The purpose of this paper is to give and provide detailed information about the reason why Craven Books was having issues on the implementation of the new information technology system which should help to improve the performance of the business. Other than that, the implementation of this new information technology system nearly makes Craven Books face bankruptcy and lost many customers. In this paper, 3 issues that lead Craven Books faced failure in the implementation of the new information technology system will be chosen to discuss in detailed.
Each issue will be discuss in detailed together with any related case studies that can take as reference and recommendations to eliminate and cope each issue. Company’s Background Craven Books is a distributor of comics and magazines and books. The company was founded and evolves in the market place in the late 1960 as it founder, Peter Craven started to distribute sci-fi and horror books through direct mail.
In 1970’s, the business began to be known in the market place by buying comics in bulk from both the American publishers and the second hand comic market and sell this on their customers in the United Kingdom by using a mail order catalogue. This had helped the company to grow in the market place and be known by many other customers. Because of this the company had been able to encounter growth both in profit and in the number of their regular customers. In this regard, the company decided to use a new information system as part of their business strategy.
In 1990’s, this plan has been initiated as Craven Books invest in new integrated information systems that will include all business operations of the company, from ordering, to processing, accounting and warehousing. All in one information system which aims to ensure that they will provide quality service to their customers and to make their logistics be more dependable. However, upon implementation of such project, the company’s expectation has not been achieved and worst, it weakens the competitiveness of the company and the competitive advantage that it builds had been destabilized.
Reasons That Cause Unsuccessful Of Information Technology System According to the video that was showed in class which is titled ‘The Great IT Horror Story’, there were many reasons that lead the implementation of this new information technology system into disaster and chaos to the business. In addition, people who were relevant to the cause of this incident were being interviewed too and they also gave out their own opinion on why this disaster can happened and what preventions or actions should be made to cope and prevent the issues on the implementation of the new information technology system.
As mentioned, due to the objective to have and efficient distribution system, the management of Craven Books has decided to create an IT system. At first, the new system was expected to and should provide great time, effort and savings for the company to achieved the company’s objective but upon implementation of the new systems, the company’s expectation has not been achieve and even worst, it weakens the competitiveness of the company and the competitive advantages that the Craven Bookstore built had been not stable.
In the video, it shows the common or classic mistake that make by the small business which also make by Craven Books that lead to this failure. Through this report, the following are the reasons why the new system in Craven Books was a failure. 1. ) Unable to determine the suitable IT system One of the first reasons for the failure of the system is the over-ambitious of Craven Books’ management that unable to determine the best IT system to use, to prepare a strategic plan before the implementation which lead to the result in choosing the IT system that is unfit to the company.
Due to the reason that the company wants to be more competitive immediately, they pick the system without even trying to identify whether the system really works or not. Furthermore, there wasn’t anyone is in charge of the systems to teach the employees to use the new system. 2. ) Rely too much on software consultants Another mistake was that Craven is relying too much on its software consultants, did not try to review or assess the given system to test its
efficiency and effectiveness before it implemented. The consultant’s suggested Craven to go for an existing system because the implementation of customized system was a bad choice to achieve Craven’s purpose or objective; it’s like putting a third wing on a jumbo jet as the thing was going so fast that the desire result wouldn’t be achieved. Besides that, the project will not employ a staff to monitor, so that when the system went wrong there was no one has to take responsibility on it.
The company was giving choice on the standard package that provide the advantages of the low cost and the another one is tailored solution which give the advantage to use the tailored solution that can modified the system that suit to the business but on the other side this method is more expensive than the standard package. 3. ) Disaster strikes After the implementation of the new system, Craven faced some disaster strikes, they lost most of their major or main customers and almost more than 60% of the staffs were being dismissed.
Because of the failure in the new system, it brings many negative feedbacks to the company. This leads many issues that reduce the company’s performance such as the conflict that happen in the actual situation with the result shown in the computer system. Despite that, the inaccurate of the weight device that was implant in the computer system always give wrong measurements and this problem had lost customers and created many angry customers due to the wrong orders were being deliver to the customers. In order to manage this disaster, the company had to fire most of the staff and changes back the system to old system.
The computer disaster cost Craven about $1 million dollar. 4. ) No one to blame or responsible for the failure of system Another reason of this failure of new system that there wasn’t anyone is responsible or managed to the project and the absent of a project team leaders that should be accountable to the system and lead the project into success. In the end, the suppliers and Cravens blamed each other for the result that it should be the responsibility of the company’s management because they didn’t do any preparation or strategic planning before the implementation of the project.
In this report, we have picked 3 reasons that cause the unsuccessful of the new information system which was implemented by Craven Books to discuss: 1. Unable to determine the suitable system for business 2. Rely too much on software consultants 3. No one to blame or responsible for the failure of system Issue 1 The first reasons which cause the unsuccessful of the new system that we would like to discuss is the failure of Craven Books’ management level to determine the suitable system that can help the company to achieve objective and improve performance.
The management level of Craven Books cannot decide and determine the appropriate system to the company because they were over-ambitious to improve their company’s performance and competitiveness quickly. In the end, they didn’t develop a strategic plan before the implementation of the new system. Other than that, they also didn’t conduct any testing on the new system to identify whether the system really can help the company to reach their objectives. Furthermore, there wasn’t anyone is appointed to handle and in charge the systems to teach the user or employee the proper method to conduct the new system.
Example case As for example, a similar case study has been chosen in order to compare and discuss with this issue. This shows that Craven Books wasn’t the only victim of the information technology disaster. The similar case that happened under the same reason as Craven Books is FoxMeyer Corp. during 90’s. Due to the intense competition among competitors, FoxMeyer was in a great need of a solution that would have helped the company to achieve a complex supply chain decisions and improve the company’s performance.
During the early 90’s, the company’ management level decide to focus on a business strategy of transferring the company into low cost distributor to increase competitive advantage and also provide differentiated services to different target customers. Based on the supply chain analysis that had been developed by the company, it was decided that an ERP system would provide a perfect solution for FoxMeyer to achieve the company’s objectives and goals. In 1992, the company had decided to hire Arthur Andersen consulting company to implement the SAP (R/3). The implementation of SAP
In September 1993, FoxMeyer had contracted with SAP, Anderson Consulting and Arthur Andersen & Co. to implement the R/3 software. This multi-million dollar project had covered the entire supply chain and was the first information system launched in the pharmaceutical industry that utilized extensive technology coupled with automation of warehouse functions. In the end, the system didn’t provide expected result and the performance was unacceptable. It was completed late, failed to deliver expected benefits and went over budget due to huge expenditures for new computers, software and new warehouse.
In 1996, FoxMeyer was forced to file for bankruptcy and was taken over by its largest competitor – McKesson Corp for only US$80m. In 1998, the bankruptcy trustee of FoxMeyer launched 2 lawsuits against SAP and Andersen Consulting. FoxMeyer charged SAP with fraud, negligence and breach of contract for convince them to invest in a system that failed to achieve the company’s objective which leads to the bankruptcy of FoxMeyer while Anderson Consulting was charged with negligence and breach of contract for failing to properly manage the implementation but both defendants denied the allegations and blamed FoxMeyer for mismanagement.
Reasons why FoxMeyer faced failure of ERP system There are many reasons why FoxMeyer faced failure in the ERP system which should assist the company to achieve goal and some of the reasons are same with the issues which were the reasons that lead to Craven Books information system disaster too. The reasons that lead to FoxMeyer’s ERP failure are: 1. Poor selection of the software – SAP R/3 was originally developed and designed for the purpose to business such as manufacturing companies and not for business such as wholesaler, especially those doing large number of transactions.
This software has never been used for wholesale distributor before because this software lacked many requirements needed for successful wholesale distribution. SAP R/3 was inflexible software, it required many time and a large amount of financial investment if it require any modification and this software was unable to handle large number of orders. These weaknesses were the reason why this software was not suitable to FoxMeyer because this company handled orders from thousands of pharmacies and each of pharmacy had hundreds of items.
2. Lack of contingency planning – FoxMeyer didn’t prepare any contingency planning to deal with the changes in the business operations. For example, one of FoxMeyer’s major client which was accounted for more than 15% of FoxMeyer’s business, declared bankruptcy shortly after FoxMeyer’s launched the ERP system. 3. No end user involvement – The implementation of this ERP system was done using a top-down approach. The planning was performed by FoxMeyer’s upper management, Andersen Consulting and few technical people.
Only a few end users were participated in the planning, analysis and design process. In the end, there was a communication gap between the end users and the system planners. 4. No restructuring the business process was done – SAP was not fully integrated and worked effective because FoxMeyer was incapable to reengineering their business processes in order to make the software to work more efficient. 5. Lack of system testing – Due to the reason of rushed schedule, some modules testing was skipped.
Other than that, the system was not properly tested to detect any problems when the system handling large amount of orders. There wasn’t enough testing and lack of time to modify or debug the system to ensure its functionality. 6. Over-ambitious project scope – FoxMeyer’s project team members and information system staff were unfamiliar with the system hardware, system software and application software. In the end, the project scope was enlarged with simultaneous implementation of computerized warehouse project.
Other than that, some technical issues on complication were not managed properly by the staff and this incurred extra expenditures and time. 7. Poor management support – At first, the management level were supportive and committed to the implementation of ERP system but once the implementation started, management were unwilling to acknowledge any system problems. Furthermore, management failed to identify the timeliness and resources needed in the implementation process. Recommendations
According to the case of FoxMeyer, the case is very similar with Craven Books’ case especially in the reasons that both company can’t identify suitable software for company and insufficient of preparations or pre-activities before the implementation new system. In order to eliminate and cope the issues, Craven Books should follow these recommendations before the implementation of new system. 1. Software selection – A project steering committee should be created and should involve high level of expertise, both technical and operational in the software selection process.
They should do some research in different software, compare and assess their pros and cons to identify the suitable software which best fit the business needs. 2. Contingency plan – A contingency plan should be develop to handle the situation when the system failure. Stipulate clearly the roll back procedures or develop new contingency plans to prepare for the breakdown of any system modules and for the total new system. 3. Stakeholders’ involvement – Any new project implementation should get the involvement of all stakeholders which also include end users and customers of the company.
All related parties should understand the purpose of the project and voice out their opinion especially in the earlier stage when any critical issues are just evolving. 4. Thorough testing – An organized comprehensive testing plan should be develop, encourage user participation in the testing process and make sure proper testing situations are done to the new system. 5. Realistic project scope – Project scope should not be over-ambitious, it should be clearly identified with realistic targets. 6. End user support – All employees and end users should be well trained to handle the new system.
Response and address to the end users’ concern to reduce any negative feelings to the new systems. Identify the need of any changes on agents and create a high and positive morale to meet the new challenges. 7. Post implementation review – Quality assurance and control programs should be develop to ensure the system checks are done. Develop business metrics to measure and compare the project’s estimated results with project’s actual result that have been achieved. Prepare an evaluation report and pass to stakeholders to review the results. Issue 2
The second issues are that the company relied too much on their consultants and suppliers who provide the system. This could be issues for Craven because they did not review the system, all the procedure just follows the consultant’s suggestion, they did not test the efficiency and the effectiveness of the system before it implemented. The consultant’s suggested Craven to go for an existing system, the suggestion for Craven’s purpose was a bad choice, and it’s like putting a third wing on a jumbo jet. The things were going fast but at the end it does not work.
Craven is too much reliance to the outside consultant. Craven did not do any reference check to the consultant; they just hired the consultant and just rely on the consultant to do the implementation of the new system for the company. Consultant is playing an important role when a company wants to implement a new system. The consultant responsible for the whole systems, to provide the software solutions and other recommendations based on the assessment. Consultant do give advice, but they frequently also perform tasks that
result from that advice. Those tasks can range from running a public relations campaign to building a customized order fulfillment system. The consultant may integrate customized software into a business or organization’s processes in order to increase the efficiency and effectiveness of the systems and to minimize manpower or the costs. For example, a fitness centre could benefit from the integration of proprietary software that tracks the progress of the gym’s members, in the form of measurements and other personalized data.
A consultant, might specialize in the creation of such software for the fitness centre, and pitch the software to various business and organizations within the fitness industry. As software can perform a wide variety of functions, a software consultant might deliver software solutions to a wide variety of industries. Businesses and organizations will often hire one or a firm on a contract basis, if such expertise is not already is available in-house.
For example, a real estate company that already employs a computer programmer, webmaster, or other information technology professionals might also hire a consultant who can create a database of properties customized to suit the company’s information management needs. If the consultant fail to perform their tasks, there is many possible failure for the project and will impact the whole company as well. The company will face cost overruns, over budget and project delay due to the poor project management by the consultant.
The consultant is not focus on the organizations change systems and lack of attention to the business process reengineering. Some consultants have never done the things they consult on. In innovation circles this means they have never been managed a team of people, never prototyped an idea, never filed a patent, never taken creative risks, so instead of banking on their experience, or even their knowledge of the experience of others, they make stuff up, there is an issues arise from that. Recommendation There is no one to blame with this implementation, the company should cancel the whole project and kick out the consultant.
For the implementation of the new system, Craven should seek a qualified and experienced consultant but not just book knowledge. A good consultant has valuable experience in one or more areas of specialty, and they can use this experience for the company advantages. Craven at start should select the right consultant firm, next is to get the consultant involved early and set up a clear and formal communication system allowing the company to communicate with the consultant what they needs to be clearly understood and turn into designing the software that suitable for the company.
Craven should having an interview session to choose the consultant from the hundreds out there, have a reference check on the consultant to check their background to ensure they have a good background and don’t have any bad reputation out there, also have to review what they have done before, for example if they have any success implementation job before and when choosing a suitable consultant don’t forget the fact that the company will need to work closely with this person for months and sometimes years, so have to choose carefully to ensure the consultant can work with the employees, the consultant should has the ability to communicate effectively and gather accurate details regarding to the business process. Craven buy the system from the supplier and trying to get more advice from consultant is not wrong. However, the mistake of Craven is they relied too much with the supplier and consultant that they did not carefully review the advice and do a better decision before implemented the system. Craven can collect all the opinion and suggestion from the consultant but have to review and have a meeting with top management to consider the possible consequences that may affect the company as a whole.
The top management have to consider cautiously and have to discuss the feasibility to implement the new system, coming out with a better outcome for the better future for the company. Planning is very important before the consultancy process so that the business is able to set out the objectives that they want to achieve after implemented the new system in the company. In addition, Craven has to ensure that they are hiring a consultant that has adequate knowledge about the system implementation. A consultant with adequate experience has the ability to identify the specific needs of the business based on the knowledge that they have acquired over the years. Craven should not rely on the suppliers.
Suppliers can supply with the templates and best practices that can take the company a good part of the way but Craven still need to define what is constitutes success and failure, progress and set-backs, also set a deadlines. Top management of Craven should have the responsibility to the company, they must have to know that suppliers are just selling the software and the implementation, the decision of the management made will directly affect the future for the whole company. Craven have to know what their business processes up front is, and don’t let the suppliers software define for the company. Issue 3 The third reason that causes the new system implementation failed is nobody is responsible on the system.
Based on the case study, the intension of Carven Book decided to implement new system for enhancing their company competitive and more effectiveness for company system, but there were not one to follow up and back up the systems after implementation This failure happened to be nobody to handle or managed the systems or the lack of system team members and leader who have experience in this information system field followed all the requirements needed to make the project successful. Hence, Carven management lack of experiences and it is a first time of system implementation to the company. Before these, all the company’s transactions, orderings, delivering was under manual systems.
Due to company willing see improvement of the information system, they started their first try to implement the computer system. Besides that, Cravens argued the responsible of information supporting should be provided and back- up by the supplier of the software, on the other hand, supplier re-blamed back they do not have any responsibility on this issue since they just developed the ready software and sell to their customer needs. Both parties involved blamed to each other for the consequent that it is the sole mistake of the management of the company because they did not again, strategically planned the project. Due to the issue arose, below are the recommendations parts can be given:
Employing IT technical support background people as company employee As result of new system transformation of company, Carven may consider to employ new staff from the specific IT field as company sources for supporting and back- up Company new system implementation as a team with the former management. Forming a department or a group member into “system development & supporting group” with collaboration with the company system user for supporting company system. Hence, Carven may appoint management manager as the department head whose job scope is leading the whole team of members to solve the problems what the system user met during implementing period. At the beginning stage, department manager has to conduct the new system education to company system user through system trainings & lessons for the current staffs.
Normal situation can be seen in the beginning of new system implementation, the most of the users were lacking of experiences in applying the new system in their workplace, especially for Carven employee who is the first time who use the new system in 1990s. After few months of training and lesson, company system users will be more familiar and useful to systems. It can be seen that they have more capability and acceptable for using the new software in this period. In this system implementation stage, department manager may regard the system support in more upper and deeper level on the system error or system problems which maybe faced by the company users.
System users must voice up the issue and the problems which they faced and handled to the IT group. Through this issue arose, IT supporting group must size up the situation and problems at the first and try to resolve it for the current company demand. Some of the time, company may change their company strategy or follow the customer’s need changes, it will affect directly into company information system procedure and lastly system user will also be affected through the transformation. That situation may generate some dispute and problems between the system and the users. IT development group have to follow up it and back up anytime with those issues arise.
Their job scope not only on the back up the system, however they also involved in protecting and upgrade the software system if there have any disputes between the system and user or customers. The reason that some of outdated or old system code or services transaction, it was not be used by the company, thus IT group should upgrade into new version. Do not rely too much on the Suppliers and ready software It is important that always picking a reliable suppliers and ready software company for future better support. Some of the ready software company and suppliers who are not too much experience and have depth software knowledge will drag the effectiveness when any problems arise.
IT support Group or specific manager must always take noted the software version depend company need to the suppliers in anytime for the better system using. Besides that, IT group members may pint out the problems which is software shortcoming or deficiency to the supplier then has a period meeting with ready software suppliers in a quarter year once for system information updating. Another important factor should be taken note by company user are not rely too much with the suppliers. If they faced any issues from the former system, it will drag down company performance once supplier cannot give the system support on time. Company implement information systems may hire and develop their own IT support group in company for nearest support and backup. Benchmarking with other company
One of the business strategies can be applied in Carven book is benchmarking. Benchmarking is the process of comparing one's business processes and performance metrics to industry bests or best practices from other industries. Dimensions typically measured are quality, time and cost. In the process of best practice benchmarking, management identifies the best firms in their industry, or in another industry where similar processes exist, and compares the results and processes of those studied or the "targets" to one's own results and processes. In this way, they learn how well the targets perform and, more importantly, the business processes that explain why these firms are successful.
The objective of benchmarking is to understand and evaluate the current position of a business or organization in relation to "best practice" and to identify areas and means of performance improvement. This process is used in management and particularly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice companies' processes, usually within a peer group defined for the purposes of comparison. This then allows organizations to develop plans on how to make improvements or adapt specific best practices, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to improve their practices.