Wednesday, December 28, 2011

Planned and Emergent IT Governance in Action

 The value of the proposed framework for management action is illustrated briefly with a case in this section. The case is of a contract supplier of toiletries and pharmaceuticals liquids. In five years a strategic vision became blurred and threatened to send the company's finances into a black hole. The introduction of IT and IS was nontrivial as the company discovered its cost. This case describes the unexpected long introduction, over five years, of IT into the company. It demonstrates the complexities and high costs of realising a global strategic information system. 

The company wanted to improve its supply chain management and its associated information. Its high overheads, relative to its competitors, led to a decline in its market share. It wanted to use IT to make its supply chain efficient and automate the information associated with the supply chain. The management believed that IT would help them make their supply chain operations into 'real-time'. This was required because of the increasingly complex processes involved in delivering products to customers on time.

The company introduced its strategic IS in 1997. It was to 'compute' complex planning and scheduling scenarios across some 500-plus Shop Keeping Units. Purchasing was struggling to manage the component range; Material Requirements Planning would enable them to control requirements more systematically. It was sourced from a company that already had a wide customer base, which provided the management with confidence to purchase the software. They were also confident in the consultant who was to install the system into the company.

The supply chain information system was installed in 1997 and failed to deliver the benefits expected. The company abandoned it in 1999. They relaunched a tailored version of it in 2002 with the same objectives as in 1997. The company has lost five years of real progress in IT/IS usage. Five years later, the chairman of the company admitted that it had vastly underestimated the costs associated with introducing IT/IS and that they are still suffering the consequences today. Fortunately, the company's cost management was robust for it to 'enjoy good margins', which enabled it to survive 'whereas lesser companies may have gone to the wall'.

The company is a successful example of the value that IT/IS could add to its operations and help it gain competitive advantage. What went wrong? Why did its strategic plans fail? The case illustrates that plans alone were not sufficient. Although the company had not deployed formal strategic IT/IS planning tools such as portfolio analysis, it had a clear vision and plan to introduce IT/IS into its operations. As the production manager observed, planning alone could not account for the complex and emerging environment in which the IT/IS was introduced. The initial introduction and subsequent reintroduction is a case of an emerging strategy for e-business IT Governance. 

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