Evaluating the Impact of IT on an Organization (CIS-590)

1. Evaluating the Impact of IT on an Organization(CIS-590) CIS 590 Professor Jongwook Woo Presented by: Shweta Vartak

2. Agenda • Overview • Introduction On MRPII • Case study on Company V • Case Description • Development of Bespoke MRPII • Case Description of Company HFF • Case study Analysis • Conclusions • Questions

3. Overview • Management plays a key role in the successful implementation of Information technology. • The adoption of information technology (IT) and Information Systems (IS) remains a lengthy, time-consuming and complex process, so issues associated with its management are important. • Hence the companies should avoid to approach the whole management of technology in an unstructured or ad hoc manner throughout the systems’ lifecycle.

4. Overview • Author Irani suggest that technology management policies and procedures based on the use of traditional appraisal techniques are myopic for the appraisal of complex IT/IS such as MRPII or ERP. • The reason for this is that the human and organizational implications associated with adopting new technology (and its management) are often overlooked, or simply ignored which significantly impact the success or failure of IT/IS investments. • Moreover, not meeting user expectation is thought to be one of the major attributes to unsuccessful I.T implementation; therefore, in this study authors (Z.Irani and P.E.D Love) adopted a research methodology that would involve the users.

5. Overview • Their Case study involves a the technology management experience of a leading UK manufacturing organization (Company V). • Firstly the company implements vendor-supplied Manufacturing Resources Planning (MRPII) . • It results into failure due to lack of attention given to human and organizational technology management factors while its implementation. • But the key employees address the technology management factors and develop and implement a bespoke MRPII system that significantly improves the organization’s competitive position.

6. Overview • Later, the new system was very successful and the company was cited the UK’s top 100 for its best IT and business practice. • Another Case study involves a Chinese Company (Company HFF) which is a Truck Production Company. • Critical success factors which lead to the successful implementation of MRPII in the case of Company HFF and reasons for failure in case of Company V.

7. Introduction on MRPII • Manufacturing Resources Planning (MRPII)-a method for the effective planning of all resources of a manufacturing company. • Born in America at the end of 1970s. • MRPII is a strategy designed to integrate a lot of information by way of a centralized database. • MRPII is concerned with the coordination of the entire manufacturing production . • The goal of MRPII is to provide consistent data to all players in the manufacturing process as the product moves through the production line.

8. Introduction on MRPII • MRP II systems can provide: • Better control of inventories • Improved scheduling • Productive relationships with suppliers • For Design / Engineering: • Improved design control • Better quality and quality control • For Financial and Costing: • Reduced working capital for inventory • Improved cash flow through quicker deliveries • Accurate inventory records

9. Case Description • Company Background • Company V produces a wide variety of made-to-order parts, products and assemblies for a large number of customers, in diverse industries. • Essentially, Company V sells time and expertise using many different conventional and computer-controlled machines. • Company V has a make-to-order inventory policy, with most component parts having a very low level of standardization and thus few common components.

10. Case Description • Company Background • To produce these differing and often complex parts, a highly flexible production capability is required. • This implies versatile manufacturing equipment, flexible employees and a genuine need to maximize the utilization of technology, to continuously improve and innovate, and to remain competitive in manufacture. • Hence the company adopts vendor based Manufacturing Resource Planning system (MRPII ) .

11. Case Description • The 'success' of Company V's previous investments gave them the encouragement and motivation they needed to introduce a computerized Production Planning and Control (PPC) system. • The measure of 'success' used by Company V was the removal of ‘procedural pain’.

12. Case Description Reasons of Failure : • Traditional Appraisal Techniques: In this project Company V ‘s appraisal techniques did not take into account the benefits and costs which the Production Planning and Control (PPC) system would provide. • Simplistic CBA: A new and inexperienced management used a simplistic Cost/Benefit Analysis . • Software unfit for the purpose: It appeared that Company V's biggest problem was their core vendor- supplied PPC module, which worked extremely well if kept supplied with a continuous flow of 'clean data.‘

13. Case Description Reasons of Failure : Remedy to this problem was to purchase a vendor shop floor data collection (SFDC) module. • Employee resistance and a culture . • Lack of Knowledge: The operational workforce did not receive an orientation on the importance of PPC and on how a new module like SFDC could make a contribution to the performance of the PPC function.

14. Case Description The following were the results: • inaccurate customer delivery lead times being quoted • falls in productivity • loss of a customer base At this point, due to the lack of success, managing director turned his attention to a new project which was bespoke MRPII.

15. Development of Bespoke MRPII • Due to Company’s need for an integrated system, key employees set about developing their own business solution. • The company found ways to reduce the cost. One of the methods was by employing industrial students for a period of 6 months to 1 year to work on this project.

16. Development of Bespoke MRPII • The managing director to hire a consultant firm. • Company V revised its business plan to develop a project strategy. • During development phase, company mapped out its entire business process using flowchart tools. • This enabled processes to be reengineered and facilitated the removal of non-value-adding activities before any systems were computerized.

17. Development of Bespoke MRPII • This approach was considerably different from earlier attempts which were mainly generic and around the functionality of the vendor-supplied software. • The reengineering of business processes prior to development of bespoke system allowed for the software to be programmed and modeled on best practice activities.

18. Development of Bespoke MRPII • The implementation of a bespoke MRPII system took into account financial, human and organizational cost and benefits. • As a result, the system has proven to be very successful, as the organization was cited in the UK’s top 100 for its best practices.

19. Case description of Company HFF • The HFF Company is a key truck producer in China. • Since 1991, HFF has been at the top of Chinese industry in terms of major economic data. • The machinery industry in China is suffering from two basic problems: • the structure of their product line • the quality of personnel.

20. Case description of Company HFF • It was realized that the losses in state-owned factories are mostly due to inefficient management systems. • The decision makers of the company decide to change HFF production management systems to meet the conditions set by MRP-II software. • In 1993, the factory directors decided to purchase MRP-II system software. • Training on MRP-II was conducted by engineers sent by Imag/EMS. • All together over 100 key engineers including leading group members received the training. This helped to popularize MRP-II in the factory by building technical teams in the company.

21. Case description of Company HFF • In order to implement MRP-II, HFF changed its existing planning system which had been in place for many years. • Since 1994, the drafting, issuing and administration objectives were also changed. • This resulted in improvement of planning responsibility, feasibility, customer service and production management.

22. Case description of Company HFF • Within the first year of system operation, inventory was brought down from 47 million to 36 million. • In the second year, inventory was Further decreased to 30 million. • Delivery period was on average 15 days less than before. This represented a direct finance benefit of 800,000 yuan RMB per year.

23. Case Study Analysis

24. Conclusions • The traditional modes of investment appraisal are inefficient and ineffective for the deployment of new technology. • Significant human and organizational factors related to IT/IS play important role in Successful implementation of It projects. • The effective management of technology plays a key role in Successful implementation of It projects. • Focused leadership, clear goals, good quality of personnel all contribute to the success of IT.

25. Questions ??????? Thank You!!!!!