This paper discusses the various aspects of IT planning at Modmeters Company which has two strategies of expanding globally and providing direct-to-customer sales. The role of IT is important in the expansion initiatives of Modmeters. The executives of various departments held a meeting to identify the budget requirements for the expansion. The plan is to establish new plants in Asia and Eastern Europe where the infrastructure facilities are not sufficient required for the operations at Modemeters. Brian Smith, CIO of Modmeters is worried about these two initiatives as the IT funding was very poor. The company has never invested in reengineering the existing systems, instead, they always introduced new systems on top of the other. John Johnson, CEO wanted to change the name of the company as MM for this updated strategy.
The current budget levels at the company are not going support the expansion initiatives. Surprisingly, only 2% of the revenue was allocated to IT. According to Brian, 80% of the IT budget was fixed for running the existing systems and fixing errors. The remaining 20% was allotted based on ROI, where majority of the budget was used by manufacturing department, Human resources and marketing departments having minor share. Brian believed that this kind of budgeting is not effective for their new business strategies (McKeen & Smith, 2012). Brian explains the need to implement flexible systems to support the updated strategies.
He stresses on the budget requirements to buy new infrastructure and problems with the existing systems. The systems are not integrated and use different terminologies in different divisions. IT needs investment for infrastructure, underlying processes and to manage the information. However, the outcomes of the budget meeting after having a long discussion were to prioritize the IT projects depending up on their contribution to the key objectives of the company and also how each of them is adding value to the Modmeters.
To develop the direct-to-customer sales, the marketing department needs more investment to get the resources. Hence, to implement the new strategic initiatives at Modemeters, the budget allocated to IT and marketing plays a key role.
An IT planning process needs to be developed to meet the demands of the new projects. First of all, the IT architecture has to be changed such that the systems are flexible to use. All the divisions should use similar terminology to manage the information and communicate with other divisions. A data dictionary need to be developed to address the terminology issues. IT should be involved in decision making at Modmeters. An enterprise architecture need to be developed to get the best out of IT. Though, I accept that IT projects should be measured in terms of ROI, the current situation at Modmeters is different. The systems are never reengineered and the communication between the systems look like a spaghetti, where failure of each system may lead to a complete failure. There is a need to invest on improving the architecture considering long term advantages of the investment. The IT and business should have a common goals and objectives in developing the existing business.
The needs of the manufacturing, marketing, R&D and HR need to be understood and allocate the budget accordingly. Identify the core competencies of IT and a cost-benefit analysis should be made for the projects. The business employees’ opinions should be taken in using technologies. The key business staff needs to be identified and made account managers. They should present their findings to the top management so that, the governance body can look for interoperability of the systems. In the IT vision, guiding principles should be developed which links the business strategies. Meanwhile, existing business requirements and operations should be addressed as a continuous process. A departmental approach should be taken while prioritizing the projects. This approach focuses on improving the business by expanding globally, enabling direct-to-customer sales, satisfying Stan’s auditing needs, making use of existing projects and improving the infrastructure.
Account managers should analyze how the proposed project would benefit their respective departments. The IT and business people should work closely while developing strategies. A SWOT analysis should be made while developing the plan. IT should be given enough budget and team work is essential to implement new strategies. The people need to be trained by allocating budget required to HR department. The resources should be used effectively for the global expansion. A centralized IT structure is essential for Modmeters to share the information between the divisions. Fred, VP of manufacturing should understand the value of IT. At Modmeters, business needs should be understood by IT to deliver the best technology meanwhile, business people should provide necessary funding to IT.
Apart from the ROI, Customer satisfaction, greater efficiency, product quality, cash savings and other intangible benefits need to be considered while assessing the business value of a project (Ferris, 2012). The marketing department funding needs to be increased. It is important to enable smooth transition while expanding and change should be managed carefully to be successful. Also, the policies and procedures in the IT plan should comply with the regulations. To conclude, IT and business collaboration is important in strategic IT planning. IT value should be understood by business and business needs should be understood by IT. At Modmeters, reengineering the existing systems, taking a departmental approach, satisfying the departmental needs and funding sufficiently will help to implement the two strategic initiatives.
Mckeen, J. D., & Smith, H. (2012). Delivering Value with IT (2nd ed). New Jersey: Pearson Education, Inc.
Ferris, B. (2012, June 12). How to Measure the Business Value of a Project. Retrieved February 17, 2015, from http://cobaltpm.com/measuring-business-value-of-a-project/