Technology for management and organizational efficiency

Technology in Management

The Fargus Benevolent Fund is a regional specialty insurance company providing weekly-premium health insurance primarily to lower-income customers. They currently operate on a large mini-computer system that they have had for 18 years (with upgrades). All computing is handled at the home office where the mini resides. Agents in multiple cities keep many records themselves in paper ledgers and periodically mail or fax reports to the home office. The system tracks customers, payments and benefits and also performs organizational administrative computing such as payroll, commission tracking, GL and AP. The mini will continue to be supported by its manufacturer for some time, and the software works adequately for what it does. However some executives in the organization want to totally revamp the current computing infrastructure. Others oppose this move. Make compelling arguments for BOTH positions. Your discussion should be couched in terms of (at a minimum) business process reengineering, change management, and short- and long-term strategic and tactical advantage.

The single largest cost component of any new system implementation is training and change management, as it requires the redefining of business processes and a significant infusion of new knowledge and training. In the case of a minicomputer being in place for 18 years, there are processes, procedures and information workflows in place that will be exceptionally difficult to change without an effective change management strategy.

The arguments for replacing the aging minicomputer system are many. First, the software was originally designed for a more simplistic, inflexible approach to completing common accounting tasks including payment tracking, benefits, running payroll, commission tracking, General Ledger (GL) and Accounts Payable (AP). These system applications were designed when health insurance workflows were significantly simpler, easier to maintain with manual process workflows if necessary. The progression of healthcare process workflows has accelerated in the last decade, making both software and healthcare insurance process expertise an essential aspect of competitive performance (Hailstorm, Lifvergren, Quist, 502). Upgrading the minicomputer system will give Fargus Benevolent Fund a greater competitive advantage from a health insurance process management perspective. The upgrade will also make it possible for the Fund to stay in compliance with the rapidly changing series of government regulations and laws that are increasingly being put into place in their industry (Eastman, McCarthy, 502). The move to a new system will give senior management much better quality of information to plan new programs with and better manage the ones in place. Finally from a strategic perspective the adoption of a new system will allow the Fund to stay much more focused and responsive to customers as well (Tulloch, 71). Strategically the benefits are very significant in that they together infuse an entirely new level of insight and intelligence into the Fund.

The arguments against replacing minicomputer are just as significant and costly. First, the risk of failure is very high as the system has been in place 18 years, many employees have a very rote, routine approach to using it, and it's also been customized to their specific needs and requirements. Resistance to change is particularly strong in this type of situation as employees' sense that their individual status and role in the company is in jeopardy if they allow the new system to overtake their jobs (Eastman, McCarthy, 502). It will take an exceptional change management program, led by senior management, to create the level of energy, enthusiasm and commitment for the replacement system to succeed (Benamati, Lederer, Singh, 12). There is also the issue of migrating the 18 years of data from the legacy systems to the new platforms, in addition to accurately tracking Payroll accounts, commission tracking, General Ledger and Accounts Payable. All of these systems must be extremely well orchestrated so that no data is lost. And the move of systems must also be done so that every step can be audited if necessary, so they Fund stays in compliance to local, regional and national regulations (Eastman, McCarthy, 502). Finally there also the need to completely re-architect the system for the existing user's perspective, ensuring the new screens, workflows and approvals don't force them to completely change how they do their jobs (Hailstorm, Lifvergren, Quist, 505). This is the step where resistance to change often becomes the most acute and difficult to overcome, and why having a senior executive champion a program makes the most sense (Benamati, Lederer, Singh, 12). Even then there is no assurance of complete system success over time.

2: Your Vice President is concerned that other firms in your industry may be using IT in such a way that your organization may find itself at a competitive disadvantage. He has asked you to prepare a paper identifying the issues associated with using IT for competitive advantage. He is quite concerned that any advantage that IT may confer would be purely temporary. Advise him based on dealing with IT and competitive advantage.

The hardest reality for any business to accept is that the external environment is changing much more rapidly than it can deal with. Often the first indication that the external environment of a business is changing is when customers defect to competitors because they have better products, more effective programs, better support, and in general meet their needs more effectively. The many warning signs of customer attrition and the leading indicators of market growth can be easily missed without an effective IT platform and applications in place. Only by capturing, aggregating, analyzing and acting on customer, market, supplier and production data can any business hope to stay competitive over the long-term (Piccoli, 282). Information is the lifeblood of any business and it is critical for a company to stay relevant to customers in the 21st century.

In previous decades customers often purchased based on price, availability or product features alone. Today's customers, both from a Business-to-Business (B2B) and Business-to-Consumer (B2C) standpoint buy more on trust and the belief that the companies they are doing business with will be around for decades. They also buy from trusted advisors more often than those who sell on price or availability alone. The highest-performing manufacturing companies in Japan use IT systems to provide a foundation of shared collaboration and trust across their supply chains, ensuring supplier collaboration to an extent not seen in any other manufacturing ecosystem (Makido, Kimura, Mourdoukoutas, 309). This aspect of trust is what makes it possible for Japanese manufacturers to move so quickly with innovations they can quickly patent and create competitive advantages from (Makido, Kimura, Mourdoukoutas, 309). All of this starts with a commitment to make IT a foundation for continually building trust and transparency throughout an organization. The strongest companies in any given industry today decided to compete with their knowledge instead of just price, availability or product features.

3: The president of X company, foremost manufacturer of Ydgets in Nevada found a copy of The World is Flat on an empty seat beside him on a long flight from Brussels. Now he is literally panting to participate in the flat world. Based on the engineering and manufacture of Ydgets, how would you advise him? What are the potential benefits and pitfalls of outsourcing the various functions of his organization? What technology will the organization need to participate; what skills?

In terms of advising the president of X company, world-renowned producer of Ydgets, I would advice him that he needs to think about managing talent globally and seeking out the very best technicians, designers and product experts to recruit them. The World Is Flat is full of case studies of how small manufacturers have been able to withstand exceptional competitive forces by using the Internet as the foundation of collaboration and communication. I'd advise him to start thinking about himself more as a global competitor, not just one located in Nevada alone.

The benefits of outsourcing are that he would get much needed expertise anywhere in the world it is located, have a much greater level of agility and time to market, have the ability to better focus on his core business by outsourcing non-essential areas as well. The drawbacks are the culture clash that often happens, the lack of control through virtual teams, and the lack of accountability that can arise in outsourcing relationships. I'd also advise him to select a strong collaboration and communications platform as well, one that is suited to the specific virtual team needs of his business. This can be as simple as Microsoft Sharepoint and as intricate as a full-scale product lifecycle management (PPM) system.

4: Discuss the 2 cases sent separately that can benefit from knowledge management and/or business analytics. What are the pros and cons and potential problems and success factors of the required technology in the specific context of the cases? The context will probably involve some form of distributed organization which will require you to speak intelligently about distributed architectures for data collection.

In the case GSD&M'S Virtual Crowd Uses Analytics, the pros or advantages of the use of business analytics was the creation of a highly accurate predictive modeling environment. The modeling environments was so accurate it could deliver results that aligned at a 95% accuracy rate with the actual results achieved. Another advantage was the use of knowledge management to orchestrate multichannel selling, marketing and service scenarios across the client's specific requirements and needs. The analytics and knowledge management systems were also combined successfully to create a constraint-based engine as well. All of these factors were critical to the success of the system.

The cons of this modeling approach were the lack of precision on pricing ands the ability to model the more finely-tuned aspects of the programs. There was not enough data to create a profitability measurement and the use of constraint modeling at times could leave out the more unpredictable aspects of the marketing mix. While the virtual marketplace proved effective for testing message, media and defining audience, it lacks the precision necessary for making long-term, highly expensive strategic decisions over time.

In the case of the Brain Behind the Big, Bad Burger the pros are the exceptional control over the analytics and multitude of variables the company found to be predictive of food purchases. The differentiating aspects of the burger, including its size, a $7M ad budget, and over positioning against competitors, worked because Hardee's concentrated on executing the strategy to the precise requirements of the given target market served. The fact that the depth of analytics and data captured led to a very precise execution strategy greatly helped the product to succeed as well.

The cons of this approach are the unpredictability of results and the lack of control over the specific variables, in addition to there being no assurance the correlations and data factors are still true. There is a significant risk that the data will also not reflect the current economic and weather-related factors as well, and the sheer size of the burger and it connoted unhealthy contents. The models designed did not check on the level of relative health; that could have derailed the entire project quickly if it had not been taken into account. The analytics did not take into account consumer behavior as well as they could have.

5: Discuss the problems and possible solutions in terms of human vs. machine centered design, socio-technical factors, impacts of computerization on the workplace, deskilling, retraining, change management, employee involvement, commitment, resistance. . . For a high-impact system implementation in a small enterprise conducted in a manner that is technically correct but inappropriate for the company culture. Many bad effects follow the implementation including very high personnel turnover.

Even the most state-of-the-art technologies can't compensate for an organizational culture not capable of changing to adopt it and get the most value for the information and insights it can deliver. One of the most fundamental aspects of effective change management is in changing the technologies involved to match user's requirements, not vice versa (Benamati, Lederer, Singh, 13). This fundamental principles is what guides the best overall implementations of human vs. machine-centered design and also guides the best alignment of socio-technical factors to the needs of professionals using these systems as well. The overarching need is to ensure any technology devised is capable of accentuating the innate strengths of a given employee and team, not forcing them to change how they work to just take advantage of the technology itself (Bordum, 249).

Even if a given technology is exceptional in its ability to align with user's needs, if the cultural fit is weak or non-existent, the entire implementation will fail. Studies indicate that even when a senior executive is leading the change management strategy, it is still flawed at the cultural level, leading to rejection by the majority of those affected by the new system (Benamati, Lederer, Singh, 12). There needs to be a very high level of congruence and support for the program itself, and the technology needs to play an enabling role overall to the development of entirely new IT and process strategies. When the technology is considered more important than the culture, IT projects often fail (Eastman, McCarthy, 510).