MDCM Inc.

(A): IT Strategy Synchronization

As a member of the MDCM executive team, given the information in the
case study we as a team were tasked to define the overall company
strategy, business goals and high level IT objectives.
MDCM Inc. corporate strategy is to run the company under one single
brand across all its subsidiaries geographically based.
The company needs to boosts it profits by increasing productivity, to
solve this requirement IT Systems and the implementation thereof needs
to be addressed. This is due to current lack in forecasting, scheduling,
inventory and supply chain problems. We need to match/ align the IT
objectives with the company strategy.
We want to be a market leader in the medical product manufacturing
industry and we want to increase our market share.
We need to reduce internal costs by identifying functional areas where IT
can be applied to assist in reducing costs, i.e. IT systems will replace
some of the workforce. The risk here is that currently we have so many
different / complex systems in place that that also leads to higher admin
costs. Not all of the staff understands all the systems. This leads to
previously mentioned lack in forecasting, scheduling, inventory and
supply chain problems. If one overall system is put into place, the
system will replace some staff members that is supposed to look after
these tasks and thus increase efficiency.
Sharing of information between various departments will improve the
services offered to our customers and that would ensure we meet the
customers requirements in a timely manner. This will also assist us to
acquire products at better prices because we will know what it is in stock
at our other facilities.
With the acquisition of other companies, we will be able to share
information between these companies to gain competitive pricing of
products over customers pricing and that would lead to an increase in
the selling price of our products and that would lead to a higher
profitability.
If we incorporate IT systems in the production of products we will be able
to increase the speed of the production which would lead to better
quality and standards.

Main business goals for the company is to reduce production costs

associated with the process of producing products, re-active and not
proactive i.e. ordering works on old information, different IT systems,
outdated hardware and software
Proper implementation of IT during the production process will also
reduce the maintenance costs.
Information flow/ communication between departments to receive timely
and up to date information. Identify the areas in MDCM where IT has
caused a lapse in information flow to ensure that of timely, accurate data
received to make correct decisions.
With all the different IT systems in play, training sessions should be
setup for the staff to get familiar with the systems and become more
efficient. With all these IT systems we should consider integrating as
many of these systems into one system if possible and reduce the
location of accessing all these systems (geographically based systems
should be centralized).
With the one system in place, the sales, finance and materials are
accessible by all (a standard infrastructure to be put into place).
The IT objectives after investigation, it came to light there are about 10
categories of systems / processes that requires intervention, different
hardware and software, different versions, legacy systems etc. We need
to consolidate all these systems in one centralized location and to one
platform (standard infrastructure).
A phased approached will be taken to invest in new infrastructure and
systems. Identify the most important systems in use and evaluate which
systems are going to be upgraded now to improve the issues currently
faced with regards to forecasting, scheduling, inventory and supply chain
problems.
A core IT team needs to be assembled to perform a requirement
analysis of what systems are needed and how to move ahead, setting
standards for integration of the different IT systems currently in use.
They need to look at how other subsidiaries will gain access to our new
system (geographically based in one location).
Regular meetings between the IT team and the management team must
be held to update all involved about the progress of project.

MDCM Inc. (B): Strategic IT Portfolio Management

You and your team are the ITPM executive committee working with the
CIO of MDCM. Based on the information given in this case and MDCM
case A, prepare a recommendation for the MDCM board. You may find it
useful to create a scorecard to evaluate each project and to compare the
projects using the Portfolio Application Model Matrix exhibit in the case.
You should also consider the approximate sequence for executing the
initiatives and may find that drawing a simple network diagram including
the dependencies is a useful tool for discussion. (Jeffery, 2006)
Evaluation of Projects
To remodel the IT structure of MDCM Inc. we need to focus on the
standardization of processes and increasing operational efficiency.
Due to the fact that the current systems are geographically dispersed
and running on different versions, MDCM is wasting time and
productivity, no coordination between subsidiaries when it comes to IT.
By standardizing the hardware and software, MDCM can implement a
set standard of computing platforms and email system. As mentioned
before this will be a long term phased approach to reduce costs and
maintenance.
When looking at the projects in question the following business
objectives* are recommended:
* Consolidate
* Increase overall scale efficiencies
* Single global company
* Focus on core competencies
* Customer Relationships
Once the IT design / structure has been upgraded MDCMs operational
efficiency will increase which will result in a competitive advantage in the
market by savings costs (projects relying on IT the procurement of stock
i.e. arriving on time and then products being supplied on time due to IT
systems being in place).

A quick delve into the initiatives:

MDCM needs to make information available to all subsidiaries,
networking will improve the quality of products produced because
sharing timely information between various departments in all
subsidiaries will add value (so if faults are found in the process it is
quickly relayed to all stakeholders in MDCM).
In the case study it has come to light that MDCM is still using a multiple
number of hardware platforms (LINUX, Windows NT, Windows 2000
etc.) standardizing on one operating system will reduce support costs
and maintenance costs and further investment in a set standard
hardware and software and train all staff on the same software will
enable them to understand and work more effectively with the system
(more productive workforce and our turnover will be bigger)
Storing the company data in a centralized networked database, for easy
retrieval and storage of data. The way you store the information and how
staff can access the data, will aid in decision making and adoption of
software that aids in decision making, will help the company gain
competitive advantage
A standardized messaging system should be put into place, the current
systems are outdated and running on different messaging platforms. If
we use one standard messaging system if will improve communication
channels to suppliers and customers and improve customer delivery.
Having an up to date website interface will add value to our products,
enquiries and orders can be placed online and our products list online
will be more accurate (up to date) and will contain more information
about products. The website will assist customers with online ordering,
online payment and self-service.

1. In Which Quadrant Does MDCM Fall? Why?

The Accenture IT governance model classifies companies using the
rate of change and the basis of competitive advantage. This framework is
helpful in offering an understanding of information technology adds value
to the organization. The two criteria create four quadrants, which include
efficient,

predictable

operators;

new

capacity

enablers;

responsive

solution providers; and information integrators. Efficient, predictable

operators are organizations having a low rate of change and compete
basing on operational efficiency. Information integrators refer to low rate
of change organizations competing using product/service differentiations
(Van Grembergen, 2004). Responsive solution providers refer to firms with
a higher rate of change competing using operational efficiency, whereas
new capability enablers refer to high rate of change firms competing using
product/service differentiation. Using this framework, it is evident that
MDCM falls under the information integrator quadrant.
MDCM is an information integrator because its business model is
characterized with low rates of change and emphasis on the product and
service differentiation, which is used as a basis for achieving its
competitive advantage. It is apparent that changes in growth strategies
adopted by the company are slow-rate, usually implemented after long
periods. In addition, MDCM uses information to improve its decisionmaking

framework

and

develop

new

products

and

services.

The

differentiation strategy by MDCM is evident by the fact that the company

was renowned for its ability to produce custom-made versions of
equipments

for

unique

applications.

The

optimized

designs

for

manufacturability by MDCM were used to lower manufacturing costs,

which provided an opportunity through which the company established its
competitive advantage. This is because optimized designs served to
increase customer satisfactions, and ultimately competitive advantage.
2. Define, Based On the Information Given In the Case, the Overall
Strategic Goals of This Firm at This Time

The first strategic goal of MDCM is to operational costs; currently,

the company has a bloated working capital and the least cost efficient
structures in the industry. This implies that the company needs significant
operational and cost improvements. The second strategic goal of the
company is to increase its revenue and profitability; it is apparent that
MDCM had faced five consecutive quarterly losses because of the lack of
an effective cost and operational improvement strategy leading to
shrinking margins for eight successive quarters. The third strategic goal is
to improve its operational efficiency through enhancing information flow,
which will in turn facilitate employee productivity. The fourth strategic goal
is to align the companys IT initiatives with the firms corporate strategy.
There is the need to have an understanding of how IT plays a significant
role in the achievement of the strategic business goals.
3. Define the Competitive Environment in Which the Firm
Operates
The competitive forces analysis helps in assessing the forces that
influence the competitive intensity and ultimately the industry profitability.
Porters five forces analysis makes use of five core areas including the
competitive rivalry, the threat of entry, the power of suppliers, the
bargaining power of buyers, and the threat of substitutes (Wheelen &
Hunger, 2008).
With regard to competitive rivalry, MDCM faces intense competition from a
large number of small and efficient rival firms that use to low internal
costs for competitive pricing, unlike the case of MDCM that has high
internal costs. The second factor that intensifies competitive rivalry for
MDCM is a low level of differentiation, as evident with the increase in the
number of foreign competitors having global capabilities that MDCM could
not match. This also indicates that the strategic stakes are high in the
industry, which served to intensify rivalry when MDCM began losing its
market share. A low level of differentiation is evident in the case of MDCM
pioneering partnership arrangements with its customers to share rewards
and risks, a model that has been commonly adopted by competitors; this
serves to constrain its brand identification. However, high switching costs

in the products helps in reducing competitive rivalry since customers

cannot freely switch between products because they are constrained by
costs (Williamson, 2003).
The threat of substitutes refers to the impacts on competition associated
with the possibility of similar products outside the industry. With regard to
the threat of substitutes, it is evident that there are no substitute products
to lower the profitability and attractiveness of the industry and impose
price levels. It is apparent that MDCM faces minimal threats of substitute
products and services because of potentially high buyer switching costs,
perceived degree of its differentiation, and no substitute products
available currently in the market.
The buyer power refers to the capability of customers to exert pressure on
the firm. In this regard, it is apparent that buyers are powerful because
they are concentrated within a significant market share and they purchase
a considerable percentage of the output. This is evident by the fact that
MDCM lost a significant part of its market share and profitability when it
lost only four of its ten largest customers during 1998-1999.
The supplier power refers to the influence that suppliers exert on the
firms strategies for growth. In the case of MDCM, the suppliers are weak
because the buyers are concentrated and consolidated, posing a
considerable backward integration threat by the purchasers. The threat of
new entrants entails the impacts on competition posed by new firms
entering

the

industry.

MDCM

is

multinational,

implying

that

its

competitiveness depends on the different government regulations. In

addition, the firm faces significant competition from new foreign
companies entering the US having more capabilities than MDCM.
4. Based on your Competitive Force Analysis; Determine the
Strategic Response(S) MDCM Should Employ to Address the Most
Critical Strategic Threats Identified in Question 3
The strategic responses that MDCM can deploy should focus on
lowering prices to attain competitive advantage. This requires MDCM to
reduce its operational costs and exploit this position to adopt a low pricing

strategy in order to have an edge over its competitors. The second

strategic

response

entails

adopting

high

degrees

of

product

differentiation, which can be used as a platform for establishing

competitive advantage over rival firms. Product differentiation will also be
helpful in addressing the threats posed by buyer power. The third strategic
response entails establishing good relationships with customers by
ensuring that the firm meets the demand of customers in terms of quality
standards, price and quality specifications.
5. Finally, Based on Your Analyses Above and the Information
Provided in the Case, What are the Critical Tactical Objectives for
MDCM
It is apparent that poor information flow is a significant issue
causing all the problems in the firm; this implies that the foremost critical
tactical objective for MDCM is to integrate IT in its strategic goals. The
second critical tactical objective is to reduce operational costs so that the
company can exploit this position to make use of a competitive pricing
strategy and increase customer satisfaction.

A decision to overhaul an entire information system of a company and replace it with

another requires critical assessment and consideration. At Mdcm Inc, the overall goal of
the restructuring of the IT is to establish a well coordinated unit that could successfully
and effectively deliver the IT capabilities of MDCM on a global scale (Mark, & Norton,
2006). Successfully restructuring the IT system would require that the differing
information systems standards utilized across the company are unified for easy access
and management (Mark, & Norton, 2006). Such modification and restructuring will
definitely affect the employees in the IT departments as well as the IT professionals some
of whom may require new training on how to apply the new systems in their daily duties.
Mdcm has only 195 IT professionals it would therefore be preferable if the company
determined the most crucial changes that should first be implemented. The company
also has a budget of 56.1 million dollars. It was however estimated that the entire
revamping process would require close to 175 million dollars (Mark, & Norton, 2006). It is
thus apparent that the company may not have the financial capabilities to implement the
entire project in one go.

ERP Implementation would be the first IT strategy to consider for implementation.

Adoption of the ERP system in the company will enable all the departments functions to
be integrated through simplifying of information accessibility and saving (Mark, & Norton,
2006). This system will save on time, energy as well as costs as the department will be
utilizing a single information system. The IT professionals will also be useful in
determining the most appropriate and effective mode of conducting business using the
new system. Since the project had already been begun continuation will not be so
difficult. Cost of consultancy can be cut by first looking it the various vendors available
and determining who is most affordable.
Atkins and his team had established twelve projects that they felt would be essential in
improving the IT infrastructure. Implementation of ERP will have covered other projects
mentioned such as consolidation of data centers and networks. Since ERP aims at
unifying the IS of the organization it will have achieved these objective by implementing
a single unit of data system. Unification of the system will also entail the standardization
of the server hardware and plat form. This would save the company millions in terms of
maintenance cost of the different platforms (Mark, & Norton, 2006). ERP implementation
will also strive towards streamlining and upgrading of the collaboration system.
Collaboration systems such as emails will be improved to allow for effective
communication across the company. Determining effective ways to manage internal
purchasing is another way of ensuring that costs are saved. This can be done through the
implementation of a system to consolidate such purchases.
The implementation of the information system technologies that will improve the overall
operations of Mdcm will be the overall objective of the company. The completion of the
ERP implementation process will go a long way ion streamlining most of the activities
suggested by the committee (Mark, & Norton, 2006). Integration of the numerous
functions and well as simplification of the information and communication systems in the
company is the overall objective. Thus by implementing EPR in phases to cater for costs,
the company will have achieved most of the twelve project listed. They include
consolidation of the data centers, standardizing the server and collaboration of
communication systems.