Wednesday, February 9, 2011

BIS 2011 - Case Study

Dear Students,
Read Case study 1 and 2.

Case Study 1

OZChem is a Melbourne based company which specialises in the design, development and supply of laboratory equipment for hospitals, universities and the private sector. It needs to be able to supply most items in a very short time frame while more expensive items such as mass spectrometers might take as long as ten days to source and supply. For its complex toxicology systems, OZChem deals with a few approved installers. For almost everything else the company is self-reliant. Like most businesses of its type, OZChem is obliged to maintain relatively high levels of inventory and is heavily dependent on its suppliers to meet delivery schedules. A recent history of late deliveries and frustrated customers has led to OZChem instigating an inquiry into the cause of the problems and the consultant’s report criticised OZChem’s ordering and delivery systems, its management culture and its old fashioned policies and procedures.

Since then much of the senior management of the company has been replaced with younger, more progressive types. The new IS manager, Caroline Black has a good background in IS and an MBA but this the first time that she has had sole responsibility for the IS function. The manager in charge of logistics, Peter Ritchie has risen from the ranks and does not have a university degree. One of the recommendations the consultant’s report made was to examine the feasibility of introducing ERP systems and Caroline produced a strong case for using an ASP to develop and run OZChem’s supply chain management systems using industry standard software. The executive management team supported this initiative and Australasian Systems Solutions was selected to develop and host OZChem’s systems.

In the interim Caroline has been re-engineering OZChem’s internal systems. The company intranet was launched 4 months ago and most internal systems now have web interfaces onto them. With the support of the management group, Caroline has replaced the old stock control system which was specially developed and replaced it with a proprietary system which is compatible with web protocols and services. When she proposed buying an “off the shelf” logistics system, Peter hit the roof. “You think you can just wander down here fresh out of university and tell us how to do our work? I have been running this division for 15 years with no problems that are our fault. I know we have had a few difficulties of late, but we depend on our suppliers, if they let us down, we let our customers down. We could increase stock levels but that would decrease profit. We don’t have that many unhappy customers anyway. This system will have no knowledge of our customers and limited intelligence when it comes to planning deliveries. I know how our customers operate, what they want and how they want it. I will fight this all the way. If you do manage to get the system in place, I promise you that it will not yield the benefits that you expect. It’s just change for the sake of change.” Caroline does not handle confrontation well and simply turned on her heels and walked back to her office.

In her in-tray was a letter from Australasian Systems Solutions saying that the company had been taken over by Total Logistics a large American company that had a relationship with a different software company than that used by Australasian Systems Solutions. The letter explained that there would be some delay in the development of the system but that all OZChem’s supply chain needs would be met in a reasonable time frame. The letter also included an option to cancel the agreement. The next piece of correspondence was a memo which detailed the huge increase in the number of help desk calls as staff struggled with the new intranet and different interfaces onto once familiar systems. Besides the user problems there were technical problems associated with system integration.

At 12 o’clock, Alan, the deputy IS manager asked Caroline if she wanted to go to lunch. He asked how her day had been and listened intently as she told him what was going on. He nodded sympathetically and then paused “I am not sure how to tell you this” he began “but I have been asked if I’d be prepared to take your job. I said that I would need to time to think and I would need to see exactly what was on offer”. Caroline stood up and knocked the remains of Alan’s lunch into his lap “You’re in on it too!” she spat “as soon as men like you see a woman in a position of importance, you just have to undermine her”. Alan slowly stood up and leaned over the table “Your gender has never been an issue for anyone at OZChem,” he snapped. “You have undermined yourself. You created the problems that put you into this situation – you put them right! Just don’t come to me for help”.

Case Study 2

Blue Books is a sizeable high street bookshop in Sydney. It has occupies several floors of a prime high street location. In addition to selling books it also sells videos, DVDs and CDs and has a coffee shop on the fifth floor. Blue Books has a history of innovation, it was the first bookshop in Sydney with electronic point of sales systems, and the first to provide customers with PC based catalogue browsing instore. Increased competition and declining profit margins led to the move into CDs and DVDs and more recently into select, upmarket stationary. A large amount of Blue Books’ business is derived from overseas visitors to Sydney but there is a substantial local customer base and repeat business from Australian visitors to the store.

There are 16 checkout positions, most of which have two electronic cash registers linked to a central database. The cash registers have limited processing power and can not access the inventory system directly to answer customer queries. The systems has worked very well for the last 6 years but the hardware started to show signs of failure The software is efficient but limited and it is very difficult to carry out data capture on customers or to carry out sophisticated queries on the database for marketing purposes. Blue Books is a good business but in order to maintain its health it needs to market and merchandise more effectively and this means replacing the exist hardware and software with something which is better aligned with the business plan. Consequently a replacement system has been commissioned.

Eric Kruger handles all IS/IT support for the Sydney store. He was closely involved in the development of the system which is now due for replacement. He was promoted to the position of IT manager two years ago. He started at Blue Books nine years ago, joining the company after graduating with first class honours in Computer Science. He has since completed a Graduate Diploma in Business with a view to taking an MBA at a later date. The directors decided to put Eric in charge of the project to replace the older hardware and software and has he has been told to reduce costs where possible.

Eric has followed a traditional systems development approach and has taken the trouble to confirm the user requirements for an integrated software system that can handle sales, inventory, transaction processing, and marketing. The software uses a single server and PCs with barcode readers to function. The company offered to provide a turnkey (ready to use) system for around $360,000 AUD (include installation) with ongoing software and network licensing costs of $80,000 AUD per year. Eric has taken the trouble to price up everything that he would need to build the system and realises that he could save over $60,000 by sourcing all the equipment locally and bringing in contract staff to handle the changeover. His procurement list included a new network, PCs to use as both electronic tills and for handling customer enquiries, a further 12 PCs placed on the shop floor to allow customers to browse the online catalogue and to place orders. The database server is a state of the art dual processor model. Eric made sure that he specified conformance to the network and hardware standards specified by the software supplier in his purchase orders. Sensibly, he has arranged for the system to be installed over a long weekend. Since the networking cabling was upgraded two years ago, it is quite capable of supporting the new systems and does not need to be replaced, however the new system requires updated networking software.

Work began on dismantling the old system as soon as the store closed its doors on Friday evening and by midnight this part of the project was complete. By 9.00am on Saturday the new hardware is in place and the software has been installed. The project is nearly 20 hours ahead of schedule. Eric tests the system by scanning a book – and finds that it fails to operate. Realising that he has only a short period of time to sort the problems out, he telephones the software company, the business that supplied the server, the PC supplier and the network software vendor in an effort to understand the problem. The network people blame the server company, the server company in turn point to problems with the PCs and networking. The PC company say that they manufacture to widely used, international standards and have never had any such problems before. The network software company points out that its product is used world wide in many different applications.

Eric realises that he has two and a half days in which to sort this problem out or his future with the company looks bleak. It crosses his mind to walk off the job and tender his resignation. Right now he has 6 contract staff standing around waiting for instructions.

Later, Eric managed to pull the problem off by having a close discussion with his 6 contract staff. Actually one of them is Martin Webster a network wizard that nobody knew. In just 2 days, the entire team managed to solve all the problems and got to use the systems before the higher management knowing.

Then 6 months later, the Higher Management agreed to another major project with millions of funds will be pumped into the store. The Higher Management planned to embark in an E-business retailing, which Eric is not familiar with about running a business through the web.

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