Steven L. Johnson

VWoA is composed of 10 business units with funding requirements of over 210 million but with a budget of only 60 million dollars capped by the parent company. VWoA (VW of NA) developed a method of prioritizing new projects with an initiative labeled the NRG or the next round of growth which functioned to define the goals, functions, and organizational strategies to support and promote VW’s diversification strategy. The goal of the new system is to link projects with the corporate goals of VWoA and to be in alignment with the enterprise initiatives of the parent organization. The issue at hand is an unfunded project dealing with the global supply chain which primarily benefits the global markets and only peripherally the NA market. The benefit to the American market would be to warehouse performance which was not a top priority for the NRG goals. Although cost savings would be realized it would have only truly benefited global integration. Additionally full funding would have used up all the money available from the budget for that year. The chief information officer understands that the new system, while geared to align global enterprise goals with VWoA, may at times inadvertently work against the progress of parallel initiatives that would be beneficial in the long run to VWoA. The new system rigidly mandates funding requirements centered on the benefits primarily to VWoA. A logical move would be to discuss ways to add flexibility to the funding methods or to align funding initiative more on a global basis that benefits the global enterprise rather than individual subsidiaries.

The project prioritization process was built from the bottom up, based upon benefits to the individual business units and alignment to the Next Round of Growth (NRG) strategic priorities. I didn’t read anything in the case about a top down review done to ensure all projects including those with global considerations had been properly reviewed. Unfortunately, I don’t think it’s uncommon with global companies as we experienced a similar problem at TD Bank with our parent TDBG in Canada a couple of years ago and I also experienced a similar issue many years ago between Siemens USA and Siemens AG in Germany. The problem for both was related to communication with the parent organization related to plan project funding and a lack of coordination during the planning process between the parent and subsidiary. VW should have a separate process and funding pool for projects that impact the global company and there should be plan meetings scheduled with the parent before the final projects are approved. In addition, I think they should implement a top down review process with the ELT to ensure all important projects have been considered (asking the question – what might we have missed?) I also believe the ranking mechanism with weighted attributes hat I recommended in response to the process assessment question would have brought the supply chain project to the top of the list (projects with global implications are heavily weighted).

The global supply chain management project was not completely funded because it was not viewed as being highly aligned with the enterprise goals, although “optimize supply flow” was #5 on that list. If this was important for VW’s globalization initiatives, it should have been considered a higher priority on VWoA’s enterprise goals. This demonstrates that although they tried very hard to take a systems approach to determining which projects to fund, they miscalculated by not taking into account a global perspective and what VW Germany would think. This falls on Matulovic and senior management at VWAG for not allowing VWoA to think beyond their local market. If globalization were truly important to VW, it should have been crystal clear to VWoA, by way of communication from senior management and Matulovic, that this was a project that required full funding. The budget of $60 million came from VWAG, so they should look at what the BPTO’s selected projects and decide if their budget is sufficient, or do they view IT as being an obstacle. I would agree with Alex’s comment above about discussing ways to add flexibility to their funding methods.

The project critical to Volkswagen’s global supply chain management system was left only partially funded because of two reasons. The first reason the project was not fully funded was because the project’s value was too narrowly focused on just warehouse performance benefits which were not related to the topmost-ranked NRG goals. The second reason was the business unit executive for supply flow at VWoA and his/her representatives on the DBC did not do a good enough job in making the case for the criticality of this project to the keep the multiyear global SAP implementation on track.

Due to its impact to the global SAP implementation and especially the integration of the supply chain management system, the business unit executive for supply flow at VWoA and his/her representatives on the DBC need to update the critical project’s value to be aligned with all of the NRG goals because not doing the project will delay the global SAP implementation may affect the entire supply chain system which will ultimately impact all of the NRG Goals. Once the critical project’s value has been changed to reflect its importance, the business unit executive for supply flow at VWoA will need to formally request Matulovic and the ITSC for an emergency review and reprioritization of the final project list to at least try to get the project on a revised final project list. Although the case did not discuss an emergency review or exception process for the final IT project list, every company I have worked for has a formal process to change its final IT project list. For example, a new law that unexpected pass has forced my company to add an emergency project in order to be compliant with the new regulation.

It’s noted in the case that the new process ‘poorly served’ the SAP implementation project. I’ll argue that while this is true, the new project selection process did serve the proper purpose – to select the IT projects for the coming year that would best serve the NRG initiatives of VWoA. This is evident by the fact that the anger over the project not being funded is coming direct from the parent organization in Germany and not from the heads of business units or ELT members in the U.S. The case notes that the project holds of a lot of value for the global organization – not specifically for VWoA. If Matulovic were to attempt to take funding from other – already approved by the new process – projects, he would surely cause an uproar within the VWoA business units. If VWoA is trying to create harmony and synergy between IT and the business units, this would not be one method in which to create good will. Further, using this as an opportunity to reopen the project selection process would be an equally poor decision. If he is ever going to play this card he has to use it when a project with a lot of value for the VWoA organization is left off the list of selected projects.

In my opinion he has to go to the parent organization in Germany and negotiate funding for the SAP implementation project. This has to be money IN ADDITION to the already allocated $60 million. He has to argue that VWoA has used an extensive decision-making process to select the right IT projects that are critical to its operating unit. In his argument he must align each selected project with the goals that will further the company’s business in the U.S. He has to show that Germany’s interest in their SAP project must be funded separately from the IT projects needed by the VWoA unit.

It is not clear from the case if Germany is going to force VWoA to fund the SAP implementation. If the parent org does direct Matulovic to use a portion of the allocated $60 to VWoA to fund this SAP project then he has to go down fighting, not giving in to the parent org in order to maintain credibility for the new process in the U.S. and also for his own credibility with both the ELT and heads of business units. As a person with a background not heavy in IT, if he is seen as appeasing the parent org rather than holding to VWoA principles then he may not sit on firm footing within VWoA trying to lead the IT organization going forward. This could be his opportunity to establish a strong presence for the IT org in VWoA trying to find it’s place in corporate strategy.

One reason that critical projects may go unfunded is that the system allows for portfolio projects that combine several towards one goal. This can lead to the budget becoming bloated to cover all necessary costs and possibly a higher ranking for the portfolio. With an already tight budget, the allowance for combined projects will eat up larger portions and leave little for something like SAP integration that didn’t carry the weight of other projects along with it. Perhaps it would be best if projects were prioritized within the portfolios as well.

The project was focused mainly on warehouse performance benefits that did not relate directly to the high priority company goals in many ways with the new project processing or ranking system. The loss of funding could mean a major setback in globalization initiatives in Germany. It had higher impact at the global level but on the local level wasn’t so much. The costs were more of a sunken costs type initially. Moreover the project was so huge such that it required significant amount of the entire budget and would have left little to any for other projects.
Since it is a critical project for the company, I believe it should reconsider and see what other projects could be deprioritized over this. I believe if this project is so critical to the company then they have a case to argue that they need to be funded or made some exceptions.

The critical supply chain project was unfunded because there was no clear alignment between the local VWoA project priority process and the broader goals of the corporation which were driving the global supply chain project. Additionally the supply chain project was doomed if it were to remain being funded by VWoA, the budget was already stretched and the DBC struggled to identify where the funding for the project would come from. The project itself was large enough to wipe out a significant amount of the VWoA IT budget. However as this project was to benefit the company globally, Matulovic should have gone back to Germany for a separate budget. Typically corporate mandated projects are funded centrally by a corporate unit when they are dictating various divisions to implement a project for the greater good or benefit of the overall corporation. Strategic alignment between the corporate team in Germany and the local IT team in the US is needed to ensure these type of projects are funded. The return on investment and the business benefit for the supply chain project was all going to be realized by the team in Germany so there was very little incentive for Matulovic to press for funding even though it was a critical priority for the broader corporation. Most centrally funded projects like a global supply chain project have a greater chance of success as the resources for delivering the project, including the financial support are guaranteed with even operating company only being responsible for the local delivery aspects. This model would have ensured success for the supply chain project.

The global supply chain system was left unfunded because the new process was myopic in only valuing “local”, (VWoA), benefits and having no mechanism within its various steps and assignments of weights and priorities for valuing global benefits. From VWoA’s perspective, fully funding the global supply chain system was not merited based on their carefully crafted system for prioritizing which projects are to be funded. So, it seems that, with minimal benefits locally, Matulovic has a strong case for requesting additional funding from Germany for the global supply chain system. However, it would seem prudent to revisit their final allocation of approved projects and the money budgeted for each of them, should Germany only partially agree to help, or not provide any additional help at all. Matulovic needs to be able to defend why VWoA’s allocation of limited resources was appropriately prioritized and try to get Germany to supply the additional funds needed, but he needs to have alternatives ready should his request be declined. He also needs to reexamine, identify and refine the process flaws that led to this situation.

VWofA made it clear from the beginning that their intention was to fund local projects, especially with a $60 million dollar budget which was much smaller than the $210 million they needed. To fund the global supply chain system, it would have ate up much of the funds that were allotted. The bulk of its value would have only been recognized on the global level of the organization. Although their project promised big savings, the big impact was global integration . The value to the US specifically would be with warehouse performance benefits which did not align with the top-most ranked NRG goals.

Since the project was already started and because it was a global initiative that could have benefited the company as a whole, I think it would have been wise to figure out a way to reallocate funds to complete the project. A problem with many projects, is that they are started but are sometimes not completed due to lack of funding. That thwarts the whole purpose of the project and makes the initial investment almost wasteful. When you are thinking of projects for a global company, I think the mindset should be to align project objectives with a global mindset. As seen in the case, VW has made some poor judgment calls when it comes to their IT efforts. While I commend the efforts of Matulovic and his team from taking what seemed like a chaotic approach to IT project management to something with structure, I think they limited themselves by not finishing projects that were previous started that could benefit them tremendously. Maybe discussing their project selection ideas with some of VW’s global leaders would have been beneficial.

The lack of funds for the project come from, in my opinion, two directions. First, it was clear that the process was set to focus on the funding of business unit projects. Second, when you look at the chart in the case that ranks Project prioritization, Optimize the Supply Flow was ranked at the bottom. This in itself would have put the project out of sight – out of mind. I believe that VWAG should have instructed Matulovic that this project was a Corporate priority he needed to help implement and in turn should have provided for funding to complete it. VWoA would still maintain the budget set forth and it would not have been impacted by the SAP project. Where Matulovic missed in his new process was that he did not account for the challenges he still needed to overcome regarding technology that he inherited. He also, in his effort to have IT not be seen as an obstacle, should have provided more transparency to the methodology and problems already at hand prior to requesting priority lists from the business units. He needs to support project completion, so he will need to share the enterprise benefits of the projects selected, the ranking of Supply Flow Optimization in the eyes of VWoA, and request fundng outside of budget to complete the SAP implementation

As so many have pointed out, the under funding at VW is primarily due to inadequate project prioritization. Unfortunately this is an example where the company was focused on pieces and not the whole. Transparency and disclosure between departments and divisions in various countries would improve communication and help encourage the company to operate as a whole.

As stated in the case, the global supply chain system project was just that, a global project. Due to the lack of adequate impact locally, the project was not chosen for funding from VWoA. I can understand their reasoning. It is difficult to send funding away to a project that has little personal impact, while projects that will have a greater local impact almost scream for more attention. However, I can also understand that these global projects can also have far-reaching effects. I would be curious to know if all of the funding for this project was at the hands of VWoA, or if it was globally funded. If VWoA is carrying all the financial burden for this global project, then Maulovic should help the supply flow are lobby for funding help from different areas. However, if the project is globally funded and VWoA is the only one not carrying its weight, then it may be time to take another look at the projects that were funded and try to see if some dollars could be shaved off. They don’t want to fall into the same mistake as in the 1990’s when a short-sighted strategy resulted in long-tern problems. Thus they don’t want a focus on local projects to cripple the global success of the company.

In a previous life, I worked for a start-up educational publisher. The founder/owner/president had held a prestigious position within the children’s division of a well-known company, but decided to leave to start her own business when she saw a need that was not being addressed. The value propositions of the newly-formed company were mainly based on “design” and “getting things done.” At the time, middle grades teachers had limited options to help struggling readers in the classroom. Textbooks contained vocabulary too difficult for struggling readers, and there was usually a large variety of reading level comprehension within one classroom, making it difficult for the teacher to prepare and/or lead a lesson. Additionally, materials that would teach vocabulary to struggling readers were often designed for younger students – no ten-year-old wants to be singled out in a classroom setting by being given a science text book that looks more like “Pat the Bunny” than a “Cell Structure” textbook. Adding to the stress of the teacher, she always had to make sure students were prepared for standardized testing – a “Pat the Bunny” level science book certainly wouldn’t do that. This is where the new company came into play.
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The company designed and produced a product that provided teachers with everything they needed to prepare and implement lessons to help students develop the literacy skills they needed (reading, writing, comprehension) through teaching of standards-based science and social studies content. The student books were written and designed very carefully so as to ensure no middle school student felt like a “baby” when using our books, even if the content inside was written at a much lower reading level. There was no obvious difference between the highest reading level and the lowest reading level unless someone did a side-by-side comparison of the pages (other than the cover color, which was consistent across each level to help teachers quickly identify the right level book without calling attention to a student’s reading level). The Teacher’s Guide was written and designed to make it as simple as possible for teachers to follow the instructions in the classroom. For teachers who understood that the regular textbooks weren’t meeting the needs of all their students, our supplemental program helped them do their job.
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The product was designed in a modular fashion – teachers could purchase individual materials, a subject-specific set, or the entire program. The items were designed to be used either separately or together, but were most effective when used as a set. But, they were also great at supporting the content taught from a school’s regular textbook adoption. The modular design meant we could offer different bundles to different customer segments. Individual teachers would sometimes purchase student books and a lone teacher’s guide using their own money, but when a school, or even better, a school district, could be convinced to implement a specific set across all relevant classrooms, we could provide more support by way of training (on-site or virtual, depending on the situation and sale).
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At the time this product was launched, there wasn’t much competition. We were offering customers (teachers and administrators) a new – and quite needed – way to meet the needs of their students and the requirements of state standards. Since the company was new, we had no brand to rely upon, and instead promoted the program’s benefits to teachers, students, and schools by taking advantage of the professional reputations of the people involved in the program’s creation. We were also able to provide potential customers with quantitative results of an independent study that showed the effectiveness of the products.

At Planalytics, we help retailers and manufacturers understand how weather impacts consumer demand for their products. As a B2B intelligence provider, our value proposition involves three areas: cost reduction, revenue generation, and risk reduction.

Improving forecasts for consumer demand reduce costs in several areas associated with the business. For example, a better demand forecast allows retailers to carry less safety stock in inventory, reducing the total amount of on hand inventory necessary to minimize stock outs, leading to reduced inventory carrying costs. Inventory carrying costs can run around 20-30% of the total cost of inventory (e.g. Chapter 12 of our Operations Management text – Heizer and Render 2014). We also can help reduce costs in areas such as transportation, warehousing, snow removal, and labor scheduling.

Understanding consumer demand forecasts can also help generate revenue. Similar to the inventory carrying costs example, maintaining enough inventory to ensure lost sales due to stock outs can be challenging for inventory managers. A better demand forecast increases service levels, allowing retailers to maintain enough inventory to meet expected demand. Other areas where our service helps generate revenue are improved preseason allocation plans, more efficient replenishment systems, marketing timing, and markdown optimization.

Better consumer demand forecasts reduce risk by reducing the standard error of forecasts. All forecasts have some error associated with them, but including weather in a demand forecast reduces the standard error, and can be seen as a type of risk control. In terms of risk financing, some of our clients use the cat bond market, with some help from our seasonal hurricane forecasts, to find ways to diversify the risk in their portfolios.

Reference: Heizer, J., and B. Render. Operations Management: Sustainability and Supply Chain Management. Boston: Pearson Learning Solutions, 2014. Print.

The company that I work for designs, manufactures, and sells instruments for use by dentists in their practice, including high-speed and low-speed drills, hygienic equipment, hand instruments, and more. One of the boxes from Osterwalder and Pigneur’s Business Model Canvas is key partners – in the dental product development industry, as in many others, this aspect is critical. The type of high-precision manufacturing required for the bearings and chucking mechanisms that hold a dental burr, spinning at speeds of over 400,000 RPM (revolutions per minute) has only truly been mastered by some. Partners in Germany, the UK, and Japan have developed the technology to produce components that are both consistent and durable. Although we are their customers, our dependency on our vendors’ expertise makes us true partners, working together to ensure that the highest quality products reach our customers’ hands.

The organization I work for now is Temple University. I am in the Construction Management group which makes up one half of the Project Delivery Group which is one of the eight groups within the Construction, Facilities and Operations Team. The team is committed to delivering excellent service to students, faculty, colleagues, and guests. We are responsible for a broad array of services to the Temple community, ranging from planning, design and construction, to campus safety, parking, and grounds maintenance. It was tough for me to decide on a box, being as we are more of a behind the curtain type of group that provides service to the University rather than a company that operates in the traditional sense of profit and loss but I selected Box 1 – Customer Segments. While we do have customers, we do not make money off of them. Our main customers are the 17 schools and colleges that make up the University and we serve 5 of the 9 campuses. Our main function is to serve as their liaison in the execution of capital construction projects. Since we are an in-house group, our clients really don’t have another option for these services but they do have a voice if we are unable to meet their requests.

I work for a healthcare consulting firm that primarily works with hospitals and focuses on ways for our clients to improve financially. This typically occurs through process redesign or process enhancements. We focus on various departments and functions within the hospital, which means there are plenty of opportunities for us to help clients.
Due to us offering a wide-variety of services we need to build various relationships with the numerous decision-makers in organizations in order to position our firm. The key to these relationships is trust. Once we instill that trust we see clients come back for assistance in another department within the hospital.
In reviewing the sub categories I feel confident in saying we provide dedicated personal assistance. On our engagements we provide the client with a team of content-area experts that get to know everything about the client and their specific goals and objectives. By providing the personal touch we again hit on the trust aspect that is so important to us.
If something were automated or if we just gave a client the blueprint and wished them the best as they provided self-service then who would be there if and when something doesn’t go according to plan? By having someone on site it proves we care and shows we want to understand the client’s culture. This personal touch has allowed us to create an incredible relationship with some of the biggest hospitals and healthcare systems in the country, and has been a key to our firm’s success.

Customer Segment at BAE Systems

At BAE Systems our customer segments is 80% military which makes our segment a niche group. Within that one segment we offer a multi sided platform that provides products and services to many of the U.S military branches. Our business is broken down into sectors to meet the needs of our customer segments.

According to the article by Ostervalder & Pigneur customer base represents separate segments if it meets the following:
• The needs require and justify a distinct offer
• Must be reached through different distribution channels
• Require different types of relationship
• Different profitability’s
• Willing to pay for different aspects of the offering

We support the Air Force, Army, Marine Corps And Navy. Each of these branches require a different product offering which is why our business is broken down into 5 sectors to meet the needs of the US military. The branches of the military that we service each need customized product offerings to allow them to succeed even though they are all military. Our project requirements and customer relationship with our Navy customers differ from that of our Air Force customers.

Before the popularity of smartphones, I worked for a company that provided a “super 411” service. Consumers could call a service center and ask any question that they could conceive. They could ask for directions, stock prices, weather, traffic, general trivia. A person would search the internet with our proprietary software and come up with answers quickly. We even had one person (later identified as a potential investor) ask, “Where is God?”.

The company only lasted a few years, which in hindsight is likely for the best. As soon as the iPhone hit the market, the company would have floundered. That aside, though, the company was always doomed because it did not identify a clear customer segment. And it’s this bucket I choose to focus on here.

“Customer Segments” identify the people or organizations a company will serve. At this company in particular, the customer segment seemed to be anyone with a cell phone. It was not very specific nor well defined. As a result, the company was not able to row in the same direction. Different groups had different ideas about how to succeed. As a result, the company chased several customers down dead ends — basically employing a trial-and-error approach. It was not a sound way to run business. Looking back, if the company had focused on which customer segments it could best serve, it might have lasted longer. Well, until the iPhone.

I am a real estate appraiser and have worked in a family firm for the past 10+ years. During that time, it’s been interesting to see how the business has evolved due to changes in technology, the economy, and government regulation. For the first half + of my decade, I think the Value Propositions box was probably the best suited to describe for our organization. By providing quality appraisal reports we were helping our clients with their “problems” and were consistently faster and more responsive than our competitors. Because of this, the appraisal portion of the mortgage process was something our client didn’t need to worry about when we were given the assignment. However, in the last few years, due to the mortgage crisis and resulting regulatory changes, our clients are now required to order appraisals through third parties and those Value Propositions have been virtually eliminated. Being faster or more responsive no longer translates into more work. Each lender has a wheel of appraisers that receive equal percentages of their work based on a random selection process. So, unless you really screw up, you are guaranteed to receive the same amount of work as the best and worst appraiser your lender’s list. With this new business model, I”m not sure whether the Value Proposition box is truly applicable anymore. I guess we are a firm working in a niche market (mortgage lenders) that offers little opportunity for showing your value added. That said, we are providing a needed activity for the client that provides a relatively consistent revenue stream. I feel like our current company doesn’t have much to put in to many of the canvas boxes. I’d be interested to hear some comments. Thanks.

Customer segments/customer relationships at BMW (on a dealership level)

For us, the customer is what keeps us in business. Without the customer, there would not be a dealership. It is important to determine which customer segments we cater too and how can we build a relationship with those segments. As stated in the text under customer segments, each segment “requires different types of relationships, different profitabilities and they are willing to pay for different aspects of the offer.” The luxury car market segment is clearly categorized on earning potential and class but it is important to understand every segment and see how you can cater to that specific segment. Yes there is a “Niche market” for BMW and other luxury car makers, but it does not mean you ignore the other segments. The days are long gone when only certain few were able to afford certain luxuries. Once that segment is defined and catered too, the next step of course is to build a relationship with those customers. Building a personal relationship (personal assistance and dedicated personal assistance as each client has specific needs and wants) leads to loyalty and future business not only from the direct customer, but everyone they come into contact with. I am sure everyone in sales will agree that once you build that bond, or relationship with the customer, you earn a client for life. Every customer that you gain you also guarantee a 95% loyalty for future sales as well as 30% of their friends and family. (BMW inside statistics that I cannot share).

I chose to focus on Box 4 which is Customer Relationships. I work for GE Aviation as a field service representative for commercial helicopter engines and my job is all about customer relationships. Our customer relationship impacts the customer experience because through our technical expertise and support we are able to increase time on wing which saves our customers money. In our business we handle every category of customer relationships. I provide personal assistance by visiting the customer and conducting training varying from inspection procedures, best practices, to administrative procedures and IT support. I am also available 24/7 in the event of any engine problems or general questions through phone or email. I provide dedicated personal assistance because I am the face of the company assigned to specific clients. Often times I am the one developing the personal relationships with customers and ensuring satisfaction in an effort to create future growth. GE as a company provides Self-Service to all customers by giving them all of the resources necessary to operate our engines without necessarily having a relationship with us. We provide automated services through our website MyGEAviation. Customers can sign in and their engine information is available to them. They can also order spares through our catalog and access technical publications. We create communities by incorporating customer improvement programs. This provides GE funding for customer driven repairs/improvements. Customers meet each year to discuss best practices, fleet statuses, and general concerns. This provides value to the customer because they are able to learn from others, and develop valuable relationships and resources to help solve each other’s problems. Additionally, customers share fleet utilization and event data which we in turn input into a data management system that drive engine improvement programs. GE engages in co-creation through partnering with D.O.D. engineering agencies to develop improvements, as well as receiving input from customers. Customer Relationships is a vital part of any business and is particular vital to GE Aviation. Customers may determine our success but through customer relationships we can help determine our customers’ success.

Consider the company you work for now (or one you have worked for in the past). Pick one of the “boxes” in the Ostervalder & Pigneur Business Model Canvas. Describe what goes in that box for the company you picked.
I currently work for the U.S. Air Force and we have very different activities for each of these boxes then you would find in almost any other organization. Although I could say a lot for each of these boxes, the one I have chosen to talk about is Key Partnerships. In the USAF we have key partnerships both domestically and internationally within our own and foreign governments. Domestically as our defense budgets gets tighter we have been moving to a more joint environment so we have many key partnerships with the Army, Navy, USMC, and Cost Guard. But on top of that we have widespread key partnerships with private contractors. As our force size decreases, we rely more and more on private contractors so they are the core key partners to our organizations. The reason we use so many contractors is because the USAF can’t be a specialist in everything; many times it is more cost efficient to outsource a project to a contractor who is an expert in that area. We also have key partnerships with other domestic organizations like the NSA, CIA, NASA, DHS, ect… because again, they are specialists in their areas so we can utilize them more cost effectively then creating our own mirrored organizations. Another key partnership we have is with the militaries of many other governments. For example, we have a key partnership with the Royal Air Force in the UK and the Korean Air Force in South Korea. The benefit of these partnerships are two-fold because we supply these nations militaries with technical expertise and products while they in turn, supply us with their technical expertise and we gain friendly access to build bases and operate on their land. Overseas we also have key partnerships with TCN’s (Third Country Nationals). TCN’s are contracted personnel who provide services to our forces and bases of foreign soil. An example of this would be trash collection or sewage treatment. The USAF and our military as a whole would not be able to operate at the level we do if it wasn’t for our key partnerships with outside organizations. Our key partners are the lifeblood of our military so that is why I believe they are the most important of all the choices on the canvas.

I use to work for an educational publisher who served many customer segments from the mass market (B2C) to niche markets(focussed on professional in segments like nursing healthcare, medicine) to multi side platforms (serving customers in Higher Education with customers being professors, student and institutions). Each customer segment had a different set of products and business models designed to engage with the customers in their respective segment and to maximize the revenue opportunity. Complicating this model further is the company I use to work for operates as a multi national operating in different markets where a product developed for one customer based maybe resold to a different customer for example. In the Middle East most educational products and services at the School level are contracted for nationally by the national government who are eager to negotiate a contract for the entire country covering all of the schools and students. In the US the same products are sold at the school district level with each district dictating its own set of requirements for much smaller deals in terms of revenue. This example demonstrates the complexity in doing an exact mapping and definition of the customer segments. In addition the education market both in the US and outside of the US is going thru a major transformation which is creating new customer segments on a regular basis so all companies operating in space have to be agile to take advantage and optimize revenue. Ultimately as the educational publishing industry transforms our customer segments will continue to evolve along with the products and the business models.

Ryan,

Thanks for sharing. I think that shared services models, when implemented properly, can yield great benefits. The process of standardizing all processes across your business will not only provide cost savings and efficiencies, but it will satisfy customer needs. My company went to a shared services model a few years ago and it provided us with overall business efficiencies and allowed us to better serve our customers. Our customers can be price sensitive and offering similar services at a fraction of the cost was one of our driving factors in moving to this model and creating value for our customers.

Osterwalder & Pigneur, business model ‘describes the rationale of how an organization creates, delivers, and captures value’. They introduced the idea of a business model canvas (BMC) where the point of the canvas is that it offers an organized framework for asking key questions around an organizations business model. There are 9 boxes (components) to the BMC: Customer Segments, Customer Relationships, Channels, Value Propositions, Key Activities, Key Resources, Key Partners, Cost Structure, and Revenue Streams.
I am currently employed by Healthcare Providers Insurance Exchange (HPIX) whose primary line of business is medical professional liability. HPIX’s mission is to protect and reward our insured clients with professionalism, services and financial stability that they can rely on. The key activities are the things we must do to be successful. This box will focus on the following- what are the key activities which we need to carry out to deliver our mission? What are our key processes in creating and delivering our offering? What differentiates us and how do we maintain and manage those key activities? In HPIX key activities box, we have 3 main areas; underwriting is a priority, early reporting and early intervention and finally joint and coordinated defense.
Underwriting priority – our main focus is quality underwriting where each risk is analyzed on an individual basis. This positions us to withstand the ups and downs of the insurance market.
Early reporting and intervention – our ability to mitigate losses stems from our strategy of addressing bad outcomes as soon as they occur. Early intervention and resolution works to reduce or prevent the costs and burdens associated with claims defense.
Joint and coordinated defense- we do this where multiple defendants or a hospital are involved. This has proven to lower our loss cost and achieve better results with hospitals.

I am preparing to transition from the military into a family-owned construction company, so I chose to use our company for this exercise. Tradesman Drywall provides premier drywall installation services to both commercial and residential properties. We also have a business under the Tradesman umbrella called “Tradesman Contracting,” which provides a host of carpentry services ranging from basic paint or repair jobs all the way up to full-scale remodeling projects. As I reflected on the different building blocks, I realized that our company is in the “key resources” block. Our greatest resources are our intellectual and human resources. Because we’ve been in the drywall industry since the 1980’s, our family has fine-tuned a method for installation which we believe is far superior to our competitors; this method would constitute our intellectual resource. Since our product is delivered solely through trained employees, they constitute our greatest resource – human capital. Right now we are working to perfect our HR policies by designing orientation, training, pay, and safety systems that will drive our culture and help to retain these vital human resources. I look forward to working through the subsequent building blocks, and re-assessing the previous blocks as our company expands.

One of the boxes from Osterwalder and Pigneur’s Business Model Canvas is value proposition. I previously worked at Commerce bank as a Customer Service Representative. Commerce bank’s value proposition was the excellent customer service provided, which in turn would create a pleasurable customer experience. Many of the practices employed by Commerce bank were customer centric. For instance, many Commerce customers who worked full time jobs could not make it into the bank during traditional banking hours. Therefore, Commerce Bank catered to these customers by being one of the first banks to remain open past 5 p.m. In addition, Commerce would offer longer weekend hours, and had a rule of staying open ten minutes past the posted time to accommodate any customers who were running late.
Furthermore, Commerce introduced checking accounts with low minimum balance requirements to allow customers to have additional financial flexibility. Even the atmosphere within the bank was very different from competitors. The atmosphere felt more like a store, than a bank. All these attributes resulted in many consumers leaving competitors in order to bank with Commerce bank.

At the Rothman Institute, we are definitely most focused on building block #4, “Customer relationships.” We consider our “commitment” to be to our patients (customers) first, followed by our employees and our community…”we strive to provide unparalleled service to our patients…” Most important in our customer relationships are the “personal assistance” which we need our staff to provide to each of our patients, and the “dedicated personal assistance” that should be the centerpiece of every doctor-patient relationship. Although medical care is increasingly directed by insurers and “narrow networks” as defined by the PPACA, the ability of a practice to acquire and retain customers (patients) is still most dependant upon the relationships which our physicians establish with their patients, and the personal service and attention which they receive from our staff.

We have also begun to move into more automated services, including outcomes questionnaires that patients complete prior to their first visit and on their follow up visits. These also need personal assistance from our staff, when patients have difficulty completing them and come to the office without completing the information.

We have one other customer that’s worth mentioning…insurance companies. The odd thing about healthcare is that they really serve more as an agent of the patient rather than as a customer to whom personalized service is delivered. In fact, most of the interactions with insurers are automated in the form of electronic medical claims submissions.

I work for a contract company that provides food service for hospitals, schools, and businesses. Our model is unique in that our Cost structure is basically zero because the hospital pays for all of our labor and food costs, as well as provides a kitchen to cook in. Our revenue comes in the form of a fixed payment every month from the institution that we are contracted with to run the kitchen department. This is what we offer our customers, who first and foremost are the institutions we contract with. Also, a lot of what we bring to the kitchen that we run is our brand. Our company is a recognized brand in the south and something you don’t usually see present inside of the different institutions, especially hospitals. To have this brand inside of a hospital is a big selling point for them and allows them to bring a level of service to their customers, the patients, that they otherwise wouldn’t receive.

I work at Vanguard, and because it’s such an established company, could likely populate every box on the business model canvas. Rather than answer this question from the company perspective though, I’ll answer it from the group perspective. The Investment Management Group has many key resources that help provide value to our clients. First and foremost are the human element: portfolio management, trading, credit research, and investment strategy professionals who help guide our investment decisions. Then there are the support staff (like me) who ensure all of their trading systems are up and running and contain the proper data so trading decisions can be made with confidence. Other key resources are the vendors who supply the data that feeds our systems, like Thomson Reuters and Bloomberg and the computers and proprietary systems we use to crunch numbers and calculate analytics. Millions of dollars are moving day to day so it’s critical that we have the resources we need to efficiently invest our client’s money and provide them the most return for their investment.

Currently I work for PwC in a Technology Advisory capacity. When I look at my specific group and start to identify our key partners we certaintly have 3 of the elements of partnerships.

1. Strategic alliances between non-competitors. As a firm we have identified strategic partners that we work with their products from a development and implementation perspective, including but not limited to Workday, Microsoft, SAP, Oracle, Peoplesoft. Each of these are strategically thought out over who we want to partner with as if we are going to market, sell and deliver your product we expect it to meet certain criteria.
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2. Coopetition: strategic partnerships between competitors. One that i’m not sure is actually a formal relationship would be within our Workday practice and One Source Virtual. They are a boutique firm that specializes in Workday technology, but since they focus on a much smaller market than PwC they will reach out to us to handle the project when it becomes to big for them. In the same light if a clent came to us and would be inappropriate for us because of size or scope we could refer them to OSV as well.
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3. Join ventures to deliver new business: Internally we have an HCM Transformation Practice that often leads to new business being identified and sold for our IT Consulting Services. They will sell blueprinting services that include strategy maps and help them identify where to spend their dollars.

Consider the company you work for now (or one you have worked for in the past). Pick one of the “boxes” in the Ostervalder & Pigneur Business Model Canvas. Describe what goes in that box for the company you picked.

I currently work at the Dayton VA Medical Center (VAMC), part of the Veterans Health Administration (VHA), within the Department of Veterans Affairs. The VHA isn’t really a company per se, but I think that much of what was presented in the Business Model Canvas still applies to what we do. For example, the Customer Segment box entails much of what makes the VHA a wholly unique organization, and different from other large scale healthcare networks. Our customers are, of course, American veterans, a distinct group of consumers that have common and recognizable needs, behaviors, and circumstances. In one sense, veterans might be considered a niche market, although certain aspects of this population reflect a segmented population.

Veterans come to the VA with a great deal of similarity in their backgrounds and circumstances, given the nature of service in the military, especially during prolonged periods of conflict such as has been seen over the last decade. Even so, there are segments of this population with somewhat different needs and/or circumstances, and the VHA works to tailor what it provides and how it is provided to each of these segments. For example, there are those with relatively minor disabilities resulting from military service, for whom the VHA is largely a supplemental source of healthcare, and whose ability to pursue employment outside the military is largely unaffected. Then, there are those who have not been so fortunate, and for whom the significance of their disabilities means that they require a great deal of intervention and care over a long period of time, perhaps for the rest of their lives. There are also segments of this population that are defined geographically. For example, those living near a VAMC, getting veterans the care they require is a relatively straightforward matter – the veteran comes to the medical center and gets treated. However, there are many vets who live nowhere near major VAMCs, or even near the smaller VA clinics scattered through out each region of the VA. Getting care to those in more rural areas presents additional challenges, and requires a different approach.

For this question I have decided to describe a group of businesses that I own within the same segment. I have three nightlife entities in the city of Philadelphia. By design each entity targets a specific customer segment so as to not cannibalize the other businesses. The three entities are a concert venue, a nightclub, and a lounge. The concert venue specializes in EDM and therefore targets a market segment from 18 to 25. The vast majority of people are within the 18 to 22-year-old age range.The nightclub focuses on the 21 to 30-year-old age group. The lounge focuses on the 30 and up crowd. Although there is some overlap between all three places the vast majority of customers fall into these age groupings. Each specific group has their own expectations as well as income level to fulfill these expectations. The 18 to 25 group wants to see a very big name DJ and dance to the music but is not able to pay for anything more than the price of the ticket to see the talent. The 30 and up group prefers to sit and talk or hang with friends and has a budget that allows for potentially any interest they have. The 21 to 30-year-old group falls in the middle regarding the interest they have and the money they have to spend to achieve it. By targeting for each of these groups and by using the channel of advertising that would be specific to each group we have been able to maintain a very busy level of business throughout all three entities.

The Cat Doctor is dependent on key partnerships to meets its defined strategic goals. The obvious partners, like for many businesses, are our suppliers of inventory that range from office supplies to pharmaceutical items to medical supplies, including prescription diets. Less obvious to most observers of veterinary hospitals, is our reliance on our reference lab, and its reliance on its equipment and professional staff, and our reliance on veterinary professionals that provide services for our clients that complement what we offer in house. In addition to the expected out-patient and in-patient medical series my employees provide, a lot of diagnostic services are involved in the delivery of veterinary medical services. Some we provide in house, but we contract out the majority of our laboratory work, largely due to the economics associated with providing extensive lab services in house and due to the quality controls outsourcing affords. An added responsibility accompanies my decision to outsource, and that is to select not only a partner that can provide a needed service for the right price, but that can provide quality that is aligned with our strategic goals. An example is how my associates and I use a specific diagnostic imaging reading service due to the quality of the consultations they provide. The detail in selecting a partner can go be as granular as selecting a particular individual that a partner provides. Examples are my referring to a particular doctor at the referral practice that offers services that complement those we offer or our requesting that only one of two identified pathologists interpret our pathology and cytology samples. It would be impossible for my hospital to provide my clients with the services they demand at a cost they can afford if I didn’t utilize key partners.

I work for a nonprofit so some of the building blocks don’t encompass this type of organization. But when it comes to customer relations that’s a cornerstone for our team. We are an educational exchange and leadership organization so relationships is what we do. We have ample personal assistance for all our program participants and alumni and dedicated personal assistance for donors and program sponsors. Many of the goals of our programs are creating communities so we continual expand our own as well through continued engagement with all our customer segments. The personal and in-depth customer relationships we create and maintain are the heart of our organization.

I used to work for one of the largest auto finance companies in the country. My job entailed overseeing several loan originators and loan processors. I was also in charge of a loan portfolio of over $250 million. When reviewing the Business Model Canvas, several of the ‘boxes’ seemed to fit; however, I believe that the Key Activities can be inclusive of the overall job. The Key Activities for the particular line of business was origination of auto loans, management of the overall loan portfolio, establishment of relationships with dealer partners, and compliance with both company and regulatory guidelines. The abovementioned responsibilities can be divided into the three categories for Key Activities; production, problem solving, and platform. To be honest, most of the job entailed problem solving; be it employee, dealer partner, or customer. The production category was reliant on the loan origination and processing. Lastly, the company’s platform was to remain in compliance with company and regulatory guidelines when lending.

The company that I currently work for is a logistics company for Pharmaceutical companies. Pharmaceutical companies outsource this service rather than having in house meeting planners. In order to get the business we have to show that we are adding a value and that although they have to pay us a management fee, our services outweigh the costs. When going through the different points in the article under value proposition, we hit most of them, for example:
• Performance – we have KPI’s that we agree upon when getting the business. We are required to perform up to the agreed upon standards, which are measurable.
• Cost Reduction – we typical agree upon a cost savings that we will provide to the client by using us rather than planning the event in house. We will then negotiate prices with suppliers to get the best price possible for our client.
• Accessibility – rather than having to hire staff full-time and possibility having to make them redundant in slow times, our clients can utilize our services when they need them.

I really enjoyed reading the Business Model Generation. I am a doctor, and I practice transplant surgery. I decided to pick the value proposition box in the business model canvas. As a back ground, competition in my field is extremely high. In addition to that, because of the lack of organ donors, there is no growth in transplantation. Also, the concentration of transplant programs in this geographic area is one of the highest in the Country. As an example there are 5 liver transplant centers in the city of Philadelphia and a total of 7 served by the same pool of organ donors. When we look at kidney transplantation the competition is worse: 16 programs are fighting for the same organ’s pool. Therefore, strategically speaking, to improve productivity in organ transplantation we have to make our value proposition better than our competitors. That will, in turn, attract more patients and therefore exposed our center to an increased number of organ’s offer. From the innovation stand point we offer procedures not available elsewhere/everywhere such as live donor liver transplant, or liver auto-transplant. In terms of performance, transplant’s outcomes are public and available at the SRTR web page. Every transplant center is assigned with an expected patient and graft survival. Transplant centers are mandated to share with patients their outcome’s results. Thus, we struggle to push for results that are not just as expected but better than expected. Getting the job done: our waiting list for liver transplant never counts more than 65 patients; we perform about 50 liver transplants per year. Therefore, our rate of conversion from wait list to transplant is the highest in the area, which means that if you get in the transplant list at Jefferson chances are that you will be transplanted within one year. Our brand is unique. We changed our brand name from program to institute when we expanded our ability to prepare patients for transplant and follow-up after surgery in many different locations outside of the main campus; therefore, offering patients a better access to care.

For this reading question, I decided to discuss the box known as revenue streams and relate it to my current workplace which is a hospital. I think people sometimes overlook the fact that a hospital is a business, one that needs to remain financially stable and generate revenue. When I first transitioned from a nurse coordinator to a nurse management role over the hospital’s neurosciences service line, this was a new concept for me as my primary focus had always been on quality of care. According to Ostervalder and Pigneur’s Business Model Canvas, revenue streams can be obtained in various ways. In regards to usage fees, patients and/or insurance companies have to pay for medical services and care. As a hospital administrator, I receive monthly utilization and charge reports in order to monitor our revenue and also collaborate with the financial department to conduct audits to make sure the service line is charging correctly. Each year, I am also involved in what is known as “budget season” where I work with my assigned financial analyst to determine projected revenue and expenses. A majority of my budget expenses are for physician and nurse salaries, however the revenue stream from the provider services can and usually do exceed the salary expenses. It is pertinent that I monitor my monthly charge and budget reports and note any variances that occur especially when expenses exceed revenue. I must be proactive in making sure that this does not occur. In the event it does, I have to make sure that I have adequate documentation and evidence which justifies the reason behind the variance. As far as revenue stream from advertising, this can also be seen in the hospital setting. Each year, our service line meets with the Marketing VP and Director to develop a formal, strategic marketing plan. The plan is well thought out and looks at multiple factors. The goal is to develop a plan that is cost effective and a successful advertising initiative that will increase patient volume (especially for elective surgeries) and ultimately generate revenue streams. Overall, the ultimate goal is to provide high quality care that is cost effective and to continue to make strides to generate revenue streams in order to keep the medical center financially strong. My hospital has a strategic outlook known as the “5 Bs” which stands for Best People, Best Workplace, Best Growth, Best Quality, and of course Best Financial. All 5 Bs are dependent on one another for continued business success.

I currently work for KPMG, a global provider of audit, tax and advisory services. My specific discipline within KPMG is working with companies to improve their planning and forecasting through a combination of improved processes and software. The specific software that I concentrate on is SAP’s BPC product which enables planning, forecasting, consolidations and reporting capabilities. We are an emerging practices and have spent a significant amount of time over the past 3 years building out our business model. I believe our reading assignment on this topic this week does an excellent job of outlining the criticality of having a crisp, yet robust business model in order to clearly define strategy and goals.

Our key value proposition, consists of the following 3 competencies and value to the client. The competencies are aligned to people, technology and process:

People Competency: We have seasoned finance transformation professionals to support this effort; finance improvement is the core competency and our global firm allows us to provide an integrated functional and industry team covering all aspects of planning, budgeting and forecasting.

Client Value: Extensive experience in planning process mapping and improvement, controls documentation and design, and industry-specific tasks and processes and we can helps clients gain such benefits as the ability to quickly model new business scenarios and decide on a course of action that maximizes value creation, reduces cycle times, minimizes business and compliance risks, and increases user productivity.

Technology Competency: We are committed to SAP technology solution and implementation and have over 200 finance and 2,000 SAP professionals globally. KPMG practitioners have been providing SAP integration and implementation services including change management and organization design over the past 15 years globally and have rich backgrounds in a host of SAP tools.

Client Value: Clients benefit from experience amassed by our SAP professionals drawing from a track record of successful BPC implementations – experience that generates quality solutions and drives cost-efficiency and speed.

Process Competency: Our integrated performance based approach to enable an global enterprise view of planning framework is to identity performance drivers and dimensions that influence the planning outcomes. This framework will be leveraged to deliver a core set of business processes and technology to create a common global planning framework that drives improved business performance. It aligns people, process, technology, and change management to create a framework that ties together each component of the implementation to provide tangible benefits for the client.

Client Value: The key to achieving your project goals and objectives will be shared vision, clear requirements, project sponsors direct involvement, sound project management, and strong governance. Our approach will allow the client to realize its project objectives in a timely and cost-effective manner, and lead to outstanding project results.

My current employer is a world leader in the seamless epoxy and urethane floor, wall and lining systems. Their value proposition entails a highly customizable, high quality, epoxy or urethane floor, wall or lining system that is defined to their customer’s needs. My company manufactures the product at the customer’s specification (within regulation) and manages its installation to guarantee a perfectly delivered final product. Many of our competitors either manufacture a rival product or install rival products but few provide a turnkey (both manufacture and install) model like ours. We find this provides us with a distinct competitive advantage in our marketplace. We argue that because our team actively oversees the process from the first sales pitch to the final cleaning of an installed floor, we ensure complete customer satisfaction.

Having been an active duty service member for the entirety of my adult life, I spent a lot of time examining each building block to see where I could add the most value. I decided to focus on key partnerships. It is critical that the U.S. military develop and maintain key strategic alliances with its partners and allies around the world. By growing and fostering interoperability between militaries, it positions these alliances for rapid, unified, and decisive action should global conflict or the need for humanitarian/disaster relief operations arise. Relationships are forged not only at the national/diplomatic level but also at micro and macro levels within the military hierarchy. For example, large multinational exercises are huge events that require effective communications and resource planning as well as coordinated logistical operations. On a smaller, more intimate scale, Soldiers from foreign armies routinely attend advanced schooling in partner nations to better understand different techniques and potentially incorporate lessons learned into their own operations.

Key partnerships could also be related to those in the defense contractor community as they support the U.S. military. Often, competing companies must engage in coopetition or form joint venture to accomplish a higher value creation. For example, I am currently working at General Dynamics on a one year internship while still serving on active duty. The company supplies systems needed for the Army’s tactical communications architecture – Warfighter Information Network – Tactical (WIN-T). Its current fielding initiative, Increment 2, is the “mobile, high-capacity network backbone” for what is known as Capability Sets (CS). The CS structure requires many different organizations to form non-competitive partnerships so as to seamlessly blend and integrate their unique systems together to provide an unmatched technological advantage to the Soldiers on the battlefield.

http://www.defense.gov/news/Defense_Strategic_Guidance.pdf
http://www.army.mil/standto/archive_2014-07-23/
http://www.af.mil/News/ArticleDisplay/tabid/223/Article/560027/building-strategic-relationships.aspx

I volunteer for a non-profit where I do a majority of their marketing for them. The non-profit has events and program that serves children ages 12-21 and their parents. The box that I would like to talk about is the value proposition. The non-profit organizes a number of events throughout the course of the year that, for the most part, serves all age groups while select events are geared towards a specific age group.

Each event and program is then broken down and customized to specific age ranges and we are able to customize our message to those ranges to show that although the event/program is open, that there’s something for everyone in each event/program. We then communicate our value through our price points (low cost but strong programs), accessibility (core events held in a central location, a certain number of our events are held in local communities to reach our customer), and encourage parents to be a part of the program so they in turn can help retain our customers. This allows us to get a good number of first time customers and by getting them to come to at least one event, we are able to then communicate the program and show them the value that they would get from it.

In evaluating my current firm, Box 1 of the Business model canvas is very appropriate to consider. Based on the understanding that a business model creates, delivers and captures value; there is likely no better place to start than customer segments. At Vertex, there is a 30 year legacy of serving large organizations by way of our enterprise software solutions. Our client list is a who’s who of the Fortune 500 firms, and our software is mission critical to accurately calculating and remitting sales tax globally. However, over the last 5 years, there has been a realization internally that this market is maturing and while profitable; will not provide the growth necessary over the long-term. Because of this, my firm has gone through a bit of a transformation with respect to the customer segments we seek to serve. Without getting into too much detail, Vertex has created a new software platform to serve global organizations in a high end niche market; the firm has deployed an outsourcing practice in a segmented fashion to diversity our compliance offering and has deployed another nice offering in the down-market segment requiring a new distribution, channel, pricing and sales model. These changes are ambitious and the firm has put forth a significant monetary investment in each of these new customer segments, which has spurred growth and opportunity; while increasing overall risk. However, it would appear that the very survival of any business is predicated on fully understanding the current customer segment being served, determine if that alone drives acceptable growth and based upon that answer; have the willingness to invest in and develop new customer segments for future products and services.

I work for a Florida quasi-governmental property insurance company so many of the 9 boxes tend to get complicated, so I’ll focus on box 1, customer segments. Before I dive into the box, I’d like to share what makes the company unique. The company exits because there are homes and businesses throughout Florida that are vulnerable to hurricanes where the private market isn’t interested the higher risks. A policy is eligible for coverage if the private market’s premium costs 15% or higher. If the company has a deficit after a hurricane, we can assess our policyholders as well as all of Florida’s property-owning consumers. Our financial statement rolls up with the State’s so we have quite a big safety net when compared to the industry. Also, we encourage other insurance companies to take our policies through a “depopulation” program.

So, with all of that said, the customer segment is defined as property owners who cannot find private insurance, such as the Florida Keys, or the pricing for the competitors’ product is too high. The business segments are personal residential and commercial properties. The legislatures define the limits of coverage for the two segments. Since we’re similar to a residual market, you could say we have a niche market.

I’m currently working on a project to help stakeholders understand how small the company can get before the industry stops removing policies via depopulation. In other words, what the minimum amount of policies the company can get to…or how low can we go. We’re using a generalized boosted model to learn what characteristics the depopulation companies prefer. Once we’re done, this will allow us to assess our bottom-of-the-barrel customer pool.

Key Activities appears to be the most relevant box to my job at a hospital of about 15,000 employees. Though we are not the archetypical production organization, we are held to a high standard for the services we provide. We are dedicated to improving customer satisfaction. Patients and families are regularly surveyed for input about our performance. The surveys also include non-clinical experience such as parking services, house keeping, security, cafeteria, etc.

To maintain the standard knowledge management and problem-solving aptitude expected by the hospital’s mission statement, there are continuous training and development programs that all employees, including the hospital executives, must attend. We are demanded to always be responsive to our “customers’” needs, regardless of our job description. If we are stopped in the hall way by a family for some assistance, we are required to help or find somebody who can help. We can’t leave them hanging.

Accordingly, we have a monthly employee recognition reward in commemoration of excellent customer service. The winner receives a very fancy plaque, and their name is engraved on a brick in a renowned hospital garden.

Consider the company you work for now (or one you have worked for in the past). Pick one of the “boxes” in the Ostervalder & Pigneur Business Model Canvas. Describe what goes in that box for the company you picked.
The box I picked was value proposition for a municipal police department. When looking at the value delivered to the customer, the department doesn’t want to provide services simply by answering calls for service. It would be easy to provide the bare minimum when you are the monopoly on law and order, but in order to create customer value we focused on performance and customization. Improving service performance by upgrading field accessibility to information technology for quicker database queries (freeing up the dispatcher from the equation from having to retrieve and relay the information). Another improvement was in certifying more officers in less-lethal and non-lethal force which helped in mitigating risk in field operations. Customization was achieved by tailoring police presence for each customer segment. For example customized street crimes units were deployed based on gathered statistical data on one hand and creating a tailored police presence for the school district and the downtown bar district to satisfy their needs on the other hand. Businesses use value proposition to create a competitive advantage and although the police department wasn’t in competition for business our value proposition built trust and support within the community.

My selected canvas box is channels. I picked this simple because I remember way back when I started with a company that was my first with one that manufactures consumer products I was fascinated with how channels were defined. I had always simply seen products in a store and never had the need to consider how channel segmentation worked. Channels were segmented as to grocery, convenient stores, retail, restaurant, and mail order (now would certainly be called eCommerce). Within each channel an entire customer profile exists along with product types, volumes, distribution methods and frequencies. Each was distinctly different and really very insightful in identifying the habits of people buyers within each segment. One segment might emphasis displays and while another was simply having product in the right place (impulse). If a retail customer was in the card section, say around valentines day, there was a plan “related product” to be “in the area” and help complete the package for an overall better experience.

I work for electrical engineering firm. We have three business segments – engineering; design and construction; and management consulting services. Our customer segments are comprised of resource recovery and solid waste management companies, municipal water and waste water treatment plants, passenger and Class I freight railroads, energy utilities such as PECO and PSE&G and energy-intensive industrial and commercial clients.

Several people have addressed value proposition in medicine, I would like to discuss channels, which I have never thought about it before. As a physician, we practice medicine every day, and frequently heard about medicine became a business now. But how to interpret is difficult. The hospital and each division have made value proposition, we are delivering those value proposition to our customers, our patients. We communicate every detail to our patients and their family, and distribute our quality service to them via different diagnose approaches, medications and opinions, which can be treated as sales channels, and establish good patient-physician relationships during hospitalization and maintain it in our continued care clinic as outpatients until one of us fall out of the practice secondary to various reasons later.

I work for Johnson & Johnson within the Medical Devices world. Under this sector, the franchise I work for specializes in cater a specific mass customer segment to providing solutions to diabetes disease. I would like to focus on the value proposition the group of the J&J Diabetes Solutions Companies delivers to this rather large segment of customers. The performance and reliability of the products are at the epicenter of delivering a proper value proposition to all segments of customers targeted. Each product placed in the market to aid with both type 1 and type 2 diabetes, J&J takes meticulous measures to ensure the products and services are above and beyond customers’ expectations. With one in twelve individuals around the world being diagnosed with this disease and many more going undiagnosed particularly in the developing economies, company strives to deliver products that are low cost to help customers manage their diabetes effectively with blood glucose meters. In addition, the company delivers a high end blood glucose measurement product portfolio to incorporate cutting edge technology and incorporate advances in the technological field with incorporation of mobile device apps/communication to cater to growing market segment. Further, group of companies offers solutions to type 1 diabetics requiring continual administration of insulin by developing a high precision best in the industry insulin infusion pump designed to fit in users pockets for convenience. J&J diabetes solution of companies have segmented its positions to deliver to various demographics by providing almost all elements of value propositions highlighted in the business model generation article while ensuring the product performance and reliability is kept as foremost element for each product.

As a physician and now an MBA student, I have been interested to witness the changes related to cost structure in health care. As the article mentions, there are cost-driven vs value-driven cost structures. I find that there is a shift underway, as more focus in health care at large is being placed on value . Though somewhat different to analyze reimbursement systems (like CMS Value-Based Purchasing) as compared to cost systems, I think the shift in emphasis is the same. Hospitals have learned that cost-driven business models do not serve them well. An example: it’s not best to use the cheapest orthopedic implants, because they may have higher failure and complication rates. So rather than minimizing cost by picking the cheapest equipment (or providers, facilities, etc), it is better to use data to select equipment/providers/etc that provide greatest value. This will be more pronounced as reimbursements fall increasingly under a “pay for performance” hazard model, in which care for surgical complications, readmissions, and hospital-acquired infections is not reimbursed.

Another trend I see in health care is consolidation. This relates to cost structure by providing economies of scale and scope. There are of course myriad challenges to integrating two hospitals or health systems, but the fixed costs of providing extensive services like transplant at each of the competing academic health centers in the city, for example, are untenable. Therefore, you see mergers that allow one enterprise to broaden its scope of services (Temple acquires Fox Chase Cancer Center, for example) and to diversify its market segment or geographical reach (Jefferson acquires Abington).

I work in Global Partnerships which is tasked with bringing in revenue through sponsorship and suite sales for all of our properties on a global scale. When looking at sponsorship revenue streams they come from large multi-property deals (Coca-Cola has an agreement which includes STAPLES Center and LA Kings) or individual team deals (LA Galaxy and Herbalife). At the end of every year our revenue goal is configured by looking at existing/pre-booked revenue (from multi-property deals), renewals (deals that expired in the previous year), and new business.

Suite sales are a bit different as those are based on physical inventory that is available. For example, we only have so many suites at STAPLES Center to sell. As suites become available we can increase their price ultimately helping us reach a higher revenue goal. The difference with sponsorship sales is we can be more creative with the way we sell because of digital inventory such as banner advertisements or social media campaigns/promotions.

The customer segment of a business model generation is extremely important for a medical practice to consider. The customer segment for a medical group such as the Rothman Institute can be viewed from a mass market perspective or a specific patient segment. The mass marketing approach appears to be logical in order to have access to more patients. However, when it comes to medical care, specific household stakeholders play more of a role in maintaining family health than others. Market research has shown that focusing on the mother of families with children will more efficiently attract a stable patient base. By focusing on this specific segment will have direct implications on other aspects of the company’s value proposition, distribution channels, and customer Relationships. Mothers tend to choose the insurance product and do the research on which orthopedic provider to go to. They make the majority of appointments and make sure the family is adequately insured and attend all office visits on a timely basis. Girls also care more frequently for their parents and are the primary caregivers during the frail years. The elderly make up the majority of candidates for joint arthroplasty, the largest subspecialty in most orthopedic groups. By segmenting the market and focusing on the primary care providers of the elderly allows access to this patient population.

By segmenting the market and understanding the dynamics of medical referrals the Rothman Institute has been able to successfully grow in each market it enters. Unlike what we hear form the government and insurers, patient referrals are more dependent on word of mouth than from direct physician referrals.

Key resources: I work at an academic hospital in a department whose mission is focused on patient care, research, and education. As an orthopaedic trauma surgeon, my section’s role is particularly focused on the care of, research of, and education/training in the management of severely injured patients. There are several key resources that are required for our trifold mission to be accomplished successfully.
The physical resources include a highly equipped and efficiently designed emergency department with sufficient medical supplies and medications, imaging technology, space, and information technology to rapidly and safely handle patients with a spectrum of injury severity and multiplicity. We also require operating rooms that are readily available, spacious, highly equipped and stocked with the instruments and implants needed to treat broken bones and their related injuries, and with advanced medical imaging and information technology available.
We also require require key human resources including highly trained and skilled surgeons, nurses, anesthesiologists, surgical technicians, imaging technologists, and radiologists. Furthermore, many of the key individuals also need to be capable, motivated clinical educators and researchers who are willing to collaborate with those in other departments whose interests align with ours.

Channels Box
Over the past year, I led a comprehensive review and refresh of our strategy at TD Bank in the US. A primary area of focus was how we best serve our customers across all channels, or what we refer to as our omni-channel distribution strategy. Omni-channel includes physical distribution at our stores (that’s what we call branches), digital (on-line and mobile), phone (call center), and ATM. We strive to deliver the whole bank to the customer allowing them to seamlessly transact across all channels. For example, a customer should be able to start a mortgage application on-line, subsequently walk into a store and pick up right where they left off, and later call the contact center to discuss open items or check their mobile phone for the exact status. One of the largest challenges is how we deliver the human element to our digital channels. However, even larger than that is the question regarding the future of our physical store distribution channel.
Most money center and large regional banks have announced plans or are in the process of significantly reducing their retail store network since transactions are migrating to other, cheaper distribution channels. When we analyzed our customer base, we found that we have a large portion of our customers that are wedded to the store network (despite a 6% decline in store transactions last year). Our research indicates this is also true across retail banking – if you deliver the experience the right way as part of an overall omni-channel strategy. So contrary to what our competitors are doing, we are actually continuing to move forward with building out our store channel but are focused on transforming it to more of a “hub and spoke” network.
The “hub” is a flagship store with full products and services averaging 3,000 square feet in size with approximately 9 employees. We are piloting different “spokes” including smaller stores comprised of universal bankers (can perform teller and sales functions) and Smart ATM’s. We just opened the first of these pilot stores in Canton Crossing, Maryland late last year with great success. Later this year, we will be piloting a self-service store on 86th and Lexington Avenue in NYC with a concierge and tablet to support customers in a Smart ATM lobby. Even though we are committed to our physical store channel, we are evolving it as part of an improved overall omni-channel experience for our customers.

Customer segment:
I work for a behavioral health counseling services organization that offers various counseling services to a broad client base. Most services we provide are highly regulated and required our staff members to have different level of training, licensing and credential in order to be approved to provide and bill for services.
In order to streaming our process and ensure that we are offering our clients the best needed care by skilled and licensed staff, our organization grouped our client base into five distinct segments based on our level of competencies and the market segment that we would like to target.
We have drug & alcohol outpatient services, psychiatric medical services, school-based services, behavioral health rehabilitation services and mental health outpatient serves. This segmentation does not only help with providing needed services but also help with marketing campaigns, recruitment of required talent, ensuring that staff members serving a particular segment have the required licenses, training, and support they need to accomplish their goals.

I work for a Biotech company. Like the article suggest customers comprise the heart of any business model, but our customers are more of a patients or even healthy volunteers at times.

Our customers fit into several segments of a business model depending on the stages of where the potential compound is in the drug development process. Any trial that a company sponsors is more focused on a niche market where you identify the unmet needs of a patient. Our customer segment has specific set criteria to enroll into a clinical trial and is based on a compound that might have a potential to cure the disease and help the patients.

The customer segment is disease dependent, that could be further stratified based on age, gender, race, previous medical history or conditions, country specific etc. Again, this course of action, where a potential compound is successful in addressing a certain ailment in a patient, after several years of testing, now that is about to be filed with FDA, then we target another set of customers where we seek physicians who are willing to prescribe our drug after drug approval, and also patients who are willing to switch to our drug or even opt voluntarily.

Further digging into this, will be addressing segment of patients who like to take the drug through IV or IM or even oral, then once a day to several times a day or even once a month or a once a week etc. This segment further opens up wide variety of patients and is all about creating value to patients from the initiation of a compound in the labs to the patients over several years.

The Key Resources segment—particularly in terms of intellectual resources—is essential to a brand pharmaceutical company’s ability to maintain and protect its product market share. In particular, pharmaceutical companies selling branded products rely on strong patent protection to exclude others, particularly generic competition, from penetrating their markets. When patent protection expires on major brand products, generics can quickly take over the market. As such, it is essential for the pharmaceutical company management to understand the risks associated with the company’s patent portfolio as patents could potentially be found invalid by courts before they would otherwise expire. As such, using its intellectual resources, a company should have a business model that allows it to properly prepare years in advance for the possibility of losing patent protection early from a patent case and can have its scientists and legal team working together on next generation products to ensure that markets exist for its line of products after the expiration or invalidation of its original patents.

Working in a hospital, there are many boxes that could be used to fit in the canvas. One of the most important boxes would probably be Key Activities, as production and problem solving are very important in my line of work. As a hospitalist, I take care of patient’s that are admitted to the hospital. Patient’s may be admitted with an array of symptoms which can create a plethora of potential differential diagnoses. Obtaining a history and physical exam are very important in my line of work. Some say a great clinician can make a diagnosis 80% of the time just by history and physical exam. Ideally, labs and other diagnostic tests should be used to confirm your diagnosis. In this ever changing world, our reliance on technology and diagnostic tests have become more important. We now start ordering CT scans on every patient that has a headache or a CT Angiogram of the chest when a patient comes in with shortness of breath whether it feels like an appropriate diagnosis or not. It feels as if medicine is becoming a check box rather than critical thinking. Some of the latest literature coming out from the American College of Physicians, teaches us about High Value Care and the importance of ordering less tests. It re-emphasizes the focus on critical thinking/problem solving and going back to the basics of history and physical exam(as well as other things). The more tests ordered, the less productive a physician can become as we are always waiting for test results. The hospital tries to increase our patient load by having us do more admissions and discharges. We are constantly being observed by our patient’s length of stay. The smaller the length of stay means more potential revenue for the hospital which means in the future an increase in likelihood that they will want to keep us part of their workforce. Thus, problem solving and productivity are key to a hospital.

I picked the Channels box because I believe it is very interesting how in the Government contracts realm this box is very narrow and does not allow for much flow. More specifically I work under the Contract Instructor Services Atlantic Fleet (CISLANT). We perform Contract Instructor Tactical (CIT) services for the MH-60R platform in the US Navy. Our contract is currently held by CSC. In this contract our customer is Naval aviation or Commander Helicopter Maritime Strike Wing Atlantic Fleet (COMHELMARSTRKWNGLANT). To communicate with our customer we are required by the contract to go through a Contract Office Representative (COR). This one man narrows our flow of information significantly. For instance if our customer would like us to provide services on a weekend they must present the idea to the COR. The COR verifies the request is inline with our contract and then presents the request to us. We then present our answer to the COR and he gives the answer to the customer. I am sure you are all reading this and thinking how tedious this process must be. Do not even get me started on the days when he is not at work. It is tedious and it also limits our ability to provide services to our customer. It also limits our customers ability to take advantage of new areas we can provide services. To help remove barriers and increase information flow we presented the idea to hold regular standardization meetings with our customer. The COR saw this as a way for our services to remain up to date with the customers requests (staying within the contracts requirements). It does allow for this but it also allows for constant communication on the customers needs and the services we can provide to fulfill those needs. Because these meetings generally have follow up emails and discussions our channels have opened up to a daily process of discussions. This increase in channels has opened up our contract to providing Subject Matter Expert (SME) advice and services in areas we were not previously a part of. As of recently the customer has seen the value in using our services in the Contract Instructor Pilot (CIP) and Helicopter Aerial Door Gunner Instructor realm. Increasing our companies channels has allowed us to better serve our customer and expand business for CSC.

Value Proposition
The industry I work in is highly competitive. In order to win contracts with clients, we respond to clients’ Request for Proposals and compete against other industry consultants (large and small) for each contract we pursue. When evaluating RFPs or other requests from clients, Go/No-Go discussion meetings are held where I discuss the RFP’s requirements and go over the contract’s scope of work with senior management. This meeting is where we decide whether or not we will pursue a particular contract. Two of the topics we discuss are (1) our value proposition and (2) our selling points and differentiators. Certain clients release many RFPs on an annual basis and, since we are a multi-service firm providing services for clients in multiple markets/industries, time must be set aside to review and discuss RFPs.

We first have to consider what value we bring to the table for that client and that contract. What is that special something we bring to the table that will set us apart from our competition? Do we have an innovative solution to propose (design, customization)? If we already know the firms who may also bid for the work, do we think we can offer a better price than some or all of those firms? Is there someone on our team who has worked for the client previously and can bring that knowledge to the contract in a way that improves a customer’s performance? Careful consideration must be taken before dedicating marketing/proposal hours and the hours of some of our billable staff who will assist with the proposal’s preparation, so value proposition is one of the most important factors in our pursuit decision process.

The customer relations building block is the box aptly suited for a position I held in an e-commerce global company. As a product brokerage company, customer relationships were pivotal to the company’s success. Built on a one-to one marketing approach, customer acquisition was attained by listening to a customer to identify what product you could recommend to help them. The personal assistance and empathy of what they were experiencing had allowed the relationship to gain trust and the dedication saw that customer retention was high.
In the area of nutraceuticals, customers feeling the success of one particular product did not feel pressurized into buying additional products because of the one –to one sales relationship. Rather the up-selling came from the customer when they inquired as to what other products could they take and compliment what they were already taking and were helping them. As the sales/customer relationship became more secure, customers could branch out into other divisions within in the company.

Customer Relationships
For the past 6 years I have been an Account Manager for Milwaukee Electric Tool. The company prides itself on its customer relationships. The CEO believes in allocating additional funding into the sales team in order to garner that face to face interaction with our customers. On multiple occasions I have heard our CEO says he would much rather hire 20+ more people than advertise on a Major League Baseball outfield wall or on NASCAR race car. He believes that the direct interaction with both our key distribution partners and key end users goes well beyond the impressions given by branding through advertising. Within the 6 years I have had the opportunity to live in multiple states dealing with a variety of cultures. The most important thing I’ve learned along the way is the importance of adapting your style to meet customer needs. My customers in Hawaii were much different than my Amish customers in Lancaster, PA. I’ve seen this benefit our company in a tremendous way. The company had had double digit growth every year that I’ve been on board. We’ve grown from a $500M+ business to a $1.7B business in an extremely short time. I believe some of this growth comes from innovation, a focus on R&D, and marketing, however I believe a majority of this growth comes from the people within the organization aligning with the CEO’s vision of having face to face interactions at almost every end user touch point, whether its a distributor partner or an end user.

At Microsoft, there is no shortage of customer segments. At a very generic level, Microsoft’s customers are diversified into: consumers, small-to-medium business, enterprises, and partners. Consumers are individuals buying products and services for personal use. Small-to-medium business is pretty self-explanatory, but its distinguishing characteristic is a business using Microsoft products without a small or outsourced IT presence. Enterprises are larger organizations with a larger IT investment and typically larger IT staffing. Finally partners are other companies that sell Microsoft products or services on behalf of Microsoft.

Within each segment, there are more segments and in those segments are even more segments. The most interesting segment to me is the partner segment. In this segment, there are companies like Dell, HP and Samsung that sell Microsoft products on their hardware. Partners also contains a broad range of service providers (like consulting, training, support, …etc) and resellers. Partners also contains some of Microsoft’s strongest completion in the market including Apple, Google and Amazon. All three companies license and resell different forms of Microsoft services and technology as a part of their products.

Value Proposition:
I work at a law firm and our value proposition is an important one. We are not a big Philadelphia firm, but we are far from a boutique firm. What we look to provide our clients is a balance between the two worlds. We offer the personal level of service of a small partnership with the expertise, resources, and experience of a larger city firm. We strive to provide service with a local, yet also big time feel. To that end, we have small individual clients as well as larger business clients. We pride ourselves in being able to handle whatever kind of case might be brought to us and have lawyers covering just about every legal field there is, with support staff to back them up. We’re in the community and have good relationships with our clients. We also prominently sponsor local events to let our clients know that even things beyond their cases that are important to them are important to us as well. I’m sure this overlaps into other categories, but it does a lot to add to our proposition of local service with city expertise. We’re embedded enough to offer personal attention, but staffed and experienced enough not to get swallowed up in the “deep end” of the legal swimming pool.

When I worked as a consultant with IBM Global Services, it was essential to my job to understand the Key Resources at my disposal in order to successfully deliver for my customers. The intellectual resources within Global Services included the IBM brand and all the proprietary knowledge and processes that IBM created over many decades providing IT professional services dating back to the first mainframes. The human resources available to Global Services included software, hardware, and infrastructure engineers throughout the many IBM companies. The internal engineers were subject matter experts that could be called upon to provide internal consulting without having to pay the hefty consultancy fees. In most cases, the internal engineers’ consulting hours came at an additional cost to the customers or were presented to the customers as non-billable time to foster better relationship.

I currently work in the Enterprise division at Verizon. Specifically, my division (or business name) is Verizon Enterprise Solutions. Verizon recently reorganized into three divisions: Operations, Product, Staff Functions. Further, the Operations division is sub-divided into three operating units – each with a distinct customer segment to be served.

Enterprise Solutions (aka VES) is a global provider of network infrastructure, mobility, cloud, and security services meeting the needs of large business customers (the global 2000) in over 170 countries (this includes the wireless voice & data services needs of U.S.-based clients).

Consumer & Mass Markets Business (aka Verizon) services the wireline voice and data services needs of residential consumers and small-to-medium sized businesses. This division sells our FiOS suite of video, Internet, and telephony products.

The Wireless operating unit is Verizon Wireless, the largest U.S. wireless network services provider. Verizon Wireless is sub-segmented into retail, B2B, and indirect focused-channels.

Each of the operating units – Enterprise, CMB, and Wireless are supported by their own Network operations. These are the engineering and technical teams that design and operate the global IP, fiber optic, telephony, cloud, security, and 3G and 4G wireless networks that deliver on the needs of our customers.

Across the entire company, we have a layer of shared services to provide support to all of the operating units: marketing and sales, IT, finance, HR, legal.

The objective of the new organizational structure is to streamline delivery of services, pricing models, products and necessary support functions to the operating units in order to best meet the needs of the customer segments designed to be served.

The customer segment is the primary focus in the parts distribution department at Ford Motor Company. In fact, the hours of operation are designed keeping the customer in mind and providing excellent service. The relationship with Ford’s parts depots and the dealership has been strengthened by a lowered lag time in part deliver from 2-3 day delivery to next day delivery. In addition, the transition from an outdated management warehousing system, to a state of the art inventory management system has allowed customer satisfaction to rise by shipping the right part all the time. Furthermore, the customer relationship is kept in tact by dealer visits from not only sales representatives, but by the depot managers to ensure that the services provided are as expected.

I work for Herman Miller, a designer/manufacturer of premium furniture for homes, businesses, hospitals, and universities. We’re also a leader in Lean Manufacturing practices, serving as a model for Toyota and consultant for numerous organizations including GE.

We couldn’t survive without our Key Partners. Just-in-Time principles require very strong relationships with suppliers. We have extended lean principles to our suppliers offering free consulting and even management training. We’ve also extended our extensive knowledge on sustainable manufacturing which have helped suppliers significantly reduce their overall footprint. Our suppliers provide high quality raw materials such as steel and wood, but also perform key manufacturing activities. For example, some of our mid-century modern furniture is completely manufactured through a particular supplier. This supplier has highly-skilled labor in areas such as wood molding and sewing, something very difficult to find in today’s workforce. Not only do we get this specialized training but it comes at a lower cost. This particular supplier also makes all of the hi-end furniture for our largest competitors, allowing them to achieve a level of scale that we couldn’t and ultimately giving us a better price.

Our suppliers are not the only key Partner. We also use an independently-owned dealer/retailer network for our distribution. These dealers and retailers better understand their local communities and their sales staff is critical to our success. They also add additional services like office/home design and white glove delivery, as well as handling our warranty/service claims.

The relationship between our suppliers, ourselves, and our distribution network must operate in a fluid way for us to be successful. In the past when there’s been breakdowns in either the results have been disastrous.

At the hospital that I currently work for, I would identify a Key Partner right now as being EPIC. EPIC is our electronic medical record software supplier that we chose to help integrate all of the network’s needs and consolidate the various systems we use now. I would say that this primarily reflects a buyer-supplier relationship. However, in order to optimize the outcome and efficiently implement the system, EPIC and the health network need to strategize together and continue to work closely before, during and after go-live. EPIC provides services that are a critical resource for the network to accomplish its forecasted goals.

Osterwalder, A., & Pigneur, Y. (2010). Business model generation: A handbook for visionaries, game changers, and challengers. Amsterdam: Alexander Osterwalder & Yves Pigneur.

In my current company, as in many sales organizations, I would say that the Customer Relationship box would apply. We encompass Personal Assistance through live, local employees answering calls and dispatching for service as well as our staffed Network Operations Center as well as Dedicated Personal Assistance through Account Manager relationships with the customer. Additionally, customers are able to order supplies and place service requests via web portals established for them which covers Automated Services. This focus on a customer level, while not dissimilar to most organizations in the technology office products and support industry provides us with some level of distinction in that we encourage direct person to person contact between the customer and the company.

Customer Relationships:
My company’s long-term success is driven by the development and then retention of customer relationships. Being in an industry that relies mostly on sales for sporting events and concerts, it is critical that we are in tune with our customer needs. What most of our customers want is a personal relationship with someone they can trust. These relationships are developed between our sales representatives and our customers. They can take form with an initial cold call and phone conversation to an automated request through our website when tickets are purchased for sporting events or concerts. We rely heavily on season ticket holders to help forecast our budgets for the year so it is super important that our sales representatives work hard to retain clients year to year. For each event we hold, our sales representatives are required to stay and meet with the clients to whom they sold tickets. Through these personal interactions, most clients will get to know their representative on a different, more personal level which allows them to discuss future events with them and make additional sales. We have different segments of our company with regards to sales so you get a representative that is in touch with your specific needs. We have Family Group sales which deal specifically with family related events like the Circus, Sport sales representatives who are very versed with the specific sports and players and are able to talk about them at length, as well as Premium Services which deals with larger company needs. We likewise are able to co-create relationships with our vendors who are amongst our top buyers of our suites for events and have showcased some of their services and ideas to take us to the next level in our business. For larger customers, specifically companies hosting events in our suites, we are able to upsell them catering packages that are tailored around their wants and needs. The bottom line of all our sales, is to treat the customer as an individual and provide them with an unique experience that will bring them back for future events.

Value Proposition:
I am one of the founding entrepreneurs of a start up company. Our product is a new combination of ingredients aimed at relieving symptoms and shortening the duration of a cold. Besides the effectiveness of this proprietary mixture of ingredients, attention was paid to the product only needing to be taken twice a day, at a reasonable price, and making the product in convenient form for the user. Another value of the product is that it should lessen or eradicate the need for any other products to be taken, i.e. Tylenol, vitamin C, zinc, Dayquil, etc. It’s aim is to be the only product you need when you feel a cold coming on.

In looking at system thinking I was trying to come up with a process that was connected, served a process, and displayed examples of the various thinking we learned in the reading. I also wanted to avoid something from work because that’s what I get to think about all day. I consistently went back to the Board and various committees at my golf club. I was actually surprised that SAQ 8 did not initially consider a Board as a system even though the author eventually conceded it was.
I felt like the Board at my club fit into the system category because it is made up of subsystems (committees) that are connected and are established to serve a distinct purpose. In this case our committees, (Golf, Grounds, Membership, House, and Finance) they all work together to provide members the best experience possible in a cost-effective manner. If a change occurs in any committee it will affect the other committees and the Board. Ultimately, the Board is just the final place to either approve or reject a proposal.
I’ve seen a lot of positives working within this system, but the single most important piece for me is that we are thorough. There is certainly no rush to make something happen just for the sake of doing it. I see a wide variety of thought processes including but not limited to holistic, reductional, and logical. The ability of our a committee to look at things from various perspectives can at times lead to delays in change, which is the major weakness of this other systems.
To avoid the negative aspects, a system such as a Board, must think ahead if at all possible. This will allow the system to make proactive changes instead of being reactive. Because if the system, in this case the Board, ends up being too reactive the necessary changes will occur too late.

Systems thinking is a way of thinking in which you consider the whole as opposed to parts. In an organization, a systems way of thinking would involve analyzing how an action or decision will affect not just those immediately surrounding something, but the company as a whole, its stakeholders (customers, employees, etc.), peripheral departments, and anyone or anything else that is part of the organization’s eco-system.

One example of systems thinking is selection of a new employee. Simpler logical or causal thinking may compare skills with open projects and assignments, and possibly personality with those in the group who will be working directly with someone. Systems thinking would look at a person’s fit with the organization as a whole. Does their personality and ethics fit in with company culture? Does this skill set already exist within the organization (are we enhancing the company with this hire or adding in a copy of what we already have)? Are we diversifying?

The upside to systems thinking is that decisions that are made are potentially better on a larger scale and across a longer timeframe. In the example above, the person hired on a systems thinking basis will be a long-term fit for the company and grow the culture and the abilities of the company as a whole. The downside is that thinking in this way is more complicated. It is much easier to match a resume to a job description. If this were all that was needed, hiring could be done by a computer with no human interaction at all. The other downside is that you may need to pass on short-term gains in order to have long-term success and stability. Looking at the system takes a less selfish and small view of a situation with the goal of better understanding the whole.

Being immersed in the world of academia on a daily basis, academic departments, specifically an English department, came to mind when considering this question. An English department consists of multiple faculty members, all specializing in English, but usually in different areas of English, and the purpose of this system is to provide university students with introductory college-level English classes (the GenEd requirements) and more specific, advanced-level classes for English majors. Each faculty member is assigned one or more classes and sections to teach, with some faculty teaching different sections of the same course, while other faculty teach different classes that rely upon the foundations taught in the introductory classes. Faculty need to coordinate their syllabi to make sure students aren’t reading the same text in different classes too many times, while at the same time ensuring students are given a similar foundation and introduction to specific texts to prepare them for future classes. In this sense, the different faculty members work together to function as whole – the English department – and each part is connected and must work together.
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The scheduling of these classes (arrangement of the system) relies upon the availability of the faculty, the skill set possessed by the faculty, the requirements set forth by the university (class time periods, classrooms available, state standards, etc.), and the number of students who need and/or want to take specific classes. Together, the faculty are able to provide students with classes that meet graduation requirements, state standard requirements, and potentially grad-school entry requirements.
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When one or more faculty members leave the department, it disrupts the system – suddenly there are planned classes without a professor available, students are unable to graduate on time because their required classes are unavailable, other faculty are asked to take overloads (extra classes) to cover sections, class sizes increase, and students receive less personalized attention and assistance. Likewise, when faculty members are added, it changes the dynamic within the department, both for faculty and for students. Faculty may feel threatened by the expertise of a new hire (will that person take the classes I like to teach?) or may feel like they have a partner (we have similar interests and can coordinate our classes to better serve the students). Students may suddenly be given the opportunity to take special-topic classes not previously available or be able to graduate on time because new sections of required classes opened up.
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The positive side of an English department system is that students are (presumably) educated in an organized, logical manner, with each class focusing on the different skills/knowledge students are required to learn. The downside of such a tightly-knit system is that when there is a departure within the faculty line-up, it causes havoc until a replacement can be found, and that can be a very long process.

An example of systems thinking can be seen in this scenario: Imagine you are an Aviation jet engine company that has just had the funding cut from an international field service engineer position. The position had been funded by a customer for 10 years. Because the customer had been paying for the employees services, as a company you had extended your employee to support other customers in multiple countries regionally which was a cost savings advantage. As a result, customer satisfaction and support had been at a premium for 10 years, costing the company very little. Do you now decide to fund the position internally and continue support, or do you allow the position to dissolve until the customer “comes to their senses” and realizes the need for your support?

From a cost perspective it would seem that allowing the position to dissolve would make sense but this is a very complex situation which is why a systems thinking approach is necessary. First of all, because you are in the Aviation industry focusing on jet engines, if a company decides not to fund a field representative, you still have an obligation of support from a safety, reputation, customer satisfaction, and future growth stand point. This means that if that customer had an immediate Aircraft on the Ground situation which was caused by an engine, some support would be provided regardless of funding. If the position is allowed to dissolve, more will be added to the plate of other representatives which could impact morale. Additionally, because the company optimized the employee’s position by having him cover multiple customers, in multiple countries despite being only funded by one, if you choose to not fund the position, you inherently diminish customer support which undermines the philosophy that customers determine your success. Furthermore, the employee who was at that location was a top performer, had been in the location 12 years and had a family there. When the position was dissolved the only place available to him was in the Middle East. There is an additional relocation cost to move the employee and his family. There is also a risk of employee performance decline due to moral and also customer satisfaction from lack of sufficient support.

System thinking allows you to break down a situation to what it really is, not just what it is on the surface, so you can fully understand all of the implications and ramifications. In this example the ramifications of the dissolving of a key position due to lack of funding, could end up costing the company more collectively than to fund the position. If a systems thinking approach isn’t utilized then it would be hard to realize ramifications that could be hidden. System thinking is a way to bring all components and their interactions within a situation or problem to light and depict their outcomes prior to making a decision or action. The downside to system thinking is the complexity. There is a lot that goes on and it is possible to “boil the ocean”, so to speak. It involves collaboration, obtaining perspective and listening. Because of the human dynamic, the perspective or variables or causes could differ greatly. I think that interpersonal intelligence contributes greatly to the ability to use system thinking.

Nice post, Ryann. So thinking back to the Southwest case study, how did systems thinking help Southwest succeed where the other major carriers failed? I can think of a couple places. They thought holistically about the entire airline transport problem. Rather than focusing on maximizing individual routes (as you would using a hub-and-spoke model), they thought of ways to maximize the entire business. Southwest used a fleet of 737s to minimize maintenance time (building economies of scale) and rather than running multiple routes the same day using smaller planes, filled seats by running fewer routes with fuller planes. They also had a worldview oriented toward customer service. Despite having fewer amenities than the major carriers, customers came away with higher levels of satisfaction because they felt they were treated fairly, which differentiated them from other airlines. I’m sure there are other examples from that case study, as well, but those two came to mind right away.

Systems thinking is the notion that all parts of the whole is interrelated. It shows how parts of a structure interrelates to form an overall system. Understanding the interconnection of all aspects of a business operation or a department can be critical to successful management. By adopting a systems mindset that supersedes individual functions and departments, managers can complete strategic value analysis based on internal and external factors, trends, and causal effects. In turn, they are able to deliver broader benefits and move their organization toward a higher level of thinking and performance. One of the main benefit of systems thinking is it fosters a collective understanding of a problem situation and significantly increase the level of employee engagement, trust, and productivity throughout the organization. Attempting to define, measure and improve business process requires a broad view of the entire process and considering all the issues affecting it. An example of systems thinking would be an ER operation.
At the start of the year, my daughter had to make two trips to the emergency room. A lot of people who appeared to have similar complaints (flu symptoms) was in the ER. A traditional reaction by the hospital staff would be to treat each person for his/her symptoms, but not to notice that their complaints were similar. But systems thinking would see the connections that link patient’s complaints together. The doctors and nurses in the hospital emergency room, would notice the similarity and react by ordering large amounts of the relevant antibiotics, brushing up on the necessary procedures and alerting the hospital staff.

Systems Thinking in Healthcare

Reading this article was very interesting as I was able to really relate to the systems thinking idea. In the article systems thinking and practice was described as “seeing the world in a particular way, because how you ‘see’ things affects the way you approach situations or undertake specific tasks.” I feel like I am always thinking of systems and how they can be improved whether I am in the grocery store or at work.

The healthcare industry is comprised of many complex systems including “high risk patients, clinicians, and manufacturers.” With the great advancements in technology in the healthcare industry it is clear that there are many added layers of complexity that need to be considered. Focusing on the level of care delivered by using technology in healthcare is an example of systems thinking. This process includes understanding the relationship between people, process and technology that if properly addressed can help resolve complex issues holistically. No one part of the system is more important and being able to identify the components of the system one is dealing with can help change one’s perspective on the issue.

The level of care delivered using technology captures the task dependencies of the system and provides a means of identifying and prioritizing the necessary tasks to accomplish this goal. By utilizing a systems approach, health care organizations can “design and evaluate interventions that maximize system performance and patient safety.” Once the interventions are evaluated it will be much easier to address system wide issues. More importantly, system thinking has to be embedded in the culture of the organization because when nurtured system thinking can lead to continued improvements in the way care is delivered in the healthcare industry.

Although there are many benefits to system thinking, it does have its limitations. Systems thinking can be hard to adapt because doesn’t separate cause and effect, it doesn’t consider the motives of the people involved in the system, it doesn’t offer a deep dive into any specific problem which can make finding resolutions more difficult. Another limitation of systems thinking is that it requires people to think differently and change their perspective, which isn’t always easy to do.

For more information: http://www.aami.org/publications/horizons/2014_Fall_FiveWaysToIncorporate.pdf

Ryann – This was a very good example. While I think that the systems thinning approach can be beneficial, I am concerned that sometimes companies, in this case a specific airline carrier, can focus on all initiatives at the same time. With so many moving parts for an airline carrier to consider in its system, i wonder if sometimes it would be better to piecemeal the system. Sometimes the best improvements on systems are done after it has been implemented.

As a member of the Army Intel community, one of the first examples I thought of for systems thinking was FBI Intelligence Analysis. Because systems thinking involves approaching a problem with a “big picture” perspective rather than simply from one or two viewpoints, Intelligence Analysis provides a perfect example. If you go to http://www.fbi.gov/about-us/intelligence/intelligence-cycle you can read about the intelligence cycle, which mentions the various intelligence disciplines. I think if you were to focus on just one or a few of these disciplines, you would miss the big picture, but by incorporating all the raw information, Intelligence Analysis takes into account the “multiple causes that make up the whole.” According to the FBI link referenced above, [Intelligence] Analysis & Production “is the conversion of raw information into intelligence. It includes integrating, evaluating, and analyzing available data, and preparing intelligence products. The information’s reliability, validity, and relevance is evaluated and weighed.” To me, this represents a perfect example of “systems thinking.” (Disclaimer – all information above regarding the Intel community is openly available from the FBI website and is unclassified and fully releasable to the public.)

An upside to systems thinking is that a problem can be approached in a more measured, comprehensive way which takes into account many different perspectives. A downside is that this can be impossible to accomplish when time is limited or if all necessary information is not available; for example, it would be difficult to apply systems thinking while deciding what to purchase in a store if you only have five minutes, because time is limited and all parts of the equation are not available.

As a clinical researcher, and as an MD, we are almost wholly bound to the scientific method. Admittedly reductionist thinking pervades the medical community. As the paper points out this is so effective in practice and usually produces outstanding results. However a more holistic thinking approach could complement this research methodology and ultimately produce better, or more accurate, results.
When writing a research paper for instance we first collect as much information as we can, filter this down until we have exactly what we’re looking for, then examine associations between variables. I recently took part in analyzing the data for a research project examining the relationship between a certain intraoperative drug and a physical outcome. When looking at these two data sets individually there was a high degree of correlation, and we were happy with the results and pressed on. However weeks later we sent our purified data to the statistician to use various multivariate or logistic regression techniques. There are various multivariate analysis techniques such as forward stepwise, backward stepwise, bidirectional elimination, and I’m sure many more. Essentially the process works by examining the relationship between the variables and the outcome and eliminating those variables with weak association, ultimately giving a multiple linear regression model. The statistician examined our data and a model was determined; only the drug of interest was found to be insignificant! Another variable, termed a “confounder”, made it appear that there was an association between the two data sets.
This is a common problem in statistical analysis. Looking at just two variables is essentially reductionist whereas examining all variables together could be thought of as systems thinking. The question becomes is multivariate analysis reductionist as well? Naturally we examine all data we can obtain, including various comorbidities and other factors, and even get creative about including other data. Despite our best intentions, are there variables we are not, perhaps cannot, consider? What about factors such as lifestyle, access to care, unconsidered genetic predispositions, happiness, family support structures, and so on?
The advantages to reductionist thinking are that it simplifies the process and the results. A leads to B, it’s plain as day and difficult to argue with the data and the statistical algorithms used to compare them. The problem is that inevitably concessions, approximation,s or other assumptions must be made at some point to simplify all data into an analyzable form. The advantages of systems thinking then are that it attempts to solve these inadequacies by taking a holistic approach and considering multiple viewpoints. As I pointed out above however, is it even possible to consider everything? If we did, would we be able to comprehend the results? Would there even be any results? We may take a holistic approach and determine something esoteric, such as that “the experience of life as a human being is associated with various diseases and ultimately death”. While this is certainly true, such a broad-arching statement leaves us nowhere offers no potential intervention.
In the end both approaches have their merits. Certainly it is advisable to take a holistic approach as much as possible, and I will certainly attempt to do so going forward. At some point however simplifications must be made in order to find a solution, indeed, even to define the problem. Great paper and the insights certainly made me think.

The most obvious example of systems thinking that came immediately to mind for me was science. More specifically, a discipline like medicine hinges on systems thinking and the interconnectedness of many constituent parts of a complex whole. Although this is intuitive to understand, I would argue that both reductionism and holistic thinking are important aspects of physiological systems models. For instance, if we take a drug and its effects on humans, we must study some of the effects in reductionist terms. What is the direct cause and effect of drug A on receptor B? However, we must also consider the holistic effect of the medication. What will the drug do for the person?

An example of systems thinking within the workplace is how associates view their overall culture depends on their personal experiences. In order for organizations to understand how to improve problems, they have to understand how each function is interconnected, that forms the larger system, the organization’s culture. Associates view an organization’s culture a certain way because how they experienced specific events or personal experiences with other associates. These specific individual events will affect how they react to future situations within the organization. The interrelationships with senior leadership, management and their peers within the organization help understand if the overall system, the organization’s culture is positive. Within my organization to determine if our culture is healthy we have an engagement scoring process where each employee completes a series of questions in regards to their personal engagement experience once a year. Their engagement score ratings will depend on their personal experiences within their business unit and direct management. Poor experiences will provide poor ratings for the overall culture and positive ratings will provide a stronger culture.

An advantage to work place systems thinking, is that this will require you to investigate the root cause of an issue within various levels of the organization. In rectifying the root cause will help improve the functionality of the overall system. A disadvantage is if you have multiple issues, identifying the root causes could take a great deal of time and resources away from other areas of the business.

I am going to use an example of systems thinking that is currently being used at workplaces such as large regional medical centers. In the hospital setting, systems thinking is used on a continuous basis to address complex problems and situations on various levels across the organization. The following is an example.
A medical center owns 20% of a long term acute care facility. The intensive care unit at the medical center’s one campus has recently had an extended length of stay related to various factors which may include conflict of interest related to private practice physicians attempting to keep patients to increase billing charges. There is an opportunity for these patients to be moved to the long term acute care facility which will create a win-win situation for both organizations. The medical center will decrease their LOS which will be cost effective and the LTACH will gain an increase in patient volume. This type of systems thinking looks at the whole picture and can be looked at as even a holistic way of thinking. The organization is attempting to look at a complicated pattern of various cases that make up the whole picture and are attempting to streamline it by considering numerous perspectives and views from different stakeholders involved. This way of thinking looks at the entire system and determines that the overall system benefit may greatly exceed potential individual unit losses or inefficiencies that can result. This is an upside to systems thinking. However, certain administrators from the medical center’s accountable care organization may view this as a loss because it is pulling patients out of their system and therefore they may lose some Medicare payments. This is more of a reductionist way of thinking as they are only looking at their individual part of a much bigger, complex scenario. Someone who is using systems thinking would say that the proposed plan’s benefits greatly outweigh the small Medicare payment losses. The downside to systems thinking is that it may completely overlook smaller, individual unit inefficiencies that could turn into much larger issues in the long term. Another downside is that it can be a complex way of thinking and certain individuals are not trained or educated to carry out actions or performance improvement plans related to this particular way of thinking.

An example of system thinking is basic science research where scientists understand in depth every single step of the experiment or series of experiments in a trial. The scientist is also capable of connecting all these information together to interpreter the results. When a scientist aims at a specific discovery, there are a number of interconnected experiments that precede and follow each one. The scientist has to be able to consider each experiment’s result isolated (reductionist thinking), how each result affect the next (logical thinking) and how everything he does in the course of the discovery potentially affects the final results. Basic science experimentation starts with an idea, and subsequent ideas can modify the course of a series of experiments.

In our medical center, our root cause analysis meetings for when an error or near error occurs involve systems thinking to try to simplify situations into it’s more basic parts and decide underlying problems for process improvements and patient safety. At these meetings, we present a final goal first. All aspects of leadership and staff discuss interdependence of hospital systems and staffing from several perspectives. Each individual present presents their thoughts from either a logical, causal, or reductionist viewpoint or a combination thereof. Eventually, a more holistic approach as to what is best for the organization and the patients at large comes to the table. The variety of perspectives present allows us as a group to reach a better outcome than if one individual tackled the problem alone.

For this question, I will draw upon my background as a CFP® professional. Financial Planning and Modern Portfolio Theory (MPT) are primary examples of systems thinking. Both employ a holistic approach to optimizing investing results and managing portfolio risk. All too often, my clients own a suboptimal collection of investments and financial products, without regard to how these components (i.e. assets) interact, or correlate with one another. Instead of having a cohesive portfolio, with a suitable asset allocation and appropriate diversification to match their desired risk profile, they tend to be over concentrated in companies, or industries they are most familiar with. Impulsive investing decisions based on emotions increase your exposure to risk and volatility. This lack of a strategy decreases the probability of success, whereas financial planning improves your results (although success is not guaranteed). That said, there’s no right or wrong way to invest for your future; however, the Nobel Prize winning science of MPT (asset allocation, diversification, and rebalancing) asserts that it’s not rational, or efficient to exceed a given level of risk to achieve an expected return. Portfolios (with varying degrees of risk) on the ‘efficient frontier’ represent optimal asset allocations, comprised of stocks (equities), bonds (fixed income), and cash (liquid investments). It’s critical to match an investor’s risk profile with their stated goals, before making any recommendations. Nonetheless, there are investment advisors who put their own interests first and profit when their clients make poor investment decisions. The downside to systems thinking, when it comes to investing is that some clients mistrust the rigidity of MPT and the ‘cookie cutter’ approach to asset allocation, diversification, and rebalancing. They prefer a more dynamic/tactical investment management style, even if it costs them more in fees and commissions. Ultimately, clients are accountable for their own decisions (rational or not).

Systems thinking and practice are eye opener for me. I have never ever think about the ways of thinking. I especially like “how you ‘see’ things affects the way you approach situations or undertake specific tasks.” I have worked in healthcare field for years, and along with the rapid development of medical research and technology advancement, medicine have highly divided into multiple specialties. Each specialty diagnose and treat their patients based on their clinic assessment and judgment. Patients and family complained of lots of confusion, and we frequently heard the patients complained why all my doctors do not talk to each other, why I heard so many different opinions. In fact, we talk to each other every day, but we behave based on our own specialty practice. We have not reach the point at that treating human body as a whole, a holistic way, we are doing reductionist way, a traditional scientific way. However, human is a system, all the components, such as nervous system, cardiovascular system, digestive system, etc. are all connected, but interdependently function to serve the life. If we treat it as a whole instead of each individual organ, then we’ll have a much better outcome. This might be the utmost reasons of the establishment and rapid development of hospital medicine, so we can co-ordinate any patient’s care as a whole, not an individual organ, lead to significant improvement in all hospital quality control parameters including mortality and morbidity and patient satisfaction.

Systems thinking involves seeking the added benefit or entirely new result accomplished through the contributions of many interconnected parts as a whole, which otherwise could not be accomplished via an attempt from any other variety of its independent units. I believe sports team management perfectly exemplifies systems thinking. While managing any team in any sport would fit systems thinking, I will use the management of a baseball team as an appropriate example. Baseball managers cannot remove one player from a team without significantly impacting the team’s overall performance. The team, as a whole, performs far more effectively and substantially than any incomplete combination of its parts. For instance, remove a catcher from the field and every pitch would result in a passed ball. Remove a first baseman from the field and infielders would have to run every retrieved ground ball to his bag. These player reductions have similar impacts when batting. Each player provides a strategic offensive talent, whether the player is the slugging clean-up hitter or holds the consistent leadoff spot. A baseball team manager understands his team as a system in which every player vitally contributes to its overall performance.

Systems thinking provides users with a holistic way of understanding complex situations. Holistic views consider something complex in its entirety. Considering multiple parts of the system simplifies holistic views. Using my analogy, you could break a baseball team down by offense and defense. These positions are held by the same players (in the NL) but at different times of the game and represent drastically different jobs for each player. You could separate these even further by looking at the infield and outfield of a team’s defense. As mentioned in our article, each slice truly contributes to the whole and a deep understanding of a part of a system adds to the understanding of the entire system.

Systems thinking enables users to recognize a system as a whole unit and think of its behavior as one particular product rather than the combination of many individual products. It incorporates many forms of thinking and perspectives when analyzing system performance. It is naturally holistic.

While systems thinking provides partakers with a “big picture” of system performance, it is very theoretical and provides little insight into or answers to critical failed parts. It tempts users to overly focus on the system as a whole and disregard the importance of its critical pieces. Also, it neglects outside-force interaction. Finally, it provides very little practical advice for gauging system performance and/or improving system performance, rather it simply requests users to think in terms of “systems”.

What is an example of systems thinking? What are the upsides and downsides of systems thinking?
An example of systems thinking would be developing a deeper understanding of how you get a glass of water. A shallow understanding would be that you turn on the faucet until your glass is full of water and then you turn off the faucet. A deeper understanding would be to see the behavior of getting a glass of water as a system that loops feedback through a cycle that identifies the many interconnections within the system. The faucet affects the flow of water and thus the level of water in the glass. There is the desired water level that you want compared to the current water level as the water rises. As the water reaches the desired level this in turn affects the faucet position as the faucet is turned off which in turn affects the water flow. Using this type of analysis for an entire system can be time consuming. Systems thinking is useful for investigating complex systems. An upside of systems thinking is that it can anticipate increased effectiveness as well as mitigate risks between the parts of the cycle within the whole process. A downside of systems thinking is that an entire system analysis is time consuming. If time is a constraint on a project’s deadline then such an in-depth analysis could be counter-productive.

The company I work at just went through converting multiple business systems onto one operations system. This process has taken over 6 years and has been an enormous project for the IT department as well as its supporting business departments. The operations system itself is an example of systems thinking, however, I believe a better example is the project management that supported the effort. Each piece of the project was broken out where the beginning stages was focused on information gathering and “story card” development where processes were documented in detail for reporting needs and eventually moved to the implementation phase. The project management process had many inter-connected parts where one affected many others so careful planning and diagramming was necessary. Project management helped the IT staff highlight influences and causes-and-effects that could have been missed. Other benefits include identifying better options by seeing the relationships in detailed diagrams. This year ends the migration portion of the project and final phases so it has been successful, but not without issues. I hope to never go through this process again…ever! 

Systems thinking and perceptions are well demonstrated in the engineering arena. An Engineer sees a river and forms a picture of a bridge spanning the waterway so people can get to the other side. The design of the bridge is broken down into all the individual designs that build upon one another in creating the bridge. A masterful bride design is produced for all to see and gain excitement. However, another engineer looks at the same river and instantly thinks a tunnel is needed because high winds will blow water on a bridge which would freeze in the winter. Is the second thinking more holistic due to factoring in the weather? Was the first engineering locked into a perspective of bridge because he was a bridge designer? This is the very reason I participate in collaboration groups often. The diversity of thoughts and perspective seems to help target a better path toward a solution.

The interconnectedness of the systems thinking characterized by feedback loops resonates in my line of work. For BPC implementations, which is a planning and consolidations software solution, we use the Spiral methodology which stresses continual improvement. The spiral cycle is similar a circular model with a 4 distinctive points including 1) Determine Requirements 2) Analyze Risk 3) Develop/Test and 4) Review which is then followed by returning to 1) Determine Requirements and the circle continues. We use what are referred to as Conference Room Pilots to verify the achievement of the requirements in the review phase. At that point we can make adjustments and to initial build and quickly review with the client.

The upside here is that the ability to quickly develop and present the results of the efforts to the client for feedback. The BPC tool is highly customizable which lends itself to this iterative build. A downside of this approach tends to be the level of complexity to execute and additional costs for multiple changes to the tool.

While reading the assigned article, the first thing that struck my mind was an event that took place sometime ago in Ghana; this event is tantamount to an analogy of systems thinking and the ecosystem. Apex predators like lions naturally play a vital regulatory role in the ecosystem. Lions prey on large herbivores such as elephants and buffalo; weakening their herds and consequently allowing smaller herbivores to thrive.

Similar to the car crash illustration of causal thinking in the article, a series of event happened sometime ago in Ghana when wildlife conservationists attempted a methodical control of lions in a certain area in order to stimulate smaller predators’ population. The intervention worked at first, the smaller animals rose in number as lion population diminished. However, at some point, equilibrium was reached and problems did set in. Smaller predators, especially olive baboons’ population exploded. The baboons started invading farms and villages, preying on livestock, wrecking crops and spreading parasites and diseases.

Thus, systems thinking was proven beneficial by systematic reduction of lions. However, the consequences were unbearable because the side effects of decreasing lion population was either not considered or probably underestimated. An understanding of the interactions that produced these side effects would have enabled the preservationists to see that their strategy to decrease lion population was bound to fail. Had the team focused on the big picture, they would have let nature take its course or simply minimized their intervention.

https://wildtracks.wordpress.com/tag/predators-at-the-top-of-the-food-chain/

I was just rereading the Systems Thinking article and was struck by John Roble’ quote, where he mentions that a holistic approach demonstrates a caring approach. It got me thinking about something I learned when I was at a local shelter yesterday. An employee told me that individual tickets were given to employees to attend a fund raising gala, but tickets were not provided for a significant other. I assume that using reductionist thinking the managers felt they had only so many free tickets they could give away, so they limited the amount they distributed. Where they failed to apply holistic thinking was that they did not allow an employee to give their ticket to a fellow employee. Perhaps the senior management offered the tickets because they would like staff to attend to show their support. The reality is that the cost of a ticket is too much for their typical low paid employee to purchase a ticket for a significant other. By restricting the use of the ticket to the employee and only that employee, they actually end up decreasing the amount of employees who can attend and don’t do much to generate staff good will. If a ticket was given to a spouse or significant other, it didn’t change the total amount of tickets allocated to the staff. I think holistic thinking would have been much better in this situation for sure.

We can analyze the crisis in the Middle East and the rise of ISIS from a system thinking perspective. Holistically we need to understand that movements in the Middle East are a reflection of adaptations to power struggles based on religious affiliations. During the Sadam Hussein regime the Shiites and Kurds were marginalized. The overthrow of the Hussein’s regime lead to the empowerment of several Shiite groups who systematically terrorized their previous abusers. Political protection was never truly afforded to protect Sunni majority and great harm was brought upon this group with the emergence of ISIS. Over time and with the departure of the US and their allies the disgruntled Sunni majority, taking advantage of the weakening Syrian regime, rose up to form the great caliph, or true and only Islamic faith. Using system thinking the basic elements of why strife has been fueled can be easily seen by drawing simple abstract diagrams of the elements involved. From here basic steps to prevent such movements can be stifled by creating governance that represents all stakeholders. In the meantime the world resources must to be mobilized to prevent the mass migration of disenfranchised young Muslim men who find appeal in joining the fight on behalf of ISIS.

Response to a natural disaster is an example in which systems thinking can be far more useful than only reductionist, logical thinking. I will use the 2010 earthquake in Haiti as an example. Many well-meaning physicians and healthcare professionals from the United States and around the world rushed to the aid of our neighbor, but typically with their own logical, reductionist thinking rather than a real systems mindset. The reductionist mindset: many people suffered broken bones and orthopaedic injuries, some with open (compound) fractures and crushed limbs. The solution, therefore, would be to rapidly deploy teams of healthcare professionals to triage and treat as many patients as possible in whichever facility they could find. And injuries like open fractures would be treated with temporary surgical fixation devices and amputations if needed. Although the reductionist thinking was correct, perhaps if considered in isolation in another context, the efforts were not coordinated, credentials of many providers were unknown, personal and patient safety were not secured, followup care was not properly arranged, and local healthcare providers were not fully engaged. Furthermore, local cultural and practical issues were not realized such as the fact that amputations were a “kiss of death” in Haiti, and there were no facilities for providing or maintaining prosthetics. Our particular professional society has realized that systems thinking is needed for the next disaster. A holistic approach is being taken by delivering proper training ahead of time, proper registration of trained providers, and appropriate planning for coordinating care with local providers as well as with other “emergency” providers during and long after a disaster has struck. By realizing the interconnectedness of the parties involved as well as the multiple causes and effects of problems that can arise, systems thinking can properly address the broader human issues with disaster management. That said, systems thinking will not address the type of medications or surgical equipment that will be needed to address certain disaster situations. A more scientific, reductionist approach will be needed to address issues like those I previously described.

A few years ago, I led a project to review profitability of our stores at TD Bank. The project was a result of recently regulatory changes impacting overdraft fees and interchange fees which combined with what we viewed as a prolonged low interest rate environment, placed pressure on finding ways to reduce operating costs. We looked at everything from store hours to store temperature settings but I think our decision process around one area in particular, our Penny Arcade machines, reflects systems thinking.

Penny Arcade is our free coin counting machines in what we refer to as our customer WOW! Zone in our stores. It has a fun interface for kids where they guess the amount being counted and win free prizes if their guess is close. Adults also like bringing in their collected change to have counted and deposited or converted to bills.

The analysis proved what we anticipated, Penny Arcade was unprofitable, but we were surprised by just how unprofitable it was when factoring in the store personnel time, maintenance and armored car costs. On the surface, it seemed like an easy decision when thinking logically because we could recognize significant annual cost savings by removing the machines and ending the program. However, we had to think more holistically than just limiting ourselves to looking at it from a cost cutting perspective in the stores. What impact would this have on our customers? At an even higher level, how might it impact our Brand and ability to attract new customers?

We presented our findings and concerns to the CEO, Head of Retail Banking, CFO and several other senior executives. After a long discussion about the unintended consequences, we decided that it was important to get the perspective of many of our Store Managers that directly interact with customers and see the value of Penny Arcade on a daily basis.
We discovered two major items from the sessions with the Store Managers. First, many non-customers were using Penny Arcades to count their change. In fact, most of these were local retail establishments like Starbucks, using our machines to count their change and convert to bills. This tied up lines for our customers and was actually leading to customer dissatisfaction. Second, our customers loved Penny Arcade and it was important to the legendary experiences that we had created in the stores. They pleaded with us not to pull them out and many stated they would even like another one due to the high volume!
Based on a more holistic perspective, we recommended to keep Penny Arcades in the stores but to charge non-customers a fee. In this way, local establishments without accounts would stop using our services, which was negatively impacting our customers. We offered to waive the fees for non-customers if they opened an account.
Our recommendations were approved after much debate – but in the end the broader perspective related to our Brand and Customer experience outweighed the cost savings of removing Penny Arcades. Considering the perspective of others helped in that we improved profitability (charged non-customers fees) while improving the customer experience (retail establishments reduced use resulting in shorter lines, and only customers were able to use it for free). I think we employed a combination of reductionist and holistic thinking to arrive at the right decision.

An example of systems thinking is a baseball team. A baseball team is a function of various different positions which make up a team. If the team performs poorly, a reductionist theory would be looking at the weakest link and trying to find a replacement because that is the simplest way of fixing the problem. A holistic approach would be looking at the statistics from the season and analyzing the data to fix the problem and making sure the team chemistry would fit. An example would be one of my favorite teams, the Dodgers. After many failed attempts at trying to win a World Series, the Dodgers hired a new General Manager in hopes of getting over the playoff hump. This new manager is a stats guru, compared to the previous GM who looked at scouting reports. This offseason, the Dodgers overhauled a lot of their roster to make the players fit the mold that they want. They traded one of their best outfielders for a catcher because of the need at the catcher position and the excess of outfielders. Instead of bidding excessively on a young Cuban second baseman, they looked at the value of the player and passed on bidding for the player. In the previous year, they may have been part of the bidding process and may have paid outrageously for the player. However, this year, they stayed away looking at the overall team and prospects that they may get.
The upsides of system thinking is that it allows you to think outside of the box and makes you think critically of how all the pieces fit and function. The downside of systems thinking is that it takes time and effort to think about the “components” and its interconnectivity.

Life can be viewed as a series of systems. There are a couple systems that stick out to me, but one of the simplest examples is money and time. We need time to do the things we like. The things we like are rarely free. As a result we need to work to make money. Working leaves less time to do the things we like. This classic example is something that most people can relate to. Those that can’t relate have broken out of the system by some means.
Some benefits of looking at a system is that it provides a different view of a problem or circumstance. In many cases, insight comes from additional perspective. The downside of systems thinking is that additional perspective does not equal relevant answers to a problem or circumstance. For example, I could change jobs, change thing things I like, or win the lottery. Regardless, thinking of problems as systems is a good way to break out of your comfort zone and force yourself to examine how attempts to solve a problem affect the greater system.

A manufacturing facility can be viewed as systems thinking. Manufacturing facilities are comprised of complex, interconnected parts. There is supply chain, feeding raw materials into the manufacturing process. There is the actual manufacturing process – depending on the type of product it can go through many different variations and processes before a finished component is produced. Today’s manufacturing is heavily reliant on information technology, various computer systems, programs, and machines to carry out the manufacturing processes. There is also the management of the entire process, overseeing the interconnected parts – attempting to eliminate complexities in order to gain efficiencies. The upside to systems thinking is that you are attempting to view all of the components to a system at once, seeing their interconnectedness in action. It’s a little bit like chess – a move here, opens up another part of the chess board but may close off or eliminate a different move the other way on the board. In manufacturing the supply chain has to be careful to feed the right amount of materials into the manufacturing process at just the right time – too little or too much can have adverse affects on the operations of the company as a whole. A downside of systems thinking is that it can be very complex, requiring individuals to spend a little time on a lot of components, rather than focusing in one the optimization of a single component. For example, the manufacturing plant manager is overseeing all of the operational activity in the plant – supply chain, manufacturing, maybe IT also. He/she is going to devote an amount of time to each facet of the operation, but careful not to spend too much time in one area so that another area is not neglected. To effectively work in this system, the manager could use a team of experts in each area – division managers – to provide feedback on operations – and continually rotate these managers among the functions in order to get a continual, fresh view of what is happening within the system itself.

In the Navy we have an example of systems thinking called Standardization meetings. In these meetings we get several Pilots and Aircrewman of all ranks from each department together to discuss issues or concerns. The reason we bring so many different people together is to gain as much perspective as possible. These different perspectives are built from different experiences, levels of knowledge, ways of thinking (ie. logical, causal, etc.), and backgrounds. In the beginning of the meeting a concern is presented, for example the Navy helo crash from early last year of the coast of Syria (you may have seen this on the news). After the concern is presented questions are asked, for example what are the potential causal factors, how can this be prevented, should our job aids be changed (ie checklists), should we conduct more training, are their outside influences, and so on. Each of these questions are thoroughly discussed until we reach a conclusion or multiple potential conclusions. These conclusions are then presented to a smaller group of officers (Commanding Officer, Executive Officer, and Department Heads). This group reviews the conclusions to see if any areas were missed and then make a decision on how our command will proceed. In some cases a set of standard practices are created for our command and in others recommendations are made to higher ups in our community for changes. The upside to this way of coming to a conclusion are the multiple perspectives that are available. Without those perspectives we may fail at even understanding why the concern is a concern in the first place. The downside to this process is the same downside we see any time a large group of adults gets together. We all tend to disagree with each other or we agree and just want our way of saying to be the way. It takes a long time to come to a conclusion when ever a large group comes together.

I spent way more time that expected reading this article and thinking about how it applies to my work. To me systems are like maps or paradigms. They involve teams and relationships as well as guidelines and consequences for decisions. A general example of where systems thinking can be applied is in connection with your personal time management.. There are certain things that must get done and parameters to stay within. As the article pointed out, it is good to first try to understand the points of view of others prior to trying to execute your own thoughts. Paradigm shifts are healthy. People should challenge what they do and how they do it in an effort to constantly improve their system.

My current employer does an excellent job with investing in certain areas related to Information Technology and a poor job with other functions. We are incredibly successful at protecting patient information through our outsourced IT support, but we lack an ability to share our knowledge with our consultants who are positioned throughout the country.
Our leaders consistently struggle with their view of technology. We have individuals who approach it from Strassman’s perspective. They put the mission first, and then believe IT should be adapted to the mission. Others take the same stance as the GAO focus as they call for attention to customer needs to be addressed first and then IT will drive some of the process design. And then there are supporters of Hammer and Champy who think IT should drive changes to an organization’s missions and goals.
You may think we should just pick on approach and stick with it. Unfortunately, it’s not that easy. My firm has five partners, and with so much disagreement related to IT we often spin our wheels and don’t make the necessary progress until it is absolutely required. And if you wait to make a change until is required you are either too late or you’re unable to make a smooth transition.
If we could at least agree to an approach we could make some progress in different areas of the firm. We may want to reflect upon some recent successes and failures and begin to see what thought process occurred most often. If leadership finds that the GAO thought process resonates best then go with it. I honestly don’t think the approach matters as long as the company is consistent.
To go back and say if we under-invest or over-invest I would lean toward under-invest. We seem to miss out on key opportunities to help develop the talents and weaknesses of our consultants through some as basic as sharing files easily, along with missed opportunities to address client-specific needs.

I have worked at places that have both overinvested and underinvested in technology. I think the challenge stems from a difficultly in projecting how technology can impact the business and the rapid changing of technology.

The company that overinvested did so at the turn of this most recent century. They invested heavily in proprietary search capabilities simply because there were few things ready made at the time. Then Google exploded, and that investment in technology seemed wasted. Google simply did it better and for free. So in that case overinvestment was a result of recognizing the need for technology, but relying heavily on current state.

The company that underinvested did so because it was holding on to a “how we always did things” mentality. They did not consider how investing in certain technologies might save them money long term or allow them to better service clients. The company has started to alter its approach, however, and has recently been investing heavily in technology that improves processes and communication.
The challenge in both cases results from a period of astounding innovation in the IT field. In fact, “information technology” completely permeates our lives to the point that we can no longer distinguish it as a separate definable entity. Going forward, the question will not be about investing in IT. It will be about acknowledging that IT is simply a part of doing business units for all parts of a company, and each business unit will establish their own balance and investment needs.

It’s hard to determine whether a company is over-investing or under-investing in information technology, unless the return is being measured, whether through standard methods such as ROI, or other measures like ROM or ABM discussed in the text. That said, I believe the company I work for currently slightly under-invests in technology.

Based on the Business Model Generation reading, our customer relationships could be improved with more investment in technology. Right now, despite nominally considering ourselves a software-as-a-service company, we really use dedicated personal assistance model (and it could be argued that it is one of our competitive advantages). That model necessarily requires lots of human capital spending time working through issues with clients. Also, such a model will scale linearly with the size of our business and is not one where we can build economies.

Ideally, we’d prefer to have a customer self-service model. In this model, obviously our labor costs will be reduced, and hopefully customer satisfaction will stay the same – or increase. This is where I believe an under-investment in technology hurts us. If we have the proper tools in place to integrate directly into our client’s planning software and allowed their systems to use our information, we’d have less need for both the high labor client services team, and also fewer client questions about why a particular result occurred.

However, as I mentioned above, we currently think of our services team as one of our competitive advantages. It can be hard to make a significant change and rely on technology instead of human interaction. That’s why the GAO recommends a full change management strategy related to information management. For us, the “Direct Change” practices would be the most difficult and necessary to implement such a change, particularly #5 “Measure the performance of key mission delivery processes.” If real quantitative benefits, as described by ROM or ABM can be expressed the business, change is more likely to be well-received.

I previously worked for consulting firm that focused on low-income housing development. In the company business model, we would find small, non-profit partners in low-income areas and help them build capacity to complete housing development or other community development programs in their neighborhoods. My boss, the president of the company, was always the one to have the most recent computer or software. He felt that technology was the key to empowering these non-profits and would buy laptops, webcams and other tech devices for these community partners. This was in the mid-90s when computers were not as common place and were also much more expensive. In addition, the partners we were choosing – small housing authorities, church organizations, and community development organizations – were well behind the curve with respect to technology.
What I thought was interesting from my time with this company (and applicable based on the readings) was that I often felt in the beginning that these groups were taking advantage of his deep pockets and he was “over investing” in technology with partners that would not use it appropriately. But, contrary to my initial perception, these groups embraced the technology and used it to their advantage. While having the computer wasn’t the reason these groups were able to achieve their goals, it was nice to see that technology in the right hands significantly added to the “business value” of these organizations. Not a significant point, I guess, with respect to the reading but it did bring back memories of how valuable technology can be in the right hands.

In real estate, it all about location, location, location and in my related field of construction management, it is all about documentation, documentation, documentation. My previous employer was a local, medium sized Construction Management firm that had a annual volume around $200 Million yet IT was never a priority. I think it mostly had to do with old school naivety and the unwillingness to invest in something that they couldn’t relate to. In my current role at Temple, we have been considerably underfunded in IT for several years but that is finally changing. My main goal since I took over our group 2 ½ years ago was to spearhead the purchase of a Project Management Software that would aid us in the day to day management of our projects. We have over 150 active projects that total in excess of $200 Million annually and the main tool to manage them has been Microsoft Excel. I led a procurement strategy that was set to move forward with the purchase of a program but then had the funding pulled for another priority. If it wasn’t for a recent Internal Audit, we might still be without a path forward. I think the decision to invest in IT before the whole SAS model came to light was a bit harder to balance but in our current procurement, our costs were defined up front, the agreements were signed and the money was budgeted so it has been made a lot easier than it used to be.

It seems a company’s approach to IT is determined by their type of business. If a company is retail oriented they would tend to under-invest in IT feeling it is more a support function. If a company is service oriented, IT is prominent in daily processes as technology is a direct mechanism of business operation.

I worked in retail at Ann Taylor Loft. IT became a thought when the computer crashed and we couldn’t ring up sales or scan recent shipments into inventory. The manger had a regular/local IT consultant on speed-dial to solve any technical issues. I’m sure Ann Taylor corporate has a higher IT prioritization for web design, emailing customers, warehouse logistics, and product transport but on the local level at each store – we were on our own.

I currently work at Temple Hospital and IT is crucial to daily function and sustainability. Staff use EMR, EPIC, Banner (the finance and accounting system), Outlook, IM, Google Chrome, Gmail, Firefox. Patient scheduling is moving more online with My Temple Health, where patients can log in and schedule their own appointments and also view their medical histories and test results. IT is definitely integrated throughout the business enterprise and business units. I think Temple has done a good job determining their IT needs and will continue to invest in IT as Obamacare, Medicare, HMOs, and private insurers’ base healthcare payment on service metrics.

Although I have discussed IT under-investment or under-investment as business determinant, I am inclined to agree with Chris and Kristopher that in the future it won’t matter. Advancing technologies and our technical future dictate IT investment as survival and in order to stay in business, IT is highly essential.

I have been fortunate to work for companies in my career which have uninvested and over-invested in technology. The key for investment is tying the investment to transforming your business by improving in some way. Companies which have under invested do not see IT as a strategic investment and see it as a necessary evil to keep the lights running. They look at IT as a cost center which spends valuable capex and opex for things like email, pc, etc. Companies which over-invest in IT see IT as a strategic business partner who can help them transform their business with automation, simplification, new functionality, new product development or reducing costs. Organizations which get the balance right are organizations which understand that IT is a partner and should be engaged in the conversation. Many industries have gone thru disruptions as a result of technology and all of these companies which have thrived have looked at IT as a partner in the process. Companies which have not survived in these tech disruptions are the ones who have looked at IT as a cost which needs to be reduced.

This year Thomas Jefferson University has finally decided to pull the trigger and begin the process of converting it’s outdated and never quite functional Electronic Medical Record for the Physician’s group and the hospital to Epic. The conversion will cost the University upwards of 100 Million Dollars. The current system for outpatient health information, GE’s Centricity, despite being exceedingly expensive, did not deliver several key components such as a note writer function nor seamless integration with hospital information infrastructure. Although Centricity likely represented an overinvestment in IT, as the cost of deployment at the time was exceedingly high, the true failure likely stemmed from the divided nature of the Jefferson system. Until recently Jefferson had two departments of IT which differed in every regard. On the University side was the Department of IT, and on the hospital side was IS. Each ran their own systems ranging from different email and calendar clients, different vendors of computer hardware, different electronic health record systems, and different technicians. The system was overly complex to say the least. With duplication of systems, came duplication of costs and poor coordination.
One of the first initiatives of Jefferson’s new CEO Dr. Steven Klasco, was to merge IT and IS into a single department as part of his strategic initiative One Jefferson. Thus the Information Services and Technology (IS&T) department was born. The next task was to take Jefferson’s EMR to the next and necessary level. The EHR (Enterprise Health Record) steering committee evaluated products from four vendors. Of these Epic was by far the most expensive, but it was felt that the company would deliver the most complete product. Over the next several years Jefferson will go through the monumental task of conversion. The cost is very high, and hopefully the deliverable, a functional, system wide EHR will be worth it.

I have recently changed employers within the insurance industry. There are many differences between my previous and current employer, the most significant being the utilization of technology. My previous employer under-invested in technology, while my current employer embraces it. The fundamental setups of workstations differ greatly between the two companies. At my old job, each workstation consisted of a fairly old desktop computer and a dated phone that were employed in order to save on costs. These computers had slow processing times, which often hindered productivity.
On the other hand, my current employer issues each medical examiner his or her own laptop with a dual monitor docking station present at each workstation. This allows examiners the flexibility of working remotely when needed. This initiative increases productivity in situations where inclement weather prevents an office presence. In my old position, productivity would simply be lost in those situations, but currently my new office doesn’t miss a beat. Multiple recommendations had been made to my prior employer on the benefits of adopting such a system, however those suggestions were quickly shot down due to upper managements unwillingness to change and the high priority placed on cost cutting. Another technology that has benefited my current employer is the use of a system called sametime. This is an application that is embedded in lotus notes that allows examiners to send instant messages to others through the company intranet (similar to AIM). This allows office communication between peers to be quicker and more efficient. In my previous position, the options were either send an email and hope your colleague checked their emails, or physically walk over to that person’s department. My current employer takes Strassman’s approach. They establish their goals and mission and use IT to support those initiatives.

I think Temple Health System continually undervalues technology and either underinvests and or invest in the wrong things. For instance, we have spent hundreds of millions on our in patient EMR system, Epic. The system is plagued with delays in implementation, largely because of insufficient staff. Meaning, Temple spent millions on the software, but has remained super frugal when it comes to hiring the necessary staff to create and implement the Temple specific version of the EMR. This strategy has never made sense to me. There is essentially 1 team of individuals working on the in-patient build. Other institutions have entire buildings filled with tech staff to build and maintain these systems. In my mind, there is no point in getting the software if you can’t implement it efficiently and correctly.

Think about somewhere you have worked before. Do you think the company under-invested or over-invested in Information Technology?

I worked for CVS Pharmacy from 2008-2011 as a college job and found that they greatly under-invested in Information Technology. During my time there, CVS’s store level infrastructure was outdated by at least seven years which led to compatibility issues every time corporate implemented a new computer based system. Many other retail organizations at the time allowed store level employees to login to a secure website to see when they were working and to take leave but our system consisted of nothing but a paper calendar and a sharpie marker. We would write down our availability to work on this calendar and hope that our manager would schedule us correctly. This lasted well into 2011 when CVS finally decided to implement a digital version of this, which in theory was great but since our established systems were so old only one employee could gain access to this system at a time and it was so slow that we had to take ten minutes out of our shift just to schedule our next week. The problem we kept encountering was that our core system hardware and software was so old that any new system was never able to be used to its full potential. I also found that CVS underinvested in Information Technology in regards to growing consumer tech at the time. Around the time I started working there the first IPhone and Android phones came out. While many other companies were starting to create apps and enabling customers to use their phones in the checkout process, CVS did nothing to incorporate this new trend. It wasn’t until the time I left when I saw we were finally able to scan coupons off of customer’s phones and come 2013 with the advent of NFC capable phones we were finally able to allow customers to digitally pay. This again leads back into our systems being too outdated to incorporate new tech. What CVS should have done is invest more in “future-proof” hardware so systems wouldn’t become outdated as quick. Or they should have invested in cheaper systems but upgraded them every three or four years.

Is there anything about IT that makes it harder to get the balance right?

Like I stated before, when new systems were being implemented some of the old hardware was unable to support them. I think this balance of system compatibility across new generations of hardware and software is what makes it hard to get this balance right. We live in a time where digital systems become outdated very rapidly so it is hard to keep up with new tech. I consistent problem I have found in IT is that my developers and engineers design hardware and software which alone works great but when combined with other systems there are major compatibility issues. I think that unless we have across the board system compatibility between operating systems and programs this will continue to make the balance difficult for organizations to get right which is exactly what I found when I worked at CVS.

My company intentionally under-invests in IT. We are a low cost provider of mutual fund products, so every penny we can save, we do. We typically are not first adopters of any new technology or upgrade either. The intention of this is to avoid buggy code that would be tested out by anyone who upgrades to the .0 version of the software. However, with this mindset, we are also left with extremely old versions of software (we just upgraded to Windows 2008!) and have to develop many workarounds to keep our processes running as best we can. Therein lies the balance – keeping up to date on technology but not chasing every trend. Technology changes minute by minute so it’s hard to keep up from a resource perspective (both time and money). Last year a decision was made to close all system defects that were outstanding for more than 180 days. There were some out there that were 5+ years old! No longer were we relegated to using duct tape and string to hold the systems together, we were provided the budget to resolve nearly all of these outstanding items. We aren’t the only one to have recently opened up the purse strings. Many in the industry are looking for something that will give them a competitve edge, and that starts with technology.
http://ignites.com/c/1074733/112223/tech_race_under_tools?referrer_module=issueHeadline&module_order=0

It is difficult to get IT just right and I believe most places under-invest in technology. For instance I was at Advance Auto Parts today because my car battery died. There were only a few people there, a couple of us waiting in line. Despite just one person ahead of me, I stood waiting for at least ten minutes. Certainly the clerks were somewhat slow, but more than that, the computers were very outdated and the software was not user friendly. The clerk also did not know how to use the system; even when he thought he was pressing the right buttons, nothing happened. He thought the computer was freezing and switched desks – still nothing. Finally a manager came over and showed him the right way, but even he made a couple mistakes. Finally they were able to exchange my battery – three employees and two computer stations later. As I was in line I thought about this course and the Operations class and the hundreds or thousands of productivity man hours lost every day in Advance stores around the country.

I now work for Rothman and their IT is actually pretty good. Many of our computers were slow a few months ago but they recently upgraded them all. Any time I have a problem I can call the IT desk – and usually there is no wait time to speak with someone – who can log into my desktop remotely and take over, provide an admin password to install a program, investigate the issue, etc. The one place they could improve is in their Electronic Medical Records and other online documentation systems. There are just so many different programs, each of which do different things. Part of this is because of the Jefferson / Rothman partnership, and Jefferson is even worse with regards to the number of different software packages at play. All things considered their IT infrastructure is pretty good. I can even log in remotely and access almost the entire network from home, securely.

In my opinion, the hardest part to get right is the proper foresight to predict which systems users will use a few months or years down the line, and planning accordingly. It’s for this reason that organizations often stay “stuck” in one operation system for instance (Windows XP for example, even beyond it’s support window). Even Rothman has procrastinated on the switch from ICD9 to ICD10 for the last couple years, even though it has been a “mandatory” change-over each year. This doesn’t affect productivity or patient care in any tangible way, but it is the newer coding system that will be used for billing. Changes like this, that are systemic to the entire organization and affect almost everyone, are very difficult to implement. The change itself could result in many hours of lost productivity as people acclimate to the new system. If there were a way that large systemic changes could be implement slowly over time, perhaps in a “siloed” or modular fashion, that could help.

I’m going to take a slightly different approach to this question as i’ve spent the last few years in a management consulting role that specialized in the HR Technology space. When I look at with a firm has over-invested or under-invested in their technology it’s often that they are doing a little bit of both, and substantially putting money in the incorrect places.
– When I think of what goes into a technology decision companies often think about it as a transnational process of putting in a new system, flipping the switches. A successful technology implementation things about much more than flipping the switches to deploy a new system, but thinks about how it will impact people and process and how the organization will react to that change. It also thinks about the upfront strategy to ensure that we are doing the project once, not doing it this year and fixing it the following year. This is an example of where they are under-investing in the technology.
– Another area I see with software is where companies focus on customizing so far from a vanilla implementation. When I think about it you should only customize software where there is a core business differentiator that requires you to do so. Customizations often result in delays, scope creep, challenges when upgrading and the inability to realize the process gains that the system could inherently offer you. This is an area where firms often over-invest, thinking they are so different than anybody else when they should be focusing on how they becomes more focused on leading practices.

At The Rothman Institute, we have been fortunate to have a very forward-thinking, superstar CEO who is always ready for “the next thing” in healthcare. However, we have struggled in the IT space despite this proactive approach. Because of the inertia exerted by the practicing physicians and their allied health professionals, it was hard to adopt an “archiving system” (a forerunner to a real EHR) 8 years ago, and we are finding it even harder to transition to a new EHR this year. This is unfortunate, because as the article explains, like emails, the EHR and especially e-prescribing functions are very much “enabling technologies.” I am 50 years old, so I remember well the days of paper records, and having to walk around with paper Rx pads, so I am very much in favor of these enabling technologies. However, the practice has always “underinvested” in IT, because with changing times, there’s too much reluctance to spend $$$ on anything new when we MIGHT be able to adapt an existing system. We keep putting off purchases, saving money in the short run, but missing out on the latest “enabling technologies” which can benefit our practice in the longer term.

Investing in IT is crucial depending on what market you are in. Here at BMW, we are constantly investing into new technologies to stay ahead of the curve. Technology, especially automotive technology, is changing at an alarming rate these days and manufacturers are cutting their model year cycles shorter to keep up. Investing in IT will help the business perform efficiently and successfully. This weeks reading regarding strategic value of information technology investments illustrates an interesting chart regarding activity classifications. We use similar charts to categorize whether the investment is worth it and how it can help us achieve our overall goal. There are times where more than one investment is needed and we must figure out which is the primary, secondary and not needed at this time. Majority of the time, the primary activities deal with operations and they are crucial to dealerships day-to-day activities.

Once again, I’ll use my family’s company as a reference for this discussion. I think up until recently, we failed to adequately invest in IT infrastructure. With a small company, operating budgets can be limited, so IT spending tends to be the first thing that gets axed. However, IT spending in today’s business environment is vital to business growth and profitability. I believe the main factor that makes is so difficult to get the balance right on IT spending, is that (as mentioned in the article) it can be difficult to quantify immediate cost savings or revenue generation that results from IT spending. Managers can be reluctant to invest in a new enterprise system or server software because they do not see the immediate tangible benefits from that investment. However, I think it then becomes a key responsibility of IT managers to translate IT investments into the amount of man-hours conserved because of the investment. This can then place a monetary figure on the investment and provide clarity for decision makers.

I struggled with this question because I debated the fact if our IT department is actually underfunded or if the funds are just not being used in the right ways. As a technology geek myself, I lean towards underfunded completely, because who wouldn’t want the fastest and coolest computers and technology? But, realistically this isn’t going to happen because then we would be over-funded and it would take away from other important aspects of our business. I think For were I work now, they just need to take a look at where they are putting the funds. I think some funding to help upgrade our IT departments skills would be useful, as it usually takes me talking to their supervisor to actually get things done because no one else can. Also, our IT infrastructure crashes periodically, so investing in upgrading or shoring up that would be great. I wouldn’t take and put more money in to do these things, but restructure the IT department’s employee’s hours to save money on their labor to do these things. I think they need to let under performing IT personnel go so that they can focus on training those who have potential. There has been to many times that I walk into the IT department and they are not doing anything. Maybe outsourcing this department would be an option.

Think about somewhere you have worked before. Do you think the company under-invested or over-invested in Information Technology? Is there anything about IT that makes it harder to get the balance right?

Honestly, I don’t have to think too hard on this one, as a new employee of the Veterans Health Administration (VHA). While I will say that the group of people I’m working with at the moment is one of the best I’ve ever been associated with, the IT side of working at the VHA is a real nightmare, especially in a role such as mine, which revolves around information management and supporting decision making. While I understand that newly appointed VA Secretary Robert McDonald is making a priority of pulling the VA out of the IT dark ages, I really don’t envy him, as I can’t imagine a more difficult challenge for our organization than this. While I still have much to learn about the organization, it seems obvious that we have greatly underinvested in IT over the last few decades, and I suspect that the organization’s outdated and somewhat byzantine IT structure is at least partially to blame for the well-publicized problems that VHA is currently trying to overcome.

In terms of my particular position, the problems are quite obvious. I’m responsible for receiving, prioritizing, assigning, and recording all of the work requests for the Dayton VAMC’s Engineering Service, which is responsible for the construction, upkeep, and repair of all of the physical structures on campus. Our work order management system is an archaic, slow, and decidedly non-user friendly DOS-based program called VISTA, the likes of which I have not seen since I first got involved in information management at the beginning of my active duty AF career, over twenty years ago. As an information management system, this program has more esoteric idiosyncrasies than I can count, and in order to perform my job effectively and be able to provide my supervisors with any kind of reliable metrics with which they can rate my performance, I have essentially been reduced to “double entry” of all required information for each and every request that comes in – approximately 800 to 1,000 each month. What I mean by this is that I now have developed an Excel spreadsheet into which I’m entering all of the required information for a particular order. Once the information is in the spreadsheet, I then use the spreadsheet to enter the information into VISTA, which the Engineering Service then uses to keep track of the work from request to completion. I do this because if I do not, then I can’t easily tell a customer the status of his or her work request, much less create any kind of reports for the various functional chiefs throughout the VAMC regarding the work that has been requested and/or is in progress in their respective areas.

I do think that improving our current situation will require a great deal more than simply increasing funding in this area. I hear rumors of a new work order management system being test run at other VAMCs, and honestly, I just can’t even wrap my head around how one would orchestrate the migration of information from our current system to a new one. At this point, there is so much bad or outdated information in VISTA, and we have built so much of our processes around compensating for its lack of utility, that unlike, say, investing in new medical equipment, the challenges associated with improving our IT situation will be daunting in their complexity.

My first job out of college was at a publishing company. At the time, content databases and e-books were new concepts. The president, who kept a close eye on every penny spent, recognized the potential of subscription databases to provide a steady revenue base that would counteract the sales decline of library reference books. He allowed the fledgling IT department to invest in the equipment necessary to prepare the company for the changing business strategy, and also invested heavily in building up an “e-pub” department – hiring and training employees whose sole focus was to create, maintain, and improve the subscription databases. Additionally, my department coordinated with two other departments and received approval (much easier than anticipated) to upgrade our computers and software so we were all on one platform using the same software versions instead of constantly attempting to down-save files or borrow someone else’s computer to translate one file to another. This wasn’t a small investment – it was several thousand dollars, including the training (a significant amount for a small company) – but it was another example of the company investing in IT not just for technology sake, but to strengthen the infrastructure of the company and prepare it for future needs.

I have been at companies that have done both over and under invest in technology. In some cases the companies invested in technology but not in the training to go along with it so that it could produce as expected. I’ve also had to deal with companies that leave technology as an afterthought creating frustrated employees and dissatisfied customers. The challenge I see with technology is not only the balance of how much you need but also how much you can maintain. Additionally, as mentioned in the reading, a lot of technology benefit can not be seen in the bottom line. Unless you’re able to actually clock employees and their efficiency rates due to new or improved technology it can sometimes be difficult to report on technology benefits. While everyone knows employee moral is important, it doesn’t show up directly on the bottom line. You also have the people factor to deal with, some people love and embrace new technology while others avoid change. For all of these reasons it’s very hard to balance new technology investment.

As a physician the interaction with information technology comes in the form of electronic medical records. The investments needed for these are quite large. Trying to determine a specific system as well as the underlying computer architecture needed is quite complex. My practice has slowly continue to invest in information technology architecture. Our initial EMR systems which are still being used today are example of underinvested information technology. Rather than getting one large system that would have done everything necessary the company had piecemealed multiple plug-ins over time. This has caused A situation where each patient’s information must be put into different applications or products. This represents a repetitive workflow issue that costs the practice not only time but money. Also the computers at all sites are quite dated and therefore do not run effectively. We are in the process of setting up for a new EMR which will take almost a year to effectively set up for our practice. This new system will need only one input per patient and will be able to control one patients information in one system only without the need for repetitive work. The issue from IT in healthcare is that those of us who work as healthcare providers have little to no understanding of what is needed and what is involved in placing these EMR systems into our practices. Communication is difficult because we understand the effect on our workflow but not the necessary requirements in order to get the workflow system working correctly.

I established The Cat Doctor in 1983 and “computerized” in 1985. Software and hardware back then was limited for small veterinary hospitals, and looking back I would say it was like getting my big toe wet regarding information management. Fast forward to 2010 when we began utilizing EMR’s for our patients, and when I installed a digital radiology system. When that system was installed, it included the installation of something called DICOM software so we could view digital x-ray images all over the hospital, at each work station. Last year, when Dell introduced their Venue Pro 8 Windows 8 tablets, I bought three so my staff could carry around small tablets which would allow them to share images easily with clients that included not only typical digital images but dental digital images at all. On the administration side of the business I utilize robust accounting software that my accountant can access remotely, payroll is outsourced to ADP and all pertinent documents (including what could be considered insignificant receipts) live in the cloud, and on site, wither through the use of Dropbox, OneDrive or Neat. Thinking about the question of whether I under or over invested in information technology, I think I feel that I have properly invested in information technology, but what I have not done is properly invest in my staff’s ability to maximize their use of what I have installed and made available. Therefore, the balance is not right. I have information technology that is available and that came at a cost that is not providing the ROI based on this week’s assignment. As the CFO/CEO/CIO/COO I am multitasking all day. The information systems I have set up allow me to work efficiently and also mean that I am not limited by a geographic location to get much of what is on my plate accomplished. Nothing gets me more frustrated, than watching others do things at a snail’s pace, when available technology could not only speed up the process but improve the process. Reading through the assigned article measuring the Strategic Value of Information Technology Investments, it became quite obvious to me that I get it, but I have not effectively communicated the value of information technology to my staff. We learned about change leadership in the HR class I just completed. I’m going to have to use my new knowledge to clearly articulate why doing a better job of using the information technology my staff and I have available will improve processes we have strategically identified. Again, thinking about the HR class, I think I will revise our performance evaluation system so it is aligned better with The Cat Doctor’s mission of not only providing excellent, compassionate care for our patients, but with strategic goals associated with information management.

I feel as if I could have written some of this article based on a current implementation in my organization. We are in the midst of implementing a CRM system, Eloqua. In my opinion the company greatly over-invested in the system. The reason being, the system is not being utilized to its full capacity. People in the department are scared by the new technology, thus they are only using the basic functions of such a robust system. This speaks to the view on information technology as a whole in my organization. My company is not shy about investing the money if a business case can be made. However, there is a big disconnect when it comes to deployment or how the department in general is used. I think this relates to that Gulf War in that you have customers here who will spend the money, yet they will not respect the guidance and expertise of IT in deployment.

At my current company, IT is looked upon as a support function as they are in many companies. There are a few different sub-divisions of IT, there is the Helpdesk function, the programmers, and the department that creates reports. Although there are different subdivisions there is probably about 1 IT employee per every 150 employees, which does not seems too out of industry norm but it is still not enough to handle the requests that are needed to be fulfilled. When reviewing if a company is over-investing or under-investing in IT, you must first look at the business model of the company. As my company is a service company, that sells itself on being able to introduce cutting edge technology to its clients, we are under-investing.
If we have a new request for a project, we first have to submit a ticket to IT. Then they will send us over a project management plan to fill out, where we fill in all the specs of the project (it’s a lengthy document), we then send it back to IT and wait to see if they will fulfill the request and when it will be fulfilled. The process reminded me of the Volkswagen case as each of us are required to fill in a request and document what value add this project will have to the business. There was an expense processing project that I requested about 6 months ago that has not yet been completed due to staff resource. The problem is that this project was communicated to the operation teams that this new software that IT was going to build was going to make all their lives easier. I am getting pressure from operations as to where the project is, and on the other side IT is telling me that they are working as fast as they can but they do not have the manpower to complete the project. This expense processing system would be enabling technology that would improve our organizations performance and reduce costs but because we are under-investing in IT the project has not yet been completed and we are left at a stand-still.

I used to work for large, national auto finance company. As this company is one of the largest companies in the United States, one would expect them to have the best, up-to-date information technology systems. However, I believe that one of the biggest problems with the company was its under-investment in its information technology software and support systems. For an industry that is very fast paced, the systems were slow. They crashed (or were down) atleast once a week – this is not an exaggeration. Once down, it would take at a minimum 30-45 minutes to bring the systems back-up and running. This was a detriment to the line of business causing a loss of business and hurting the company’s reputation in the industry. Furthermore, the slower than average systems would cause aggravation to the employees and it hindered our efficiency and effectiveness.

I will admit that information technology is hard to keep up with as it is ever changing. There is new technology, faster paced systems, new malware, and various security concerns to be aware of and keep up with. Therefore, I believe that the success of a company, especially one that is heavily reliant on computer programs and systems, is heavily reliant on keeping abreast of its information technology software and systems.

I have worked in a couple government agencies over the past couple years and I personally feel that we have underinvested in IT for many years and it has been slowing down our business of serving the citizens. In my current position, our IT department has been gutted (only 2-3 people on staff) which resulted in a 2+ week turnaround time for questions and help from staff to be answered. On top of that is the 2 week turnaround time for our website to be updated. Trying to get things updated and sent out to our grant recipients very difficult.

I believe our IT is not in a position to achieve the right balance. They either do half the job (and save the other half for years later) or change the processes to the point that you get confused. Also there is the problem with building/updating new systems is the amount of time to train staff members, some of which have been in the same department for 10-20 years. They are not as motivated to learn the new systems or are quick to go back to the old systems.

Having worked as a medical practice administrator during the EMR selection process, I saw first hand how difficult it is to make IT decisions as a small business. It was an extremely difficult selection process, because much unlike Cinderella, there was no good fit with any of them. Therefore, it was also often a big gamble. Many EMR companies did not allow us to use the program for even a month to see if it would work with our practice and most of them required too much training for that to even be feasible. Realistically, you would have to sign with a program (usually because other specialists in your field endorsed it) and hope that your staff, doctor, and general practice would be able to handle it. We wound up selecting a well-known, highly-endorsed giant, underwent 3 weeks of painful training and transition, and realized that none of us (ranging from tech savvy 20 year olds to tech-averse doctor) could use it. We wound up switching to a less known but simpler program after wasting a lot of time and money. So while I think, ultimately, our practice did not over or under invest as they were complying with federal regulations and attempting to do so in the most efficient way, I can see how difficult such decisions are. These decisions often require a large financial commitment with little guarantee that they will be useable and useful for the business in long-run.

As a hospitalist, it is easy to see that the health system I work in has grossly undervalued and underinvested in information technology as a result of short sightedness of cost relative to value. The paper highlights several points about management being less effective as a result of either lack of or poorly implemented technology. This has been a chronic problem for the 8 years I have been present in my institution. It is very difficult to assess the value of this information system or EMR for a health system, but by in large, it increases competitiveness by streamlining communication and information for a clinician. If implemented well, it most certainly provides cost savings through prevention of redundant care. From a purely technical standpoint, the cost of the system does not necessarily equate to the ability for the hospital to collect more money on individual services, and so for that reason, valuation is easily overlooked.

I can say with the utmost confidence that the U.S. military does an exemplary job of both under-investing and over-investing in Information Technology. As a matter of fact, it’s almost scary how good they wastefully spend on nonsense yet fail to fund critical equipment. The Army has recently bought the necessary systems to extend the network to the company level (about 100 employees). Not only that, they can access the on the move in a tactical vehicle. Is it necessary? That’s debatable. Is it cool? Sure. You can put a dish on the back of a Humvee in the middle of nowhere and go online. Now let’s say that I’m working at a brigade (generally anywhere from 1,700 to 2,300 employees) where the hub for all of the communications systems in the brigade is located and I need a replacement low noise block downconverter (LNB) for my satellite dish to get the network running again. No chance. Or the battery on my Uninterruptable Power Supply (UPS) that was issued three years ago starts to go bad and I’m stuck in the middle of Iraq, there’s a better chance that Petraeus is named Director of the CIA again. One of the most challenging aspects of IT investment – at least for the Army – is training personnel to use the equipment. Most Soldiers serve at one location for three years. More often than not, supervisors improperly forecast attrition and send individuals already on the second year of their assignment. Once they’re done with training, they leave six months later. This can also happen after a deployment when there is a large turnover in personnel. Soon there is no one available with the necessary skillset to operate and maintain the network.

It is hard for non-IT people to conceptualize and anticipate IT challenges, thus sometimes preventing them from making great business decisions with respect to IT. They just want it to work. Many times, it’s even harder for IT to clearly articulate to non-IT people about issues that they’re having. Specifically referring to maintaining and managing of systems (which is part of my career field), non-IT really don’t get it. My Army branch is Ordnance which includes munitions and mechanical maintenance (which is surprisingly the largest component – by a lot – of the Ordnance Corps; not the EOD or munitions guys). As a communications-electronics officer, my field doesn’t really fit that well into that group. The overall technical expert for the entire Corps of 34,000 people – a former truck mechanic – told my current boss: “We can fix anything with our toolboxes.” He didn’t understand how improper signal flow, bad routing commands, no line of sight, or silly things like solar conjunctions or wrong polarization can affect the tactical network as a result of his mechanical maintenance background. The same applies to measuring the strategic value of IT. As mentioned in the article, IT does not readily provide hard metrics or illustrate value. I did, however, find one surefire way to measure productivity and employee satisfaction while running a tactical network in Afghanistan which was the primary means with connecting to other units, especially over long distances. When the network was down as a result of a scheduled or unscheduled outage, personnel could not access the internet or make phone calls (VoIP) so they complained and did nothing. When the network was running fine, not a peep and performance was great.

I work in the financial services industry. Due to the financial crisis and several years of near zero interest rates, my company postponed ‘discretionary’ IT investments. As a result, our 300+ retail branches across the country experience bandwidth issues – for example, the computer system crashes if more than one person tries to complete online training modules, in the same office. So they need to come in on weekends to stagger their computer usage during off peak hours. My company also delayed a much-needed CRM upgrade. Instead of funding these IT projects, my company has waived more than $2.5 Billion in money market fees (since 2009) that our clients would otherwise be responsible for paying (to maintain $1 NAV per fund share). The choice to put our clients first and absorb this financial burden (especially during tough economic times) is what sets my company apart from our competitors who charge nuisance fees and earn ‘bad profits.’ Now that the economy is improving, my company is launching a fully automated, free investment advisory service (referred to as ‘robo-advice’ within the industry). I can’t disclose much about this proprietary service (due to compliance/legal regulations) but this investing algorithm is poised to disrupt the industry. My take-away from the last seven years, is that it’s very challenging to justify funding for ‘non-essential’ IT projects, especially during a financial crisis. Ultimately, my company made some tough budgetary decisions and accepted short-term tradeoffs to position us for accelerated growth during the economic recovery. This is an exciting time to work in marketing at my company!

My current employer is under-investing in IT systems and do not link IT needs to their sales strategy. After reading this weeks article, “Measuring the Strategic Value of Information Technology Investments”, really put things in perspective for me. I was able to make the connection as to why when my request for additional IT resources or enabling technologies have recently been denied by management. As a National Account Manager, I travel frequently to prospective customer meetings, about two weeks every month. I am constantly going through airport security and I have to take out my 15-inch Dell laptop, put it in a security bin, and carry this heavy piece of machinery around. Within a year my screen bezel, CD drive, and keyboard had to be replaced. Our IT systems manager, who manages our sales database and hardware needs, proposed that the Account Managers are given IPADS. I took it a step further and explained the business need. By having IPADS this would allow us to travel lighter and would be easier to create documents, and run customer presentations on the go. I proposed this as a more long-term cost effective solution, since it would minimize repair and shipping costs when I had to send my laptop back for service. As the article, states the main reason management denied the request was because of a finance-based decision, that IPADS or IT related costs were not in the budget for Account Managers. Management was so fixated on budget concerns that they undervalued the business need of making our job more effective and opposed change. If they included IT systems and devices in calculating ROM activities of their account managers using IPADS, it would probably provide a more positive outcome than using a Dell laptop. Reason being, using IPADs would help us be more productive in the speed of completing presentations and preparing for customer meetings while we are traveling. Since the frequency of our travel time is higher than any other function within the organization, this would present a higher ROA and ROI. For example, we could work on our presentations using an IPAD during take off and taxi to the gate, since federal regulations do not require you to power down handheld devices. This would allow to complete more presentations within a specific timeframe. This is a clear example that senior leaders within the organization are not effectively leading our strategic information management process to provide IT tools to assist with disseminating information to prospective accounts in a more efficient manner. Also, the sales organization has not established an effective, interrelated relationship between management and IT.

In looking back at the firm I worked at previously, Kronos; I would argue that they underinvested in IT in a significant way. As a workforce management software company, we had numerous developers and product managers working diligently on product upgrades, improvements, release schedules etc. Our customers generally viewed us a progressive firm; focused on delivering cutting edge tools for HR and IT. Additionally, our sales methodology very much focused on finance based concepts of value; as we often demonstrated ROI and total cost of ownership models. We rarely got into conversations specific to strategic value or enabling technology; which certainly could have assisted us in justifying our pricing.

Nonetheless, when you turn the table and evaluate this firm from an internal IT investment stand-point, there is a striking and opposing philosophy. While the external persona demonstrated a firm poised to deliver strategic IT solutions; internally the systems and tools were outdated, and far behind industry standards. For example, the firm still leveraged out of date CRM systems, awkward and slow performance management tools, legacy expense reporting software, possessed very few strategic marketing tools and employed numerous manual processes across the org. The general feel was that our IT organization was not overly powerful and must have had serious issues justifying spend and investment. Upon reading this article, that could be more eloquently summarized as a management issue, as that firm was looking at IT spend based on sheer capital fixation and not based upon strategic value. The big picture was missing. It was certainly evident that the value of IT investment was not being measured based on performance; as is espoused in the various methods contained in the article. This is why, in general, it is difficult to get the IT balance correct. There appears to be a struggle in determining what technology is enabling (with strategic value) versus the tried and true cost based approach to IT investment. Firms that understand the difference will get closer to that balance point and make investments based on performance and the big picture more often.

Think about somewhere you have worked before. Do you think the company under-invested or over-invested in information technology? Is there anything about IT that makes it harder to get the balance right?
The one police organization I worked for under-invested in information technology. The reason was the initial cost of new technology and the lack of internal technical support that caused the organization to under-invest. In the past the organization had over-invested only to be burdened with out-of-date technology as improvements were being introduced routinely. I think the cost and need for experienced knowledgeable technical support makes it harder for small organizations to get the IT balance right. Especially when dealing with specialized IT software and hardware for field applications. We did not have the funding to staff full time technical support and due to the 24/7 operations of the organization there were numerous times problems would arise when support was not available. When you consider the amount of IT infrastructure loaded into each patrol vehicle it can become overwhelming without proper technical support. And this is complicated on the front end when unknowledgeable individuals procure the IT equipment to be installed in the vehicles. I recall a few instances when product was purchased that did not live up to expectations. Consider that each car’s computer system has computer aided dispatch (CAD) software which uses a VoIP connection to communicate and is patched into a GPS system. The VoIP provides the ability to search local, state and federal databases from the car. The car’s laptop login is protected by the use of encrypted USB passkeys and the rest of the electronics bank includes the communication system and video camera’s whose recordings download wirelessly when the car is parked outside the station. Then there is the data storage for remote license plate readers, individual officer worn camera data storage and even the IT infrastructure of the headquarters. Without the appropriate staff maintaining the system, the right balance of IT can be challenging.

I work for a large academic hospital in Philadelphia. When I first started in this job, 12 years ago, IT was definitively under invested. However in the past 2 years after a change in leadership the organization has definitively made a move in the right direction First and foremost by hiring a CIO, and preparing to implement a better EMR. What is really surprising, in my opinion, is how little the IT personnel are paid when compared to other professionals working for the organization. Any contemporary corporation cannot function without a proper IT support they are the core of the organizational structure; nevertheless they are clearly underpaid.

I feel that we under-invest in our information technology. My company tends to fix things when they break rather than be proactive in replacing outdated equipment. IT equipment is only replaced when absolutely necessary. We tend to put a “band-aid” on the problems. When the executive team meets to discuss the firm’s IT needs it ends up being a three hour discussion resulting in a list of outrageously expensive hardware and software. Because the costs are not realistic we continue to debate the best solution but we do not upgrade our system. We continue to work with outdated software and equipment which can be very slow and/or shutdown completely. This is very disruptive to our workflow. Ultimately our executive team needs to realize we are a small firm with limited resources and compromise on the scale of upgrades so we can afford to make improvements to our IT system. Upgrading our IT system will minimize the number of interruptions from network problems and help productivity in turn improving the bottom line for the company.

I have worked in multiple hospitals in the past decades. However, I have not found enough hospitals spent adequate fund for update their computer systems or techniques. For example, when you walked into the hospital, you could see computer is everywhere. However, if you try to use those computers, either they do not have mouse, keyboard, or no software are installed, or not even hooked to internet or printer. I still remember I worked in one hospital, everyone was trying to get the same computer everyday as that is the only working computer in that whole floor. Everyone is caring about HIPAA. However, I got so many phone calls and junk email in my hospital email account, I am just wondering how those people get to know my hospital email or my working cell phone. I even heard one physician got notified by payroll that her direct deposit was switched to another bank. It took her whole day and found that someone got into her working cell phone and found her account information, and transferred her direct deposit of her paycheck to another bank, which she never ever had account there.

I work for a children’s hospital in Ohio and I can boldly say that IT is a top priority here. The IT division currently occupies more than 4 floors in one of the professional buildings and is still expanding. The annual IT budget is in tens of millions and in my five years of working here, I have never heard of any major IT issues at all. However, there is still some minute degree of shortage because certain departmental IT-related projects sometimes get declined or delayed indefinitely. What we brilliantly do is utilize in-house talents to develop substitute programs with available resources. For instance, my people with some IT knowledge sometimes volunteer to develop substitute programs utilizing MS Office suite-based applications such as Access, Excel, and SharePoint. This measure of creativity has been quite helpful for us that we rarely contact IS these days. In an effort to substantiate our own departmental “IT” prowess, senior management recently sponsored a few short IT courses for those willing to be part of the volunteer team.

• Think about somewhere you have worked before. Do you think the company under-invested or over-invested in Information Technology? Is there anything about IT that makes it harder to get the balance right?
I have worked as consultant for a small business that started as one standalone dental clinic few years ago. With my knowledge of the IT systems, I helped them setup the infrastructure to deploy a management system. While developing the strategy to deploy within a standalone clinic, at first we though what value can IT systems can provide that can help the business. Before almost making it too simple, we did some research of other local clinics, as well as large businesses that were established for years. It became quite clear that although the entire clinic is run by doctors and nurses there is lot that is going on that is important to understand the business structure. We developed scripts and empowered all computer to gather data from how long the computer is used by which user, what is one spends most time doing, how long does it take to input patient information, what patient information is important, how does ERM help employee. There were various programs employed to study the day to day interactions of the business. The amount of data collected helped develop and find tools to aid nurses and doctors to streamline their work. Although I picked up project as a hobby, the end result provided a data source that was used improve the first clinic. Above and beyond, the data generated was then used to design second clinic to reduce inefficiencies that were identified from the first system. The balance of investing into IT may differ from application to application, however, in my opinion there should be enough spending on IT to ensure that organization is generating valuable data above and beyond simple automation. The pivotal point of IT spending should be until the IT systems in place are able to provide sufficient information to warrant additional IT projects for efficiency and productivity within a business.

Conrads article measuring the strategic value of information technology investments makes the cogent argument that our measurements of business productivity and net worth are skewed towards financial indices rather than on work quality, workplace safety, time savings, and risk management. I couldn’t agree more. At my workplace at the Rothman Institute we constantly assess large droves of data from health insurers, patient files, imaging archives, quality metrics, and morbidity and mortality reports. It is imperative we have the same data and the same interpretation of this data as the insurers or we can find ourselves being excluded form narrow networks if our costs are too high, our length of stay are too long or our readmission rates are above the national mean. We have found that it is better to be proactive with positive data to be on the upside of negotiations rather than being told we are not making the grade and therefore being replaced by other providers. In order to make sure we are aware of our performance in many areas of care we have invested in ownership in an analytic company that tracts adverse events, complications, readmissions, etc. and allows us to develop predictive models with regard to patient preoperative optimization to avoid poor outcomes. It also allows us to save money on navigating patients to appropriate postoperative care facilities to avoid the expense of expensive rehab facilities when it may not be necessary. In order to do all this we need constant investment in our IT infrastructure which is always an uphill battle when reimbursements are declining and money is needed for other operational events. Fortunately the board, as espoused by Conrad, sees the importance to the wellbeing of the organization with a well aligned and functioning information management system that helps guide quality initiatives to save time, minimize risk and therefore improve the financial condition of the firm.

I believe that my hospital has underinvested in Information Technology with respect to the implementation of our Electronic Medical Record (EMR) system. Under Conrad’s concept of performance-based value, I would argue that the performance of our organization has only improved in certain aspects. As he argues (page 18), IT needs to be fully integrated with the business in order to provide a sufficient return on the investment. We have three basic missions: patient care, education, and research. Whereas the EMR has, arguably, improved our mission of patient care, it has been a disappointment for clinical researchers. Naïve doctors such as myself hoped that data collection and investigational queries/reports would be easily generated if the data were input properly. The database in the EMR is difficult to access for someone like myself. The EMR has to balance the security issues of allowing unrestricted access to its database with convenience for its users. Therefore, we have been looking to invest in additional data warehousing solutions from other vendors to extract useful data from our EMR and other related sources. Whether or not the hospital chooses to invest in these solutions remains to be seen.

Interestingly, the implementation of our EMR is potentially subsidized by the Affordable Care Act (assuming it doesn’t get struck down by Congress and the Supreme Court in King v. Burwell (J Green, Businessweek 3/2/15 p 8-10)). The decision to invest in EMR was clearly guided by its “dollar value”. Its strategic value remains to be seen.

I believe one of the organizations I worked for, a healthcare rehabilitation organization had under-invested in information technology. Although some funds had been set aside to purchase computers and printers for various offices, not every employee had access to a computer or even company email. The nursing staff is still using pen and paper for documentation and patient files would need to move from one department to another if someone needed information for example from the nursing floor to physical therapy office. As Conrad wrote about the finance-based concept of value, this organization’s decisions when it comes to investing in IT were restricted by not being able to adequately financial explain or see the financial value in increasing the IT budget especially since they were doing fine without the additions recommended by IT. The other restriction was none of the departments that were going to be affected were willing to cut into their budget to get the projects going.
Finally, because of changes in regulations, additional funds were set aside for implementing electronic medical records. The system is up and running, but they again under-invested in the process improvement and mapping the key process of data flow. This resulted in having a system which has not incorporated all the necessary departments. Currently, only the nursing, rehabilitation therapy, and pharmacy departments are linked to the electronic medical system. Other departments such as billing still require paper documentation from the different department to compile the individual bills for the clients/patients. In most cases, the nurses, therapist and pharmacist are duplicating their record-keeping efforts by maintaining the EMR and paper records. I believe most of these issues can be corrected if there is a buy-in from top executives in improving IT system as part of the overall strategic improvement plan that would not just improve the process but cut cost and increase their rate of return on investment across the organization.

I feel our company is under invested at times. Ours is a Biotech not an IT company, hence the notion that we don’t need to invest as much. Often times the systems we have are not so robust in nature. When things fail, we turn to IT for help. You call the help desk, no one answers your call or even if someone does, then that individual has no knowledge as how to fix an issue as simple as getting the password reset other than your NT password. To them getting the NT password reset is a piece of cake, but anything else beyond that is not as much. There are times, we have applications that are used internally and you need access to them right away to continue your work. But when you lose your pwd, then IT cant help reset it right away as they are not aware of the application nor are aware of the way to restore it. Often times this takes a day at least to bring them up to the speed and then finally someone in their group knows exactly what domain/group within them this belongs to and how to reset it. It could have been a simple 10 minute job, lead to 24 + hr job that brought the work of the individual to a halt. This gap is too wide causing wastage in several areas and to many employees and is frustrating.
Part of the problem is we don’t have an in-house IT group, it’s all outsourced nationally and internationally. Hence the company that is outsourced to is not fully aware of the applications that are being used in the client company and cant train their staff to be aware of all the systems. The training of these staff is important to address any issues that came about. Often times, the call gets routed to different individuals within the outsourced company and there is so much wait time from the time the request to reset a simple password is made to the time, it is being reset.
Same thing happens when you have your computer refreshed or if you are provided with a new one over the course of time, to get all the legacy applications installed on your machine is a hassle as the IT outsourced company don’t know what the applications are and how to install or who the contact is. This goes on. Same thing with restoring files or folder that were accidentally deleted or overwritten, it’s another nightmare. We could do better had we invested more in IT.

I work in the legal department at a pharmaceutical company that I believe has under-invested in certain areas of information technology. We currently have hundreds of ongoing cases ranging from product liability to patent cases to contract disputes, as well as dozens of law firms that we manage. We also have thousands of employees around the world including some that may be identified as witnesses for these cases. For years, we have considered implementing data management information systems to better track and to some extent, automate some of the things we need to do with every case such as sending out do not destroy notices and creating reports if requested by senior management. We also track to the extent possible the thousands to millions of documents produced in the cases. As the article points out, we may have wrongly been considering the value of such a system by focusing on cost and return on investment rather than its performance-based value. Under Strassberg’s return on management metric, such an investment would likely make a lot of sense and provide strategic value to the organization. With this tool, we can help people be both well informed and can also leverage time by improving responsiveness. Improving performance in these activities, as argued by Meyer and Boone, can help us improve in organizational performance more generally. As such, we should consider stepping back from focusing primarily on the cost of the system and focus more on the strategic value such a system could add.

At times I believe almost all companies under invest in technology. A firm I previously worked for does have a very large budget for IT, as their existence depends upon it. The website has had major renovations to make it more simplistic for the user and to also incorporate a recent take over. While the front end of the business which is the website and allows the customer the ability to shop and place orders online was the primary focus, there was little investment into the ‘ back-office’. This is where target sales numbers were held, corporate information, sales and advertising materials and personal information for distributors.
With weekly targets the primary focus for the distributor, the back office at present still does not have ‘real-time’ reports. This is frustrating to someone who may be on target for a sales quota, but not realize that they may not need to produce last minute volume. As all the distributors are tied, it may have been the case that volume produced was enough to hit the goal target. The lag in the reports has meant that distributors can miss out of substantial bonuses. While it’s understandable that the ‘front’ end of the business is vital, after all we would be nothing without customers, there needs to be a balance to ensure that the people pushing the business and in sales have access to reports that are updated frequently rather than 24 hours later. Often sales materials and trainings are missing key details or in extreme cases have been moved to another location at the last minute and not update provided for sales teams to see. This led to an email chain being created within the teams to check and double check the information on date and location rather than rely on the company back office.
A lot of the budget recently has gone into mobile apps, and the development of the technology to allow both the distributor and customer access from a mobile device. The talk between teams is that they shift their attention somewhat and balance out the focus and expenditure to ensure that all areas of the business front end and back end are more equal.

Prior to my current job, I worked at a microchip design and manufacturing company. The company was a spin-off from a larger company because the microchip division was underperforming. It also caused the overall value of the larger to be depressed. Immediately after the spin-off, the new CEO issued a mandate to cut overhead cost from the entire company. The IT department took on the major grunt of the cost cutting initiatives. As a result of the cost cutting activities, the IT department staff was reduced over 50%, all future IT projects were cancelled, ongoing IT projects had to complete within budget without any more funding for overruns, and all software/ hardware upgrades were cancelled. The new strategy was to “keep the lights on” and no further investments were to be made to IT unless it was required because of regulatory concerns.
The new company definitely under-invested in IT because the new CEO did not see any financial or strategic values with investments in IT. I can recall a town hall meeting where the new CEO said that we had no reason to be a world class in IT shop because we strived to be a world class microchip shop. The new CEO failed to see the collaboration between IT and the chip engineers to put in automation, advance chip design software, and chip design platforms that enable the chip engineers to do their job so well.

Conrad’s paper, “Measuring the Strategic Value of IT Investments” was a timely and convincing read for me as I am currently at an IT crossroads at work. I work for a private foundation with a large number of projects and high net assets, but a very small staff and somewhat antiquated processes. I am at the point where I must decide if the foundations grants management system is going to go online and be stored in the cloud. The grants management system we currently use has remained practically unchanged for the past decade and is manually backed up from the in-house server.

This article helped me worked through how making the investment in this software will increase our efficiency by streamlining administrative work and improve communication both internally and externally. I take great pride in keeping the foundations administrative costs low so can easily see how some would like to assign a cost to IT like they would assign cost to a widget maker. I think the article did a good job of explaining why it is important to look at the investment in IT differently than other expenses. The foundation could gain more from the records if the data was better managed and more accessible. This is a large shift that will provide more complete data in a faster and more organized manner. These improvements reach the core purpose of the foundation.

I am making myself feel guilty writing this because I feel responsible for our antiquated processes! It is “the cloud” that bothers me. Someone said to me, “talking about the cloud today is like 10 years ago saying, you think you will ever get a cell phone?” Cloud storage makes me nervous.

Ford Motor Company’s Warehouse Management System. Until the past 3 years, Ford’s WMS (MOMS) was a MS DOS based system that was built exclusively for Ford in the mid 1980s. There were many issues with the MOMS system such as: 1 day lag time for updated information, system failures, inventory accuracy, and errors in receiving and shipping of products. Fortunately, the implementation of a new WMS has been implemented and has steadily increased sales, production, and efficiency since its inception. I don’t think the company under-invested in this area. I don’t think the funding was available to support the improvement when it was needed. The parts distribution division was used to support the R&D department until the sales from vehicles generated enough cash flow to support itself. I think that the fact that IT enhancements that provide both efficiency measures as well as a secured environment change so frequently, that it is difficult to establish a budget for the continuous updates and improvements.

I believe my company both over spends and under spends, or maybe it’s more that there doesn’t seem to be process in place (much like the Volkswagen case). We have made attempts to reduce some spending. For example, two years ago we moved away from a company Blackberry to a consumer choice package. This ‘Consumerization of IT”, or more people bringing their personal tech into the workplace, has allowed the company to reduce the amount of staff placed on handling/servicing those phones. Those people have been allocated to projects where more help is needed.

Here are a couple of examples of under spending in my opinion. We launched an ecommerce store in 2010. It’s grown by double digit figures every year with revenue exponentially increasing, yet the team still cannot get a team member solely dedicated to launching new products on the store (creating the pages, working the back end etc.). Instead they must compete with other areas of the business for help from the digital team (6 people for a $2B company). This not only limits the amount of new product, but it limits changes to site and upgraded features. Another example would be spending $150,000/yr on a new analytic’s tool for monitoring digital/social and not investing/training anyone to use it. Would good is data if no one can turn the information into something discernible? This reminds of this week’s article by Conrad on measuring strategic value for IT. We invested in a powerful platform that can help us do all these great things, but failed to invest in the management of the asset. What were left with is a six-figure tool that’s literally going unused.

If I had to compare my previous employer to my current one, I would say that the last company easily under-invested in Information Technology in multiple ways. The article mentions that many companies take what might be considered the easy route when making budget adjustments. At my previous employer, overhead employees (Administrative, Marketing, HR, and IT) were let go as a means of saving the company money – particularly during our recent economic downtown. By the time I’d left the company, our IT group (the smallest department in a company of approx. 200 employees) had dropped from 4 to 1, which led to more IT related complaints/issues from remaining staff.

Most firms I’ve worked for either as a direct employee or as a freelancer had some sort of Customer Relationship Management tool or a combination of that and Deltek Vision’s Enterprise Resource Planning (industry standard database tool). Each tool incorporates HR, Marketing, Accounting, and IT functions in an effort to increase a firm’s profitability by tracking clients and projects; storing project, contract, and employee information (timesheets, tracking billable hours, etc.); tracking opportunities; providing additional information on competitors as well as upcoming project information for specific clients; having reporting functions that allow the firm to see its place in the industry and which services/markets were the most and least successful, etc. Instead, the previous firm attempting to track these things using a number of varying tools and software from a highly expensive, semi-functional database that only accounting could use and understand to a separate somewhat expensive HR database, to Excel spreadsheets used by the marketing department to track opportunities and awarded projects, etc. From what I observed, there was no importance placed on the need for strategic information systems. When cuts were made from each overhead department, one of the biggest complaints by senior management was that the information management company-wide was not up to par yet suggestions made by these departments for improvements were ignored or deemed unworthy of the costs and time it would take to implement them. My current company has both Deltek Vision and CRM systems in place and has managed to win more business, retain staff, and remain profitable throughout the recent economic crisis.

I do not believe the previous institution that I worked for under-invested or over-invested in IT. In fact, I think they were ahead of the curve and accurately forecasted what would be needed of an IT infrastructure to support future growth. Many health networks are just now moving towards implementing comprehensive electronic medical records, whereas my above mentioned employer went live with EPIC about 8 years ago. Considering an EMR aligns with the network interests of catering to population health management and providing for coordination and continuity of care. Having information and records captured in one virtual place allows for operating efficiency and sophisticatedly helps ensure compliance with coding standards. This also appeals to the customer (patient) through providing an accessible way to be engaged in their own care.
It could be challenging to get the balance right because prioritizing IT projects is best linked to corporate strategy and it is very possible that value initiatives may be adjusted. I think that even if you plan meticulously, everything cannot be predicted or guaranteed and there has to be some room for flexibility. This could throw the balance off and cause you to under-invest or over-invest.

I worked for a Global products provider who made the leap to Oracle. The organizational position was one of providing a customer centric operating system that would allow them to provide service and support across a global platform, thereby allowing customers to have view of all assets and related contracts no matter where the product was located. This would give us a competitive distinction in the global services business. It was involved in the decision making process, but not in the planning as it related to the total business process. Naturally, the roll out was a mess and IT was blamed. In this case, the disconnect was between executive management and IT as out IT staff was quick to point out. There was n consideration to bandwidth, current in place computer technology or the total migration of current systems. The CTO, who is still in place, had shared the concerns, but the investment that had been made in planning, consulting and beta testing became so great that Executive Leadership forced the switch to be pulled. The result was lost customers and employees who felt the organization only cared about process and not about them. In short, the company both over and under invested in technology. the Oracle price tag crept up on $1 Billion dollars and much of that could have been avoided had they not under invested in the necessary technology requirements to help with a successful launch. It has been 10 years since roll out and the system is finally stable and preforming as planned. However, the loss of customers and people will make it difficult for them to ever reach any tangible ROI.

The company I work for currently is a division of a much larger cable and technology company. Prior to last year with the introduction of new management, laying off employees on all levels, and most importantly the incorporation of our division to adopt more corporate initiatives, we were under-investing in Information Technology. This never made sense to me. Why are we operating on two version old software? Why are we using an outdated accounting system, one that didn’t sync with our headquarters accounting? Why are our customers unable to do some of the simplest of tasks like send a text in our building? With the introduction of some management from our corporate offices, people who were well versed in I.T., we were able to recognize our deficiencies and started operating as one company, as opposed to many different divisions. This affected us on many different levels. Our company invested in an intranet for employees to access company-wide communications, we upgraded our accounting system to align with corporate which will significantly improve productivity and our bottom line, and we also invested in technologies that allows our customers more accessibility to their technologies at a greater degree of speed as well as access to our information to our teams and shoes through our mobile apps. Lastly, they revamped our website making it more user friendly. These are amongst some of the things our company has done to address the under investment and utilization of information technology. Our long-term success is currently centered on investing in various IT initiatives that help with increasing internal efficiencies and delivering a better customer experience.
There are things about IT that make it hard to get the balance right. Not speaking company specific but from experiences, sometimes IT teams are not properly staffed with people who have the expertise to deliver on certain tasks. Sometimes critical deadlines aren’t meant that are necessary for projects to have a positive effect. Also, when it comes to certain projects, sometimes IT and other departments, specifically finance which is where I work, can’t agree on the appropriate technologies that need to be implemented. I have worked at companies where we over invested in technologies that were never used, or just not used to their fullest potentials.

This is a bit of a tough one for me to answer. It’s hard for me to say my law firm has under-invested in information technology because we do have a lot of programs to improve our daily operations. We have accounting and billing software, research databases, our website, e-newsletters, electronic records management, and so on. At the same time, not everybody uses it, meaning we may have sprung for too much. Then I could make the argument that a lot of the programs we have in place allow us to operate more efficiently (when used) but maybe don’t do what we need in terms of client management and generation. Frankly, I’m not too well-versed on that end other than knowing that we have a Director of Information Technology who presumably does. I’m not all that certain he knows the ins and outs of IT and the legal field, though. And that’s where I see the problem arising when it comes to getting the investment balance right. IT is such a specialized field that you do need specialists to handle it. The question is, though, do they know enough about your specialized field to integrate the two. If neither side can communicate effectively to the other what is needed and why, or how it helps, there will always be that question of whether or not the right balance is being struck. I think it’s the knowledge gap between the two groups that makes this so difficult.

As a Temple Medical School student I have seen what I believe to be underinvestment by the university in LCMS. LCMS was supposed to be a product the school would use to replace blackboard for classwork and one45 for rotations and evaluations. In theory it was great, and it had some positive reviews from other med schools. However, I believe the investment in the product by the school was so underwhelming and problematic that two years after it’s rollout, it is still performing so poorly that the school has gone back to using one45 and blackboard for the remainder of this school year, and possibly next.

Right now our company has been growing significantly over the last 5+ years. We’ve gone from $500M to $1.7B since I’ve been with the company. Not until this year did we invest in an updated ERP system. We currently use JD Edwards and Lotus notes. This is an early 1990’s state of the art system. We have been so focused on funding the sales, marketing, and R&D for innovation that IT was left on the back burner. This year we will be implementing a Microsoft based platform AX. This will be a monumental shift for a company that has been innovation driven that utilized a green screen based ERP to get there. It should be a very tough transition, and in my opinion will effect sales during the monumental shift from green screen to Microsoft.

Professor Johnson,

I’m not sure if it is made explicit elsewhere so please excuse me if I’m overlooking something, but I’m not sure where to find the readings pertaining to the first case analysis. Are you referring to the reading for week 2 as the reading on which we should do our analysis?

Hi Mariya,

I believe you are right. The article for Case Analysis 1, Google Inc., is under week 2 Case Readings on blackboard.

Hope this helps.

Hi,
I’m guessing this information is posted somewhere, so I apologize in advance for asking this if I should be able to find my answer on my own. Is it posted how you want our case analysis to be formatted? Maximum page length, type (font and size) and line spacing?
TIA

May we have the questions for case #2 posted after class this evening?