Analysis of IT Services in Business - Essay Example

Analysis of IT Services in Business INTRODUCTION This report includes discussion on different scenarios and circumstances that have taken place in Terra Firma since its inception and gives an insight on how things have emerged and how the company should treat them in future. Along with this, the report includes a detailed description of products of Terra Firma with their overtime development, introduction of new products and expansion of product line of Terra Firma is part of this report as well. The uncertainties and problems faced by Terra Firma and opportunities utilized by it are a part of this report. It will also comprise information about how it achieved success and faced some disastrous situations. This report caters the method of dealing with those situation used by different leaders at Terra Firma. An analysis of IT services at Terra Firma and the way they have contributed in the success or failure of some tasks. Overtime development of IT at Terra Firma and problems created by these developments are a part of this paper. Along with this, paper includes suggestions using which Terra Firma can bring improvement and stability in its IT department. TERRA FIRMA Brief History of Terra Firma Terra Firma was founded in 1992 with the aim of making high-resolution flat panel detectors for X-ray imaging. Its first accomplishment was the agreement between Terra and Siemens in which Siemens agreed to buy 10,000 of Terra’s detectors, which provided Terra with high financial stability (CMIS, 2010). With this, Terra expanded its product line to different detectors including X-ray detectors for CT scanning, and gamma ray detectors for PET and SPECT systems. At that time, company did not touch MRI (Magnetic Resonance Imaging) and Ultrasound Imaging because their workings are very different from other detectors. By 2003, the company was earning good revenues with offices opened in US, UK, Japan, Germany, Australia, and Singapore, along with manufacturing capacity at Penang and Malaysia. Terra was still in quest of expanding its business further however, it did not have sufficient funds after all heavy investments (CMIS, 2010). Therefore, for the first time, it decided to invite outside investors to help terra in expanding its product lines. These investors included the owner of “country’s largest sheep farm, an award-winning film director, an actor known for his temper and fondness for rugby and inventor of bungee jumping” (Blanchard & Bowles, 1998). Though these investors did not have much knowledge about corporate world, they wanted the Frost brothers to hire a professional management team (Blanchard & Bowles, 1998). Despite huge opposition for this decision, Frost brother ultimately appointed Stephanie Clark as vice president of IT and Operations. Her colleagues called this woman as “force of nature” as she possessed diverse abilities from looking into the details of any operational problem to encouraging the employees keeping in mind the broader goals of the company (CMIS, 2010). She majorly focused on planning and execution, which did not influence firm’s engineering culture. They assumed that they could not perfect the products if there is a fixed schedule or budget for them. These clashes were at height in 2005 when the company was trying to make a filmless X-ray system for dental and veterinary uses. Clark was getting this made because she could see a hidden opportunity in this segment. She knew that film-based imaging technique was relatively low-priced but their cost of possession, which included procuring, storing, and retrieving X-ray, was very high. Richard Weisen the vice president of Product Engineering agreed to Clark but he was unwilling to move the resources of the company from challenging projects to ordinary parts of the system. Strategies behind Success After almost a year of unmet deadlines and cost wastage, Clark approved to bring the product engineering staff into line, but convinced the Frosts and the Board of Directors to purchase the assets of “a defunct Australian X-ray machine manufacturer and lay down a new division to reconstruct its products around Terra Firma’s sensors” (Kaplan & Norton, 1991). She authorized the head of this new Digital Imaging Systems division to appoint his own direct sales force and build relationships with distributors in Australia and Southeast Asia. The new DigiRayZ product line at last commenced in 2007, and rapidly grew to become a NZ$345 million business. This strategy worked in favor of firm and helped it earn huge revenue (Kaplan & Norton, 1991). Another strategy adopted by Terra Firma was very wise and it was according to the needs of end consumer. Terra Firma’s investors, who were not very corporate minded people, though suggested this strategy but their suggestion turned out to be very profitable for Terra. In 2004, on the request of the firm’s investors, the company hired a team of programmers who were experts in graphical rendering. Company hired them to develop techniques for 3D and 4D images. The first product of this technique was released in 2005, with this launch company had a new division with the name of Imaging Software Products, and it was small till 2009 but fastest growing unit. At the end of 2009, company was one of the mature enterprises; it had revenue of more than NZ$2.5 billion and around 5200 employees. Products and Services Offered by Terra Firma Terra Firma is one of the top dealers of medical imaging devices such as X-ray machines and computed tomography scanners; however, it does not supply these devices directly to hospitals and clinics. Its direct customers are large medical equipment traders such as Philips, General Electric, Toshiba, and Hitachi, which make these medical devices available to hospitals, outpatient imaging clinics, research laboratories, and doctor’s offices (CMIS, 2010). The firm also provides dental and veterinary X-ray systems, which international chain of distributors along with company’s aggressive sales force sell (Find The Best, 2012). The company provides benefit to its customers by giving them technical support and integration services and adjusting software for easy visualization, analysis and storing of medical images. There are two categories or segments of the medical imaging industry, equipments, and consumables. Most of Terra Firma’s business relied on equipment, which again has categories “according to the type of imaging service the patient requires, for example, CT, MRI (Magnetic Resonance Imaging), nuclear medicine, X-Ray and ultrasound” (CMIS, 2010). The medical imaging devices are very valuable for Terra Firma’s customers as today in developed countries, use of these devices is increasing at very fast pace. Hospitals, clinics and other such places excessively require these devices for diagnosis of major diseases. For example, they use MRI and CT for diagnosis of heart diseases, cancer, and neurological disorders (CMIS, 2010). Moreover, X-ray machines and ultrasound devices have great importance and use in rural areas because they are inexpensive and dependable. Industrial Trends, Problems, and Uncertainties For almost a decade, Terra Firma’s business went up due to the industrial trends and drastic modification and development in devices. The time required for a CT scan fell from 20 minutes to 30 seconds and the resolution of pixels increased from thousands to millions. These modifications made it easy to make 3D images of scans and sometimes 4D images so that people can see the changes in their bodies overtime. Another factor, which contributed to the success of this industry, is the hybrid technique, in which two imaging techniques combine to have a more profound idea of what is going on in patient’s body (Mathur & Al, 2006). This technique proved to be very feasible and demanding as it obviated the need of diagnosing a patient at two different times with two different devices, which is often lengthy and risky. Terra Firma did take good use of this opportunity by expanding its product lines and introducing the products that should have been introduced. Despite these positive trends, some forces were making slightly visible the problems and risks that this company was going to face in near future. Regulatory pressure from government that, physicians should not make too much use of imaging devices and reduced payments by insurers to imaging service providers was becoming the causes of downfall of this industry. Along with this, the reaction to rising healthcare cost in weak economic conditions was also a matter to worry. These issues were majorly destructing for larger vendors like General Electric, however Terra Firma, which is a comparatively smaller firm, had indirect effects of this because it greatly depended on larger vendors for its revenues. Balanced Scorecard and other Strategies The use of balanced scorecard in Terra Firma can greatly contribute in the efficiency of this organization, as this would help everyone to have a common goal. This strategy suggests that results tell about the effectiveness of a strategy so a strategy is not showing any results, managers should change it. This can be very useful in Terra Firma because the industry has rapid changes, which are necessary to be catered at that time. Along with this, it has huge importance for measuring what matters, i.e. first finding out what is important and them implementing that. There should be continuous measurement and evaluation of performance against goals defined otherwise the strategy is of no use (Melville, Kraemer, & Gurbaxani, 2004). Terra Firma belongs to an industry, in which there are rapid changes and these changes can bring drastic changes in the revenues of the company. Therefore, the company can have short-term goals for sometime, which would ultimately help accomplish the long-term goals. THE IT FUNCTION IN TERRA FIRMA Overview of IT in Terra Like many other companies, Terra Firma also took IT for granted. It was so excessively and routinely used that no one noticed its importance because it is human psychology that people give less importance to the things that are exposed to them regularly. However, they realize their importance when those things go away. IT was only given importance when it failed but due to the expert staff of the company it rarely failed. Problems with IT in Terra Before appointment of Stephanie Clark in 2003, Terra did not have a corporate level IT department, IT staff was positioned with engineering and product teams and it used to report the CEO of Product and Engineering Department. Stephanie Carl made this organization aware of IT advantages. She wanted to create a separate IT department, which would work under her guidelines rather than appointing a Chief Information Officer. However, Weisen was disinclined to shift his employees under her supervision. Clark established a set of Business-IT Solutions teams to work with the four product and service divisions and the Corporate Administration group, which included corporate finance, legal and regulatory affairs, and strategy. These teams were accountable for assembling requirements from their respective business customers, preparing suitable solutions (e.g., a new application or enhancements to an existing system), working with the business sponsors to attract funding, and communicating with other parts of the IT & Operations organization to convey each solution on time and on budget. Most of the technical work was carried on by a separate Corporate Application Development group, which included teams that concentrated on IT architecture, enterprise applications (e.g., customization of J.D. Edwards for global use), and applications for internal business customers (e.g., a web-based order fulfillment system for the Imaging Software Products division). In Terra Firma, like many other companies, IT budget was allocated in three main ways. Basic services like telephone and email used to get funding on a cost recovery basis. Corporate-supporting services like payroll processing and financial reporting get funding through annual budget requests (Tapscott & Caston, 1993). Finally, the services that primarily benefited a particular unit got funding directly by these units. Although many new IT services came into Terra with new standards, the company still had major application of systems that were there before the setting of new standards. By one count, “Clark’s organization was supporting over 200 different applications, fewer than 10% of which adhered to the new standards” (Training-Classes.com, 2012). The employees were not willing to accept these new technologies as they were accustomed to the old ones and did not have any difficulty in operating them. Some senior employees, because of the complexity to use the hardwares and softwares left their jobs. However, with all these difficulties, systems were operating easily until an engineer complained in end of February that he could not access his email. This was the last call received that day as the telephone line cut due to the failure of VOIP, which handled the telephone services for Head Quarter area feasibility. Few hours later, Clark found out that all the systems were crashed and connectivity with both manufacturing plants was lost due to some time out error. Clark tried hard to find out the reason of this disaster and ultimately she found out that it occurred because of failure of a router. Outcomes of this incident were missing log files, corrupted database tables, and inconsistent application data. However, no important data was lost, correcting the problems that occurred, required boring manual work and longer working hours (Training-Classes.com, 2012). Steps Taken By Terra for Solution After the occurrence of this event, Clark instantly called Marvin Keats for his suggestions and opinions. Marvin Keats said that despite having high technology and well-qualified experts, experienced people who have great technical knowledge are supporting pillars of a company. He said that experienced people who just left the company because of complexity of systems could have controlled this situation with their shortcuts and technical skills. He further said that this crash was just a symptom of more severe problems with the use of information technology in Terra Firma. IT occupied over 40% of the company’s capital expenditures, however, most of it spent to either swap existing equipment or expand existing systems, neither of which generated much of a return on investment in terms of cost savings or business value. It still required a longer period to get a new application installed, or even a new sales representative set up with a laptop and an account on the company’s customer relationship management (CRM) system. Moreover, the brightest people in the IT & Operations organization were leaving because they did not anymore find their jobs interesting; they valued Clark’s professional management style, but wanted new and exciting challenges. Clark offered Keats to become an advisor for Terra Firma and continue with his consultancy business that he just started but Keats committed himself on fulltime basis and operated as a regular employee for terra. He designed some projects and steps that would help Terra to come out of its IT problems. For first six months, he majorly focused on a system including a secure virtual private network that would support email, voice communication, file sharing, and web based access to corporate applications like payroll and travel expense reimbursement. He did not set up the whole system and replaced the old one with new, as he did not have enough fund and luxury to do so. He appointed local telecommunication service providers to make additions to the existing system. He took a wise decision keeping in view of the scenario existed at that time. After this, Keats concentrated on introducing CRM softwares to Asia Pacific sales force, as Terra did not use CRM softwares before because most of their sales were to smaller number of larger dealers. However, after the launch of DigiRayz and expansion of some other product lines, it became mandatory for Terra to use such software if they wanted them to achieve loyalty of their customers. Most of 2009 went in a key effort to advance coordination with the Penang factory after taking over full control from Intel the previous year. The main objective of the joint venture had been to get advantage from Intel’s enormous proficiency in semiconductor fabrication techniques to decrease the production cost and progress the quality of Terra Firma’s sensors. The team of business analysts hired by Keats had a great opportunity with it, as the people were very young and had the capability to quickly understand the problem and look for solution. After all, employees are the competitive edges of any company no matter to what industry it belongs. Some Suggestions for IT Improvement To make sure that in future disastrous events do not occur, changes the company is going to make should be tested in the production environment so that any risk pertaining to them reveals beforehand. If the valuable employees of the company are leaving just because they bored with the system, the manager i.e. Clark should approach them and have a personal talk with them. She should tell them that what benefits they are going to get if they stay in this company and they can work according to their own conditions but whatever they do should be for Terra’s benefit. IT systems should be flexible, i.e. if any system installed in the company is no more of use for them company, the company can sell it or alter it for any other use so that its resources does not waste. The IT systems should be reliable, i.e. the internal information of the company should not be leaked, or even if it is leaked, systems should have such components that tell about this immediately so that the company can take corrective actions. Sometimes, natural disasters take place, which are not in hands of humans; systems cannot have security from these events; however, backup data should be available at any other geographical location so that data remains safe. If one of the largest customers goes away because of some IT issue, the company should immediately approach the customer and tells him about the advantages of their services, monetary compensation is also a good option. REFERENCES Blanchard, K. H., & Bowles, S. (1998). Raving Fans: A Revolutionary Approach to Customer Service. HarperCollinsBusiness. CMIS. (2010). Terra Firma Medical Systems. Retrieved on May 19, 2012: http://cmis.tamu.edu/newsite/FileUpload/TerraFirmaMedicalSystems.pdf Kaplan, R. S., & Norton, D. P. (1991). “The Balanced Scorecard Measures that drive performance.” Harvad Business Review, 1-13. Kaplan, R. S., & Norton, D. P. (1996). The Balanced Scorecard: Translating Strategy Into Action. Harvard Business Press. Find The Best. (2012). Kroger Limited Partnership I - Mason, Ohio Medicare Supplier. Retrieved on May 19, 2012: http://medicare-suppliers.findthebest.com/l/38055/Kroger-Limited-Partnership-I Mathur, S. K., & Al, E. (2006). “Indian Information Technology Industry: Past, Present and Future & Tool for National Development.” Journal of Theoretical and Applied Information Technology, 65-84. Melville, N., Kraemer, K., & Gurbaxani, V. (2004). “Review: Information Technology and Organizational Performance: An Integrative Model of it Business Value.” MIS Quarterly, 283-322. Tapscott, D., & Caston, A. (1993). Paradigm Shift: The New Promise of Information Technology. McGraw Hill, Inc., Professional Book Group. Training-Classes.com. (2012). Terra Firma Asia Sdn Bhd. Retrieved May 19, 2012: http://www.training-classes.com/providers/00/36/3622_terra_firma_asia_sdn_bhd.php Read More