How Does IT Influence the Customer Experience - Assignment Example

 PART 1 How does IT influence the customer experience? Insurance business is most competitive oriented. To get a business in a competitive insurance industry, Lenox has able to develop a computer software program namely Lifexpress which facilitates Lenox’s 10,000 agents who functions nationwide to analyze the financial profile of a prospective customer, recognize and search Lenox’s most apt insurance policies, make a preliminary actuarial study, contrasting with competitors’ rankings and execution and produce all the required documentation on-site to complete a sale. This has facilitated the agents to complete a deal within matter of days or hours as compared to number of weeks earlier. Insurance industry is a world where competition progresses speedily and the requirements of customers change quickly, Lenox should see that IT oriented system is to be delivered in months and not in a period of over three years. Does IT enable or retard growth? Oxford Health Plans Inc was ranked as the fifth top –growing company in the United States in 1996 by the Fortune magazine as the business was growing both in revenues and in members. Everything went topsy-turvy when Oxford management tried to introduce new computerized billing system as the executive’s paid a little or poor attention to information technology. The bad structuring and management of Oxford billing system not only tarnished the company’s brand name but also resulted its future growth as Oxford’s stock price stumbled down to one-third of its earlier quote due whooping loses of $ 300 million. If the management do not spot the apt IT-enabled chances, introduce misguided systems or mishandle the whole activity , in such scenarios ,IT systems can even be proved to be devastating like what it had happened in Oxford. Badly visualized and implemented IT investments become hazardous in the long run if it is not noticed at the early stage. Like a captain of a ship who knows where to maneuver, a CIO should know how to leverage IT to promote business goals. He or she should see that IT is really living up to its prospective. Sullivan of Lenox appears to be a customary CIO. She failed to appreciate her exact role in the Lenox. She should have established the atmosphere required to make technology more efficient at Lenox. Sullivan should have been made to directly report to Bennett, CEO rather than reporting to Fontana, CFO. Sullivan, as a CIO, should have assumed responsibility for outcomes of IT investments, in collaboration with the senior management. A management committee should have been formed with CIO as the head and this committed should have supervised the real-time systems and should have introduced necessary changes as and when necessary. How Do You Know If IT Is Fulfilling Its Potential To Help The Business Grow? Lenox CEO is fully aware that by bringing the latest technology, by modernizing key applications and by rationalizing and reorganizing the information services at Lenox, it definitely helps Lenox to see its business is growing. If investment in information technology is wholly integrated with the company’s objectives and functions perfectly, it will infuse implausible strength to a company. The best examples are FedEx, Wal-Mart Inc to corroborate this finding. Lenox Managers should be made to know how technology could advance their business goals. Were CIO present at all important conversations about strategy? Lenox Insurance Company’s CEO and President, James Bennett informed Dianna Sullivan, CIO when she joined three years earlier about Lenox’s objective for having an efficient and trustworthy IT system mainly to enhance the distribution system of the company as it will place the company in advantageous position to offer their agents the apt tools to retrieve fast, reliable information when they require to finish a deal in Lenox’s favor at the edge of their competitors. In Lenox, Sullivan, CIO, was not present at all significant strategy meeting as she was reporting to CFO Fontana only and not directly reporting to CEO, Bennett. Due to this, Sullivan had missed the opportunity to appraise the CEO about the backlogs and insufficient allocation of funds for the project. In case of Did she make suggestions about new ways to do things? Sullivan should have submitted a weekly post-deployment assimilation map (PDAM) and such map would recognize high-risk, no-risk and low-risk business units. On the request of Sullivan, Bennett should have reviewed all IT proposals and to see that proper funds are allocated as per budget and to make sure that delivery of systems are made as per deadline. Sullivan should first understand that she cannot attain success by functioning lonely but to ally herself with the head of either field operation or the sales. Sullivan is needed to assist Lenox’s managers to vocalize their outlook and demonstrate to them the opportunities that technology offers. No. Sullivan does not make suggestions about new ways to do things. She would have suggested the following that would have made Lifexperss a great success at Lenox. Sullivan should have strived to enhance Lenox’s competence and should have educated the Lenox’s managers how other companies employ technologies and steer them as they defended such projects within their own divisions. Though Sullivan aptly complained about the absence of product strategy but failed to establish that Lifexpress should have a clear business purpose. Sullivan should have formed a team to identify the vision of the project. She should have secured the dedication of the marketing, sales and field operators namely agents. She should have reminded the team that but for their active cooperation and leadership, project could never be successfully implemented. Can the CIO articulate the long-term vision for the IS department and how it relates to the overall business strategy? Sullivan, CIO, should assume full responsibility in deciding how Lenox would employ technology to enhance the strategic aims of the business. Hence, Sullivan being the CIO shall be held accountable for the business results of system investments. Sullivan should become a full partner in defining how Lenox will employ technology to enhance the strategic goals of the business. A CIO should have established an atmosphere in which technology –footed change agendas can be successfully established. Sullivan missed the early signals of warning that she was underway and should have brought the same to the notice of CEO and CFO now and then to find a solution. Sullivan, as a CIO, should have articulated the long-term vision for the IS department and how it relates to the overall business strategy. Does CIO communicate new developments to the executive team? CIO should communicate both upwards and downwards and emphasis about the role of technology in company’s capacity to vie. Since Lenox lacking behind its competitors in the area of technology implementation, she should ask her colleagues to probe into the reasons. It will also offer an exchange of outlook of technology’s part in the business. To speed up the implementation, she should recommend to CEO to tie up the managers and executives incentives with that of successful of implementation of technology. Both CEO and CIO should make it clear that managers are liable for employing technology to bring value to the business. Does IT favorably affect productivity? Yes. There is interrelation between productivity and IT. Lenox should have right-headed team and requires to benchmark to unravel the sophisticated IT oriented distribution systems. Lenox should match its investment on IT with that of its competitors, else, it may loose not only its valued customers but also business agents. Does IT advance organizational innovation and learning? Sullivan, being CIO, should play a dominant part in both demonstrating the new space offered by technological advancements and offering employees with mechanisms to capitalize on their creative potential. Bench marking, employing intranets, electronic whiteboards, videoconferencing, and online training courses will help in advancing organizational innovation and learning. How well is IS run? According to survey conducted with about 101 CIO’s of both giant and midsize business in a mixture of industries , it is clearly revealed that these companies were not getting full benefit or value of information through their investments in information technology. The key reasons for poor returns from investments on information technology are as follows; Insufficient Outlook and Direction In Lenox Insurance Company, newly hired CIO, Diana Sullivan, was left alone in fulfilling the mission. Both CEO and CFO had just entrusted the vision to Diana. It is to be noted that outlook cannot be either outsourced or assigned and should be acted on jointly. Business Responsibility or Accountability has not been defined: In achieving the mission, Sullivan was left alone. For success of Lifeexpress in Lenox, business managers should be made to assume accountability for accomplishing the desired the business goals. Lethargic Implementation: A period of three years has been set for the achievement for the implementation of Lifeexpress in Lenox which is too long. Any application that has direct impact on competitive standing and returns should be implemented at a shortest possible of time, say within a year. Funding for IT is Inadequate: Lenox should find out new techniques for funding IT projects. Fontana should give utmost priority to Lenox IT project as it will engender the highest payback. In Lenox, IS does not run well as Lenox is not getting full benefit or value of information through their investments in information technology. PART II The foundation for the slogan “ Right product in the Right place at the Right time for the Right price “ rests on the four basic elements namely a) accurate ,available data b) forecasting c) risk-based inventory planning d) supply-chain speed. FORECASTING It can be done by analyzing the past sales data, testing the veracity of their forecasts and employing a mixture of forecasting approaches. Past product sales data are an excellent tool to estimate the overall product sales. Japan based World Company and Spain-based Zara are using early year sales data to predict future demand for its various products. World Company reaps many benefits from forecasting as it has achieved a gross-margin return on inventory investments of more than 300% Further , Dallas-based CompUSA , uses even one or two days of past sales data to estimate future sales and to stock up its inventory for PC’s. Borders Group, a book and music retailer employs historical sales data. Majority of companies uses single forecast for each item. However, generating multiple forecasts can be very worthful since it can help to understand the divergences in those forecasts and managers can discover the suppositions implicit in their forecasting method. In Wal-Mart, with the help of central database, store-level point-of-sale systems, and a satellite network and with the help of UPC bar codes, store-level data can now be collected immediately and compared. By correlating sales data with external information, Wal-Mart is able to offer further support to buyers, thereby enhancing the veracity of its purchasing forecasts. Wal-Mart perused CPRF (collaborative planning, forecasting and replenishment) an integrated method of planning and forecasting by exchanging critical supply chain data, such as information on inventory levels, promotions and daily sales. Wal-Mart’s vendor-managed inventory (VMI) program demanded suppliers to control and manage inventory levels at the Wal-Mart’s distribution centers, footed on agreed-upon service levels. SUPPLY-CHAIN SPEED World Company can manufacture and dispatch an existing product within two weeks and a new product within three weeks to its stores. This feat can be achieved by World Company by holding adequate raw material inventory and reserve production capacity. Further, as the retailers now employ new software tools for forecasting and planning supply, they can employ these techniques to gauge the effect of a shorter lead time and to compare the demand with that of supply. During the initial years, as Wal-Mart was located in rural Arkansas, no supplier was willing to forward their trucks to Wal-Mart stores and hence supply-chain is maintained by resorting to self-distribution. Wal-Mart employs more than 75,000 individuals in its logistic division and is having about 7,800 truck fleet drivers who delivers the majority of its merchandise to its stores. Further, it has 114 distribution centers located throughout the United States. The average distance from stores to distribution center was about 130 miles. It is said that Wal-Mart dictates its suppliers to share information where they procure raw materials, where the manufacture their products, how they are designing their products and what inputs and ingredients are used in those products. Wal-Mart is having around 90,000 suppliers all around the world. Wal-Mart distribution costs were estimated at 1.7% of its cost of sales as compared to their rivals such as Kmart (3.6% of total turnover) and Sears (5% of total turnover). INVENTORY PLANNING It involves the process of decision making about time and quantum to be ordered or the quantum to be manufactured of finished goods, raw materials or components. Many retailing companies report lost sales as they could not track stockouts. For instance, Bulgari, a Rome-based jewelry manufacturer experienced stockout on a single item at one retail store which had minimized the store’s revenue by nearly 3.5% Wal-Mart introduced ‘Remix’ scheme mainly to minimize the quantum of out-of-stock products at stores by restyling its network of distribution centers. Wal-Mart successfully introduced RFID as a mean to enhance in-stock rates and minimize tracking costs. A research study conducted by the University of Arkansas, RFID increased a net improvement of 16% fewer out-of-stocks on the RFID-tagged merchandises. In January 2006, Wal-Mart had the idea of eliminating about $6 billion in excess inventory. Further, Wal-Mart internal goal had demanded for reducing its inventory growth rate to 50% of its sales growth rate. GATHERING ACURRATE, AVAILABLE DATA With the help of point-of-sale (POS) systems, most of the retailer can now capture sales data accurately by electronically. Majority of the retailers are unaware that their data or information is not accurate since they do not track accuracy of information or data. Other retailers who track their data accuracy but the information retrieved is not largely publicized. The Wal-Mart distribution location has been designed in such a way, any merchandise could be moved to stores automatically and manufacturers are automatically notified about the quantum of their stock and on such information, supplier plans his supplies to Wal-Mart avoiding any stockout of that product. As a process of dissemination of information to employees, Wal-Mart exchanged and shared information on daily, weekly, monthly store sales with all employees during 10 –minute –long standing meeting. Wal-Mart offered to its supplier’s access to real-time sales data on the merchandise they supplied, down to individual stock-keeping items at the store level. With the help of software platform namely “Retail Interface”, Wal-Mart gathered store level sales data which could then be exchanged with suppliers. Works Cited Byron Reimus. “The IT System That Couldn’t Deliver.” Harvard Business Review Johnson, P.Fraser. ”Supply Chain Management At Wal-Mart. “Richard Ivey School of Business, The University of Western Ontario. 28 November 2006. May –June -1997. Read More