maturity Model for Software on applications development projects across the federal marketplace. This division's first priority is to understand the business goals of its customers in order to provide individualized service and products.

Information Assurance

This division is responsible for information security management practices that are capable of managing every aspect of strategic, tactical, and operational work needed to maintain a secure it enterprise.

Source: Network Designs, Inc., 2007, http://www.netdes.com/infoassur.php.

The company's strategic approach to gaining and adding market share has been to use its competitive edge as a women-owned business to bid for and win federal contracts which has been a mandate since the late 1980s (SBA announces women's business initiatives, 1990). According to Dabbah (1999), "Federal government contracts are highly competitive, requiring a very rigid bidding system. These contracts are complex and unique. They are also covered in terms of specific requirements by a multitude of statutes, legislation, standards, and specifications" (p. 191). Because these federal government contracts are "complex and unique,' companies that do their homework and determine precisely what is required to satisfy their requirements to the letter will stand a better chance of securing them; likewise, if a company is able to gain a competitive edge by virtue of an affirmative action initiative, so much the better for them.

In this regard, this author advises, "On the brighter side, and in general, the price of the contract is not a major controlling factor. Although the bidding system specifies that the lowest bidder should get the contract, there are numerous exceptions" (Dabbah, 1999, p. 191). In fact, as Wilson (2000) emphasizes, Section 52 of the Federal Acquisition Regulation "contains dozens of provisions governing the need to give special attention to suppliers that are small businesses (especially a 'small disadvantaged business'), women-owned small businesses, handicapped workers, or disabled and Vietnam-era veterans, or are located in areas with a 'labor surplus'" (p. 126). The company's status as a women-owned business, though, has only been part of the strategy to help them compete in a highly competitive field.

It is reasonable to assume that Network Design did not start out in business with the same resources, talent and expertise that it boasts today, but it has always had the competitive edge represented by its status as a women-owned enterprise that helped the company "gets its corporate foot in the government door" at some point in the past based on its perceived ability to satisfy the terms of a government contract as the lowest and best bidder, which implies it possessed the requisite resources to do so.

Nevertheless, it is equally clear that the company's success to date can also be attributed to its ability to develop the precise mix of resources and expertise that are needed to secure these federal government contracts for various niche products and services. In this regard, the company developed a custom software application known as IRMIS for the federal Office of Rulemaking (ARM). The company reports that its IRMIS application has been named a "best-of-breed, web-enabled workflow system by the FAA" (Fact sheet, 2007 p. 1). This approach to satisfying an identifying need and developing a viable response is precisely what successful marketing is all about: Marketing is about satisfying consumer needs. Effective marketing depends on doing proper consumer research and also conducting industry and competitor analyses" (Kermally, 2003, p. 60).

The IRMIS applications allows federal personnel to track all regulatory documents, manage workflow, evaluate rulemaking reporting, and track rulemaking projects via the FAA Intranet; in addition, remote and local users are able to view, copy, and edit documents in real time using this application (Fact Sheet, 2007). According to the company's corporate literature, "Management accesses the same information to review schedules, milestones, and other project-related parameters. NDI provides technical help desk support to all Office of Rulemaking (ARM) personnel in the areas of applications, servers, and networks in real time. In addition, NDI supports all non-ARM users throughout the United States, providing IRMIS new-user training and application support. NDI also supports the technical help desk of the Office of Certification and Regulation (AVR). NDI supports FAA-specific applications, office automation, and network connectivity for more than 400 AVR users" (Fact Sheet, 2007 p. 1).

Strategy of the Division

As noted above, one of the most important strategies currently in place in the company's Software Applications Development division is to customize its software design/integration through the use of the Capability Maturity Model. Thorn (2003) reports that the Capability Maturity Model (CMM) is one of most commonly accepted standards and measures of effective project management. Originally developed by the Carnegie-Mellon University (CMU) Software Engineering Institute (SEI) based on sponsorship by the Department of Defense (2002), the CMM provides timely descriptions of the primary elements of an effective software development and project management process that can be used to provide the basis for continuous process improvement.

Since its introduction, the Capability Maturity Model has become the standard that is used to appraise the quality of the development process in a wide range of industries (Meyer, 2002). In this regard, Thorn describes CMM as an iterative function that defines a consistent path for improvement that can be used for organizational development from their origin as a set of ad hoc, immature procedures to a consistent, mature, disciplined process; in addition, the CMM defines five specific levels of progressive process maturity: (a) Initial, (b) Repeatable, - Defined, (d) Managed, and (e) Optimizing (Thorn, 2003). Further, each of these five areas also have a recommended Process Areas (PA) that is addressed at each level with level 2 (Repeatable) functions that specifically focus on various project management issues with an emphasis on the ability to establish and follow consistent processes (Thorn, 2003). This author adds that, "The hypothesis underlying CMM is that effective practices must be built on one another in logical progression rather than adopted scattershot. Software developers participate voluntarily in the CMM assessment program in order to gauge their rate of improvement" (Meyer, 2002, p. 149).

Contractors seeking lucrative federal contracts in the future will also likely voluntary participate in the CMM approach if they want to improve their competitive edge, and this is exactly what the leaders at Network Design have done with their Software Applications Development division and these issues are discussed further below.

Division's Fit within the Company's Strategic Framework.

Value added by division to the company and vice versa. By providing the federal government with exactly what they want in terms of contractor selection criteria, the corporate leaders at Network Design are able to satisfy existing government requirements in a classic C (3)E strategic approach. Furthermore, in a reciprocal fashion, collaboration with the company's Software Applications Development experts has allowed the government contracting offices to fine-tune their bid specifications to encourage companies such as Network Design to compete for contracts by keeping their resources and services in line with these specifications. This is not to say that collusion is taking place in this process, of course, but it is to say that it is much easier for companies such as Network Design with substantive bidding experience and the credentials to match to secure government contracts than it is for an up-and-comer with little or no relevant experience in either area. The use of the Capability Maturity Model is clearly congruent with federal government policies for software development and design, a point that has not been lost on the corporate leaders at Network Design.

Potential misalignments. Unexpected innovations have been known to introduce misalignments between existing business practices and processes, with typewriters, adding machines and buggy whips representing just some of the fading remnants of the past. It is possible that the company's concentration of keeping their resources and expertise so finely tuned to the federal government's existing needs that they may overlook innovations that are taking place elsewhere in the industry. Likewise, the lack of ISO 9000 standards in the Network Design marketing and management mix may create a disadvantage for them in the future when competing for contracts with companies that do.

Identification and Evaluation of Competitor's Strategy.

One of Network Design's major competitors today is GAITS, a computer consulting/programming/networking company maintaining a Web site at http://www.gaits.com.Like Network Design, GAITS specializes in the provisions of various professional services to federal agencies. According to their corporate Web site, "GAITS is "an SBA 8(a) certified company providing a focused array of professional services which includes: verification and validation, information technology solutions, staff augmentation, program and administrative support, help desk services, and end-user support" (GAITS, 2007, p. 1).

Major vulnerability of Network Design to GAITS. In spite of Network Design's proven success using the Capability Maturity Model strategy to secure government contracts, this may not be enough to keep them on a competitive footing with GAITS in the future. As GAITS emphasizes, it uses processes and procedures that have been externally assessed under both SEI-CMMI and ISO 9001:2000 standards and the company has been certified: "The SEI CMMI-(SW) appraisal is held by only 110 companies in the U.S., of which GAITS is one. This, coupled with our ISO certification places GAITS in the elite 1% of federal government contractors who hold dual certifications, and is a testament to GAITS' commitment to quality for our customers" (GAITS, 2007, p. 2).

Some of the highlights featured on the corporate Web site maintained by GAITS include the following:

GAITS, Inc., Awarded a Five-Year Contract from the Department of Justice/Federal Bureau of Investigation (DOJ/FBI) to Perform Independent Verification and Validation (IV&V);

GAITS Awarded Task Order Supporting U.S. Air Force Office of Special Investigations (AFOSI) under the Multi-Operational Professional Services (MOPS) Contract;

GAITS Awarded Task Order Supporting U.S. Air Force - AF/A3/A5 under the Multi-Operational Professional Services (MOPS) Contract;

GAITS in Final Running for "50 Best Small & Medium Companies to Work for in America" Honor; and,

GAITS' External Customer Satisfaction Rating Reaches 98.57% (GAITS, 2007, pp. 1-2).

Potential marketing actions or initiatives by GAITS. Aristotle Onassis once observed that the secret to success was "knowing something the other guy didn't know," and it is always possible that Network Design's competitors, especially GAITS, may discern new trends in federal evaluation criteria used for awarding their product and service contracts. The more finely tuned bid applications are to such criteria, of course, the better the chances of securing these valuable contracts. To the extent that Network Design continues to keep attuned to these trends will likely be the extent to which it will be able to thwart the efforts by GAITS to intrude on its own market niche and create a significant barrier to entry for newcomers.

According to Kermally (2003), by using Porter's five forces framework, an improved analysis and understanding of the competition in a particular industry can be achieved: "In order to construct a competitive strategy, an organization needs to know what is likely to happen in the markets in which the organization delivers its products and services. It also has to know who its competitors are in a particular industry structure" (p. 58). To help accomplish this strategic analysis, it is useful to refer to the rules of the competition governed by five competitive forces as articulated by Porter in his five forces model, and these forces are applied to Network Design and its competitive environment in Table 2 below.