Schmidt Co

A Case Analysis
Introduction

Case Facts
$ 40
million
Annual turnover
10,000
SKUs of different items
distributed
18 year
Old Unreliable &
Obsolete inventory
management system
A new information
system replacement
project over shot budget
by
$50,000
4 month
Old Project

3 months
Behind Schedule
DTech
A well-known and widely
used system in Europe
was selected
Schmidt co is automobile
parts distribution
company in the process
of converting its manual
based inventory
management system into
automated one.
Q1. Why is the
decision facing
John Schmidt
is a difficult
one?
#1
The company has
already invested
$600,000 in the
software development
#2
The HR support from
D-tech and in Schmidt
both has been below
par and has affected
the companys
conversion process
#3
The company had no
backup plan ready in
case of original plan
fails. Further delay and
failure may jeopardize
its business operations
#4
The company has
come very far in
conversion and doesnt
know what to do next
in terms of decision
making?
#5
Despite his fathers
caution and internal
employees resistance
this was by far the
biggest CAPEX
company has ever made
Q2. What aspects of PrOACT+
framework presented in Smart
Choices are most relevant for
Johns decision problem?
How should he go about making
his decision?
For John the most relevant aspects of PrOACT would be to evaluate
Alternatives and arrive at Trade-offs that he needs to make between time,
cost and scope to finish the project on time. But while making trade-offs
he should not lose sight of the Objective of replacing Inventory
management system and consider the Consequences of his decisions.
The decision process should first set the clear goals followed by evaluating
different alternatives and their consequences and then by choosing from
the alternatives. Whatever decision he takes, he should also be ready with
back up plan in case thing dont go as planned.

Currently the activities are not time bound. Reallocation of resources, reducing the
scope and setting the strict timelines will help the project to gain momentum.
Hiring a new dedicated Project manager, though will add to cost but will help in
streamlining the development process
Q3. What is
Johns decision
problem?
#1
Managing Cost as
conversion project has
already exceeded time
and money budget by
3 months and $50,000
respectively
#2
Stopping the
conversion project or
dump DTech and turn
to runner up vendor
#3
Whom he should
handover the project
before he leaves for
executive program at
Harvard Business
School
#4
How to deal with
employee trainings and
gaining expertise in
using the new system
#5
Dealing with virus threat
over the network and
setting up new
hardware on network
was getting expensive
Problem
O
A
C
T
Q4. What
should be his
objective?
#1
Make a tradeoff by
making quality as
constrain, time as
enhancer and cost is
acceptable
#2
Focus on finishing the
implementation of new
system as soon as
possible
#3
He should work on
reducing the
distractions or delays in
terms of network
related issues to
prevent any blockers
#4
Focus on improving in-
house IT expertise and
motivate employees to
work harder to finish
the project
#5
Overcome the limitations
of old Inventory
management system and
improve operational
efficiency
Problem
Objective
A
C
T
Q5. What are
his
alternatives?

#1
Go for runner up
Vendor
#2
Hire a new project
Manager and IT
consultant to work in
tandem with DTech
consultants
#3
Continue with Dtech but
in more stricter & agile
mode with more number
but smaller duration of
iterations and
modularized team
#4
Make David Goldberg
as CIO and give him
the authority to
manage and handle
the project as he is
extensively experienced
#5
Implement the project in
two phases and
prioritizing the important
features to be finished in
phase 1
Problem
Objective
Alternative
C
T
Q6. What are
the
consequences
of each
alternative?

#1
Further delay
Increased Costs
Increased Risk
Business Loss


Go for runner up Vendor

#2
Increased Cost
Better management
Quick Decisions
Expedition

Hire a new project Manager and IT
consultant to work in tandem with
DTech consultants
#3
Reduce/Maintain Cost
Reduce time overrun
Compromise on
Quality
Win-Win for both
Continue with DTech but in more stricter
& agile mode with more number but
smaller duration of iterations and
modularized team
#4
Additional Cost
Improved expertise and
professionalism
John can focus on other
strategic initiatives

Make David Goldberg as CIO and give
him the authority to manage and handle
the project as he is extensively
experienced
#5
Better decisions
Relatively better
quality
WLB for employees
Implement the project in two phases and
prioritizing the important features to be
finished in phase 1
Problem
Objective
Alternative
Consequences
T
Q7. What
should he
decide? Why?
#1
The company has
already paid $200,000
as down payment
going with any other
alternative will add to
costs
#2
Following the agile
methodology will help
in quick
implementation of new
system and reduce
costs
#3
Small modularized team
will help in better project
management and task
assignments. This will also
help developing the
expertise in respective
module over long run
#4
More number of
iterations will enable
the team to test
application frequently
and resulting in more
stable application
#5
Following agile the
team will also provide
daily updates on the
progress which will help
in close monitoring of
the progress
Problem
Objective
Alternative
Consequences
Trade-offs
John should go with combination of 2
nd
& 3
rd

alternative i.e.
Hire a new project Manager and IT consultant
to work in tandem with DTech consultants
&
Continue with Dtech but in more stricter & agile
mode with more number but smaller duration of
iterations and modularized teams