Opening Pandora's Box - Reflection

        I would still recommend an aggressive approach with Pandora’s technology. The conservative approach of pulling back, reducing headcount and having minimal investments are not a promising future. In my opinion, the pedal to the medal approach and the 3 emerging technologies provides motivation, determination and profitability for Pandora. Pandora must continue to be creative and unique with offering different ways to listen to music. I wouldn’t change the following bullet points below.  

• Continue to offer a free music service with an optional monthly subscription
• Continue to use the word of mouth marketing strategy (no significant marketing expenses)
• Continue to challenge the Copyright Royalty Board (Trying to Triple the licensing fees)
• Aggressive Path (3 New Emerging Technology products)

There must be an investment with the three emerging technologies.  As I mentioned, the three emerging technologies are a Pandora headset, a Pandora watch and the ability to watch free music videos. All three new products offer a new unique way to listen to music. A Pandora headset would be a great way to listen to music as other competitors wouldn’t match the product. The iNanos are heavy and don’t have a good track record with their ear phones. The Pandora headset provides convenience and easy listening with no technical interruptions. There is an opportunity to make $10 million in net profit within one year.

The Pandora watch is a creative way to partner up with Swatch. Pandora would add notoriety to their portfolio and the Pandora Swatch watch would add you as a household name. The ability to listen to music on a watch is unheard of and a great way to be creative. The Pandora watch would increase profitability with a $60 million net profit within one year.     

Pandora has an opportunity to provide free music videos to listeners and viewers. The ability to watch free videos is a similar approach with Pandora’s current model of listening to free music on the Internet. There is a major investment and a great way to significantly increase your net profits. I calculated approximately $292 net profit within one year! Your listeners have an opportunity to listen to free music and watch free videos!  

Pandora’s goal is for listeners and musicians to come together as one. I have identified new and creative ways to bring them together. The three emerging technologies gives you an opportunity to make $332 million net profit within the first year projections ($10 million in the headset, $30 million in the watch and $292 million in watching music videos on Pandora). I would take an aggressive approach and not look back. 

 I have a simple formula that helps identify the big picture.  Emerging Technology + Emerging Market = Significant Profits. I am looking forward to Pandora’s next action step.  

Microsoft Project

Joe,

I would recommend Microsoft Project for our accounts payable automation project coming this summer. Lotus Notes is outdated and is not providing as a good timeline resource.  It’s exhausting going back forth between Microsoft Excel, PowerPoint, Word and Lotus Notes. Microsoft Project is a one-stop shop for projects and it consolidates the different Microsoft programs into one main program.

          We weren’t efficient with time and we were over the budget by $150,000 during the credit card project. We spent an additional $100,000 in consultants and another $50,000 in overtime with staff training.  We were not accurate with time and relied too much on the Lotus Notes calendar. I don’t want another timing debacle similar to the credit card project. The CFO came into my office last week and encouraged me to improve our time management in projects.   In my opinion, Microsoft Project will give us the opportunity to make sure we don’t go over $150,000 in our budget and that we stay focused each day on our daily tasks.  Microsoft Project provides us with a significant impact in visibility and accurateness for achieving deadlines in a timely manner. I want to ensure we save time and money for the a/p automation project.

         Microsoft Project is a one-stop tool that is neat, organized and efficient for future projects. The built in features gives you the various different charts to see your reports. The Ganntt chart is where you input your timeline data and it gives you the visibility of the task.   You can insert a column and begin your timeline. It gives you an endless amount of features using the drop down field columns. For example, there is a % complete column that shows how far complete you are with a project. The % complete drop down option is great way to monitor your project. You have the ability to take notes and there is a sticky notepad symbol that you can add additional comments. The cost drop drown feature is another great way to ensure you are on target with the budget. The budget shows a comparison to actuals in a Microsoft Excel format. You can create charts and diagrams with the spreadsheet analysis making it convenient using one program instead of Excel and PowerPoint. This analysis will be great for the upcoming a/p automation project as we can monitor each week and see how committed the a/p consultants are achieving the deadlines. The goal is update the actual data daily and not go over the budget. This will be a key area where we could make a significant improvement. I’m ready and eager to get my team and the solution up and going within three months. Please open the attached Microsoft AP Automation file as there are 5 easy steps to view the project summary into 1 sheet.

1. Click Projects
2. Select Reports
3. Select Overview
4. Select Project Summary
5. Print

Please see the $150,000 cost savings below.
Total Yearly Cost Savings – A/P Automation Project

•          $100,000 in a/p consultants –Microsoft Project provides new visibility to projects.                                
•           $50,000 in training – The structured timeline will require no overtime.    

       We can use Microsoft Project for other tasks such as electronic time sheets for the entire company. We don’t have a timesheet policy and HR is looking for a timesheet software solution. HR should stop looking for an HR software and we can utilize Microsoft Project as the replacement. We have a significant expense in overtime and Microsoft Project would solve our problems. This will modify our paper archaic timesheets and will serve as an electronic timesheet. I can partner up with the HR director and show the benefits of Microsoft Project. Microsoft Project is more than a project timeline and we need to be creative with this application. We could deploy Microsoft Project onto employees’ laptops and the application would be installed within 45 minutes. There would be a training demo on Microsoft Project for the new time sheet procedures.   We could save $250,000 in HR software and maintenance!! I will have visibility in overtime for fulltime employees. Also, I can keep track of the part time employees compared to receiving a monthly invoice from Robert Half. I created my employees in the Timesheet file and I have access to view my employee summary. Please open the attached Timesheet file as there are 5 easy steps to view the weekly payroll expenses. 

1. Click Projects
2. Select Reports
3. Select Overview
4. Select Project Summary
5. Print

Please see the $450,000 cost savings below.

Total Yearly Cost Savings – Microsoft Project Company Timesheet

• $250,000 – Software/Maintenance. Why do we need new complex electronic timesheet software from a HR vendor? The HR Software is going to 6-8 months to implement. Also, do we need to pay another $50,000 a year in yearly maintenance to the HR vendor?
•  $200,000 –Company overtime. Microsoft Project’s electronic timesheet will serve   as                a better visibility tool compared to monthly P/L’s ($300k o/t savings - $100k Microsoft Project Users = $200k).   

I am ready to discuss Microsoft Project since we have Microsoft already installed on our laptops. The IT department can install Microsoft Project to our laptops quickly so we can get started with organizing the project timeline. I want to ensure Microsoft Project will give our team the ability to meet tasks timely and accurately so we don’t go over budget compared to the credit card project.  Microsoft Project’s one-stop feature will make all of our jobs easier and efficient. I am ready to show the HR Director    that Microsoft Project is an electronic timesheet feature for the entire company. I want to show the CFO that I am ready for the/p automation project and I will be cost effective, utilizing Microsoft Project as a timeline resource. A $600,000 cost savings reduction within a year is a great story to build on to my resume.  

Opening Pandora's Box

Key Problem

Pandora is starting to see major success in December 2007. The users are growing to 8 million and online hours were growing at a staggering 50% year on year. Pandora is projected to see a positive cash flow in 2 years. There is a potential challenge that Pandora had to face with the Copyright Royalty Board in Washington, DC.  You are  facing serious threats in licensing fees and trying to find a balance of risk and reward. Tim Westergren, your chief strategist and founder of Pandora has to make an important decision besides the potential increasing licensing fees on what strategic path to choose:   A conservative path or an aggressive path. The conservative path would pull back on the growth levels, reduce headcount and have minimal investment in the Pandora product. The aggressive approach is a pedal to medal approach, which would add headcount, significant investment and financing and take advantage of the first mover advantage. The key problem is what strategic path will be the most efficient for Pandora’s future growth.

There are 4 major distribution channels: traditional radio, satellite radio, CDs and digital music. Pandora will have a technological advantage over these alternatives.

Traditional Radio

            Traditional radio is a free music broadcast for FM listeners. The radio stations earn advertising revenues based off of advertisements. In recent years (2000-2005), traditional radio has been on decline for several reasons: Listeners being annoyed with too many advertisement's and with technology. Listeners found new ways to listen to music using portable music devices like MP3 players.    

Satellite Radio

            Satellite Radio is a subscription based way to listen to commercial free music, sports and news. The subscription is approximately $12.95 per month and is dominated by two companies XM and Sirius. The two companies had a $6 billion accumulated losses by the early part of 2007.      

CDs

            Compact Disc (CDs) consist of a pre-recorded 10-14 songs or single songs CDs.  The CD comes with a CD booklet with pictures and song lyrics. CDs are not free like traditional radio. In 2005, the average price of a CD was $14.92. CDs like traditional radio are seeing a decline due to today’s technology. Digital music is a new way of listening to music in a convenient and user-friendly way.        

Digital Music

            2005 is the year when the US digital music sales doubled reaching over $770  million. Digital music growth is the reason the CD business declined. Digital music is based on either a la carte single songs or monthly subscriptions. iTunes has a la carte for $.99/song and Rhapsody $9.99/monthly subscription. The digital music business is growing significantly however; Pandora has a different philosophy. I am in favor of your free of charge philosophy of listening to music and an optional monthly subscription.     

Pandora – Recommendation

The other four distribution channels (radio, satellite radio, CDs, iTunes/Rhapsody) all have cons and they don’t have the unique opportunities that Pandora offers. In exhibit 7, there were 4 attributes that Pandora was favorable (the colored circles). The pros were:  Variety, low price, ability to find new songs and interruption-free listening. There was one major con (no color in circle) that was to play specific songs on demand. In my opinion, I wouldn’t change to a la carte for specific songs on demand for listeners. I don’t think it hurts the value of the Pandora product as listeners like the convenience of music listening.  Pandora is the preferred digital way to listen to music compared to the other distribution channels.  Pandora offers a free, efficient and user-friendly way to listen to music on the Internet. Other digital music services do offer similar ways to listen to music but to pay for songs is not favorable and is a major difference (iTunes $.99/song and Rhapsody $9.99/month).  

 I wouldn’t change the marketing strategy as well as the word of mouth strategy has been working well over the years. As it was mentioned to me, Pandora’s goal is to create new ways for musicians and listeners to find each other. The aggressive path is creating three new technological products that will accomplish Pandora’s goal. I would recommend the following four bullets below that will not only increase profits but make Pandora a household name.   

• Continue to offer a free music service with an optional monthly subscription
• Continue to use the word of mouth marketing strategy (no significant marketing expenses)
• Continue to challenge the Copyright Royalty Board (Trying to Triple the licensing fees)
• Aggressive Path (3 New Emerging Technology products)

Pandora’s Emerging Technologies

I would recommend three new products for new and existing customers that would significantly impact today’s music word: a Pandora headset, a Pandora Watch and creating the ability to watch music videos on Pandora. I see walkers and joggers struggling with iNanos and their headphones. The iNanos are neat and can store up to 1,000 songs but the issue is iNanos are not convenient and causes technical issues. iNanos are heavy and are a liability as they could break if you drop them.  Also, customers need to buy additional headphones since the iNanos headphones are not reliable and are a weakness in their product.  The Pandora headset would be an exciting concept where users can listen to Pandora on a mobile wireless headset. The Pandora headset requires no wires and essentially goes around your ears similar to a wireless mobile phone headset. There are existing products that have traditional radio headsets so the research and development wouldn’t require an extensive amount of time.  Pandora wouldn’t require a significant amount of time for production as the main components are already enabled with through computers, tablets and phones. You can charge $50 for a headset compared to the iNanos $60.  You are reducing a price on the new technology competing head to head with Apple. Overall, the Pandora wireless headset has an advantage over Apple’s product: The Pandora’s headset is less expensive, comes with no software, music downloading and doesn’t require purchasing additional headphones.  

First Yearly Projections:

$50/Pandora Headset * 1,000,000 new customers = $50 million (revenues)

$40/Headset costs to make * 1,000,000 headsets =   $40 million (expenses)

                                                    Total:     $10 million (profits) 

The Pandora watch is another excellent idea to add to Pandora’s new collection of IT products. The Pandora watch is a unique, fun and exciting way to listen to music. The Pandora watch is light, modern, hip and easy to listen to music in a new efficient way. Pandora would partner up with an established watch company such as Swatch. Throughout the years, Swatch has targeted a younger population similar to Pandora. This would be a good fit for both companies to expand growth and revenues. Swatch has the expertise with their watch functionality and Pandora adds a new unique way to listen to music on a watch.  You would be able to even set the time to listen to your favorite stations during a particular part of the day. For example, you can program the Lionel Ritchie station in the morning and Best Hits in the afternoon. The Swatch Pandora watch would sell for $60 for the watch, watch charger and music. The watch would need a charger similar to mobile phones. We guesstimated a $30 million increase with the Pandora watch.

First Yearly Projections:

$60/Pandora Watch * 3,000,000 new customers           = $180 million (revenues)

$30/Watch costs to make * 3,000,000 new customers   =  $90 million (expenses)

$20/Swatch royalties’ fees  * 3,000,000 new customers =  $60 million (expenses)

                                                     Total: $30 million (profits)    

 

Pandora’s customers like the free convenience of listening to music but watching free music videos is an even a better concept. It’s the same concept as listening to music but you would be seeing the music videos for free. It would have minimal commercials like the current process with listening to music. The most profitable aspect of this alternative concept is earning the advertising revenue in both segments of the business. Your company would earn both advertising revenue in listening and watching music!

First Yearly Projections:

$50,000/Commercial * 9,125 Total (25 commercials/day *365 days) =    $456 million (revenues)

$36/Yearly Paying Subscriptions ($3/month)* 1,000,000 new customers = $36 million (revenues)

$20,000/Licensing Fee for Music Video  * 10,000 Music Videos    =       $200 million (expenses)

                                                                                                                                                                                            Total:         $292 million (profits)    

Conclusion

            A free product is unheard of in today’s market. You have done an outstanding job with your Pandora product revolutionizing the free music world while earning advertising revenues and subscriptions fees. You have done an excellent job with the word of mouth marketing strategy and I would continue to use the word of mouth as a free marketing strategy.  There is a significant amount of technology that I could add to your platform with three new ideas: a Pandora Headset, a Pandora Watch, and watching free music videos on Pandora. I recommend all three new products that would increase your revenues and the future is an aggressive path. In my opinion, Pandora should use a pedal to the medal approach as this will generate significant funds. You have the potential to make $332 million within the first year projections ($10 million in the headset, $30 million in the watch and $292 million in watching music videos on Pandora)!  

            I am available to discuss these great emerging technologies this week if you would like to discuss more in detail.                                 

Bombardier Reflection

            The consultants reviewed the second implementation on a green, yellow and red post implementation rating. The Dynamic Consultants feel that a green rating was accomplishing the goal effectively, yellow rating needed some fine tuning and red needs a significant improvement. There were four areas broken down in executive management, project management, knowledge transfer and adoption.    

I agree with the consultants as Bombardier needs improvement in project management and significant improvement in knowledge transfer. I would still recommend developing Key Performance Indicators (KPIs). This was mentioned as a red rating and an area of concern in project management. Employees need to be aware of inventory reduction and costs. Bombardier’s management must show monthly KPIs to their staff, otherwise, the employees don’t see the value of the ERP implementation. For example, the Mirabel plant had a significant reduction in $1.2 billion in inventories within the first year of Go-Live. The KPI inventory reduction should be communicated throughout the plant on a monthly basis to the staff. This is a major accomplishment for the plant and there must be awareness of this outstanding achievement. The ERP KPIs will only boost morale within the department. These positive results will allow employees and management continue to build rapport.       

I would still recommend making significant improvements in knowledge transfer with proper training and eliminating the legacy systems. The consultant training was not effective and power users struggled in the second implementation. I agree with the Dynamic Consultants that additional full-time headcount would be needed since the outside consultants were not adding value. Two full-time SAP specialists on each site is a great recommendation compared to the inadequate consultants.  I would still suggest utilizing the Mirabel plant as a resource. The Mirabel employees can cross train the next plant with their knowledge transfer. Also, I would recommend eliminating the legacy systems for each site. Employees should be deactivated from the legacy systems after each site goes live to ERP SAP.  The Dynamic Consultants did an excellent job with providing the best practices. This will make the ERP SAP third implementation a successful project.   

Dr P. – I attached 2 of my KPIs from my ERP system that I prepare to my staff.

                        1^st KPI –How long does it take for my team to log invoices.

                        2^nd KPI – How many a/p checks are being issued. The goal is to convert to ACH payments.   

Ubuntu-Tech Tool (Small Candy Business)

Dear Dad,    

     I wouldn’t recommend Ubuntu to corporations but I would recommend Ubuntu to mom and pop businesses for an operating system. A small business doesn’t have a big budget so why spend money on Windows. After downloading and researching Ubuntu, I would propose Ubuntu to the candy business (my father owns a small candy shop). There are several reasons why I recommend Ubuntu to the candy business: it’s a free operating system, easy installation and user-friendly for the average user.

    I can get an older computer from home and we can install Ubuntu. Ubuntu would help the business with the daily financials. You no longer have to keep track on paper for the daily transactions. After 45 years, you will have the visibility on the computer free of charge. Ubuntu Cal is a spreadsheet that keeps track of your daily figures and we can see the seasonal trends. Ubuntu Cal is useful to monitor the seasonal trends throughout the year. Also, you can create an invoice template using Ubuntu Cal. This would be positive for business owners and make things  efficient for the day-to-day business activity. You no longer need the hanging calendar on the wall for daily and weekly tasks. You can use Ubuntu's calendar as it this will make it easier for you to manage your daily tasks.

    Ubuntu’s impact would be positive for the Caramel Shop.  In my opinion, it gives small businesses an opportunity to grow. The open source feature allows you to customize the operating system as you grow. You don’t need all of the bells and whistles like Windows and Ubuntu is a perfect fit for small business.

   The free operating system makes it convenient for the average user like the candy shop. I was going to stop by the candy shop to discuss Ubuntu more in detail as this free operating system will help increase your candy business.

http://www.yelp.com/biz_photos/caramel-shop-ocean?select=Wfh2hGWv_aoURojCFowTUA#JNqBFogZuR4wx6-PAR6sPA

http://jimsmarketingblog.com/2013/05/18/ubuntu-for-business-highly-recommended/

Bombardier - ERP Implementation

Key Problem

In the Bombardier study, Bombardier Aerospace is the third largest designer and manufacturing aircraft company in the world. Bombardier Aerospace reported to make $8.2 billion in revenues which is 55% of Bombardier Limited’s total revenue in 2007.  Bombardier is using a legacy system since the early 1990s known as the Bombardier Manufacturing Systems (BMS).  BMS is based on a MACPAC platform, which is starting to show its age as an insufficient solution. Bombardier has made several acquisitions throughout the years and the MACPAC platform is making it difficult for the future development of the company.  The Vice President of Operations and Project Sponsor is aware of the aging MACPAC platform and has a vision to make an efficient upgrade so Bombardier can be a ‘One Company’ philosophy. The key problem is Bombardier Aerospace needs to significantly improve their low visibility of inventory and lack of integration within the company.

ERP I - Implementation

            Bombardier Aerospace tried to make a significant technological improvement with an Enterprise Resource Planning (ERP) system. An ERP application provides one platform for inventory, purchasing, procurement, customer service and finance. The first attempt for the implementation of ERP system project was not successful.  The ERP project was discontinued in 2000 and spent a substantial amount of $130 million in sunk costs. There were several reasons why the ERP implementation was a failure: Inappropriate businesses process, outdated company vision, a weak sponsorship and insufficient involvement of employees. In my opinion, Bombardier didn’t have best practices for the ERP implementation as there was no structure, loyalty, organization and leadership for the IT project. The Bombardier Aerospace ERP best practices should have been developing the inventory management, integration, formal employee training, price consistency and a master supplier listing.     

ERP II -Implementation

            As you may know, the second ERP implementation was started in 2001 by a group of senior managers from Bombardier Aerospace’s Irish facilities. The senior managers developed the Bombardier Manufacturing Information System (BMIS). BMIS was a motivated realistic proposed plan to achieve project goals. The BMIS project was to have a wider ERP strategy and focus on the processes that support manufacturing, inventory, procurement, finance and engineer data. The main reason the ERP implementation failed the first time was not having a detailed management planning solution. Also, one of the BMIS objectives was to reduce the headcount for clerical roles since the processes are automated and not input manually. The ERP system would eliminate paper as most of the material would be automated.  Employees could focus on more analytical tasks rather than administrative tasks. The SAP enterprise system was chosen as the ERP system for Bombardier Aerospace. There was value for deciding to use the Mirabel plant as it is manufacturing plane site. The CRJ700 model plane is manufactured at this location and the jet plane is Bombardier Aerospace’s potential growth in the future.  The one site implementation approach is a more conservative approach which is needed for a large scale ERP implementation.  I agree that big bang theory is not the best approach and would be more challenging for the company. I commend that way the implementation was structured using the Mirabel site as pilot with integrating testing, training and Go-Live. Once SAP implementation was fully completed, the cost savings was extremely favorable within the year. There was a significant reduction in $1.2 billion in inventories within the first year of Go-Live. Employees’ attitudes changed for the better as the ERP system started to make their job easier and more efficient. In my opinion, the second ERP was successful but there is room for improvement for the third ERP implementation.  

ERP III – Implementation

            After reviewing a memo from an executive, I will identify the ERP SAP best practices and bring the necessary world class standard for the implementation project. The second ERP implementation was a success but I want to ensure the third implementation will be flawless. There are several action steps during the second ERP implementation that I would continue to support for the third ERP implementation: BMIS, One-Company (Integration) and less Consultants. 

  In my opinion, the BMIS functional strategy is one of your strongest assets to the development of the ERP implementation. I would continue to utilize the BMIS philosophy as it provides the right focus on the Bombardier’s functional processes. BMIS focuses on the functional processes, such as: inventory management, manufacturing, procurement and finance. BMIS shows a detailed analysis and structure to implement thoroughly and effectively. I do support the VP of Operations and Project Sponsor’s One-Company approach. It is necessary to have all checks under the Bombardier name and have an integrated system. I am in favor of less third party consultants and I do like the ratio of employees to consultant (1:10). Employees can get frustrated with too many consultants explaining the processes and can be challenged with a new ERP implementation. There will be a better working environment with fewer consultants.

            I would recommend 4 areas to make improvements so your team can learn from the mistakes from the second implementation: training, eliminating legacy systems, processing purchase orders and Finance. There were several opportunities to improve your training program. The third-party consultants didn’t provide the proper training material and the staff expressed dissatisfaction with the training program. At this point, I wouldn’t recommend training from a third-party consultant as the Mirabel plant is your training material. The BMIS team and the Mirabel plant users can provide a formal cross training program during the new ERP implementation. The Mirabel employees can provide feedback to the new users that the ERP system has saved them a significant amount of time.  Your employees will learn from each other, and it would boost morale.         

There were users after the Go-Live from the Mirabel plant that were using the current legacy systems. I would recommend discontinuing the ERP user from using the current legacy systems. In my opinion, the employee isn’t adding any value and this is not an effective way of learning a new system. The VP of Operations and Project Sponsor’s should send out an email to the managers and not give permission for users to use the legacy systems. I would encourage managers to send out a problem list to the BMIS project team so they can problem solve for any new issues in SAP. 

There were challenges with processing purchase orders during the Mirabel implementation. I encourage revamping the purchase order process as vendors are either receiving too many faxes or not receiving purchases orders.  SAP was automatically sending fax purchase orders to vendors, causing problems within the MRP engine. Suppliers were receiving too many faxes every time the MRP engine was being updated. At this point, ERP SAP has the capabilities to email purchase orders rather than faxing a PO to your vendor. It was unacceptable that the BMIS team was printing, stapling and mailing purchase orders to vendors for three weeks. Also, the BMIS team should create an IT audit to ensure vendors are receiving POs in a timely manner.         

Key Performance Indicators (KPIs)

In my opinion, Key Performance Indicators (KPIs) are an excellent way to monitor your goals and improve your business. Once the third implementation of ERP SAP is installed, I would recommend utilizing KPIs on a monthly basis. ERP systems can provide a plethora of KPIs and you can choose what KPIs are most important to your department.  There is a significant amount of opportunity to improve your trade working capital (inventory + trade debtors – trade creditors). For example, Bombardier Aerospace has done an outstanding job with a one-time reduction of $219 million reduction in inventory costs. The reduction in inventory costs can lead to other financial opportunities for your company. Overall, KPIs give excellent visibility for achieving goals within your organization.  

Conclusion

            SAP is creating an effective and efficient solution for your inventory and integration problems. An ERP implementation can be successful with the proper vision and dedication to the system. Management needs to be confident in their product and encourages users there is a benefit to their daily workload. Bombardier Aerospace must emphasize that ERP systems give you an upgrade and an opportunity to grow the business. In my opinion, it’s time to eliminate the outdated legacy systems and look to the ERP system as a resource of future growth.  ERP systems provide the following services better than legacy systems in the following: organization, inventory visibility, purchasing, customer service, finance, employee morale and function control. The Mirabel ERP implementation contributed to a $1.2 billion cost saving reduction which is impeccable! This will give Bombardier additional cash flow, improve Bombardier’s balance sheet and make potential company acquisitions.  I would eliminate the legacy systems completely and replace them with the ERP SAP.

The ERP SAP system would be just as efficient as the design of your aircrafts. The CRJ700 jet plane needs an engine to fly with power and speed and the wings to bring control effectively to the aircraft. The ERP SAP system will bring a fast and powerful one platform solution and provide an effective solution with integration, inventory, purchasing, sales and finance.

           

iPads-Reflection

            I recommend iPads for the detailers (sales employees) when the laptop leases’ end. The laptop leases will expire in a year and half. This would be a sufficient amount of time to make the necessary functional requirements. New technology requires time and dedication to make a significant step on improving technology for the sales team.  I do like Bill’s enthusiasm regarding iPads, but there must be research, structure and organization to implementing a new technical product. There would be a timeline with three different phases of implementing new iPads (Development, Pilot and Production).

The functional development of iPads is to have security, accessibility, efficiency and convenience for the users. I would recommend purchasing Citrix Receiver software with iPads to make it compatible with your system. Citrix Receiver is an easy-to-install software client that lets you access your applications, desktops and data easily and securely from any device including smartphones, tablets, PCs and Macs. Working with a Citrix-enabled IT infrastructure, Receiver gives you the mobility, convenience and freedom you need to get your work done^[1]. Citrix Receiver provides instant secure, single-sign on access to all Windows, SaaS, and internal web apps or entire Windows desktops for apps. not immediately accessible, you can kick off an automated workflow to get manager approval, quick access, and get back to work^[2]. The Citrix Retriever is $3,200 for 15 users ($213/employee) and does provide 1 year of maintenance. In  my opinion, the cost is an immaterial amount for the iPad ($1,200/employee) and Citrix ($213/employee).

I like the idea to switch 2,500 sales representatives to iPads but I suggest using 1 out of the 4 regions as a pilot group. I would recommend 100 users in the Northeast region. The 100 users would be an excellent resource to see the return on investment (ROI).      

I believe it’s important to start small to see the pros and cons of iPads. There will be a learning curve for Amrahp employees when rolling out the iPads. The pilot region would take 3 months and they can provide feedback on iPads to the company on whether this is an efficient decision. Once the pilot group is doing well, I would present the iPads to the rest of the region. Each region would be a phase after a 3 month implementation program and the 2,500 sales employees will be on iPads within 1 year.        

There are several pros for the sales representative that will make it a beneficial function. I agree with Bill that it would be more convenient for detailers and iPads are lightweight. The iPad provides a quick and efficient process for the detailers with using a touch screen during the sales visit.   The detailers (sales representatives) can provide a demo to the doctors to see the value of iPads. iPads are less prone to viruses and malicious software compared to laptops. The iPads are also easy to upgrade compared to laptops.

There are several cons with iPads such as a learning curve, storage restrictions and the current infrastructure would need support. The 2,500 detailers will need training to learn how to use a touch screen. There is no external storage such as a standard USB and a battery isn’t easily replaceable. The current infrastructure needs support like Citrix Receiver.         

            The iPad pros outweigh the cons as iPads are the future for the medical field based on the convenience of bedside work.  There was a survey with small and medium-size medical offices. Of the small- and medium-sized medical and dental offices surveyed for the report, 76 percent said they intend to buy tablets over the next 12 months^[3]. According to the report, most of those looking to buy tablets want an iPad, which is quickly becoming the eponym for a tablet computer, the way the iPhone has for smartphones and the iPod for digital music players^[4]. The surveys are in favor for iPads in the medical field and I recommend them to replace the heavy duty laptop.

Once the sales team goes live for a year with iPads, Amrahp could eventually switch to iPads for the entire company as a long term IT goal...  

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^[1]  http://www.citrix.com/products/receiver/overview.html

^[2]  http://www.citrix.com/products/receiver/overview.html

^[3] http://www.dotmed.com/news/story/17765

^[4] http://www.dotmed.com/news/story/17765

Accenture - Reflection

             After reviewing the Accenture alternatives, I would still recommend SAP and COBIT 5.  In my opinion, SAP provides as an excellent one-platform enterprise application and COBIT 5 provides an excellent tool for an IT governance application.

COBIT 5 principles will ensure that Accenture is receiving a high level of IT governance. COBIT’s 5 principals are: Meeting a stakeholder’s needs, covering the enterprise end-to-end, applying a single integrated framework, enabling a holistic approach and separating governance from management^[1]. One of the key areas where you can improve, with the 5 principals is separating governance from management. COBIT 5 is a more formal process than the existing IT governance and provides a segregation of IT duties for management. For security reasons, there needs to be a separation of duties for management and they shouldn’t be auditing projects. There is too much manual input done by the sponsors and IT managers. There is too much time being invested at the IT management level and they don’t have the time. Exhibit 7 is an example where you can save time, money and get a high level of productivity from COBIT 5. COBIT 5 provides IT auditing, effective consulting, security and separation of duties within the IT infrastructure. COBIT is an affordable application and it can add value to management so they can focus on daily tasks.

COBIT 5 provides you with a new IT governance that will allow Accenture to be recognized as a world class organization!

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^[1] http://www.isaca.org/COBIT/Pages/default.aspx

Zara - Reflection

             I would still recommend my third alternative to upgrade the Point of Sale-POS terminals with the Microsoft OS-Operating System. There are too many pros to upgrading that it shouldn’t be a low priority: Increase revenue, better visibility with inventory and sales and better form of communication between stores.   Also, I would still recommend implementing purchases on the Internet. The Internet is an undiscovered resource for Zara and the upgrades will only increase revenue and boost employee morale.

The POS and OS IT upgrade can be a major financial investment for Zara’s business as well. As I mentioned in the earlier memo, you have an opportunity to increase your net profits by 11.8 million Euros in the 2003 year (15 million Euros in additional profits – 3.2 million Euros in additional expenses = 11.8 million Euros Gain)! The cost of hardware, software, and installation goes on your balance sheet financials as fixed assets.

Also, I would still recommend creating a new IT department. I believe the IT department would add value to Zara’s organization. There is a 1.2 million Euros  salary expense to go with this new department but you will see a substantial increase in your revenues. In my opinion, if there is no investment in staff and technology, there is going to be a lack of IT creativity. The lack of IT creativity will allow competition to take away business.       

Overall, the POS hardware and OS software upgrade accompanied with the Internet will only drive your business to grow efficiently and effectively. The set up time won’t require a significant amount of time to implement and the upgrade transition is not difficult. As it was indicated to me, Zara managers want to look up inventory balances in all stores in a timely way and the IT upgrade project would be an excellent idea to implement POS OS in their day-to-day operations.     

Zara - IT for Fast Fashion

 

Zara - IT for Fast Fashion

Key Problem

In the Zara case study, Zara relies on time to make clothes for young and hip fashion-conscious city dwellers. Zara needs to respond quickly to their clothing product as fashion changes rapidly, so time is an extremely important to the unique clothing line. Zara is Inditex’s largest chain store and they use point-of-sale (POS) terminals with a Microsoft disk operating system (MS-DOS). A major weakness of Zara is the speed of implementing a new technological system.  Zara has continued to use an outdated Microsoft DOS – disk operating system compared to Microsoft OS - operating system. Microsoft launched OS in 1985 and 18 years later Zara is still using DOS. The key problem is Zara needs to upgrade their applications and add functionality, and networking capability.  

Assessment of the Three Alternatives

            The first alternative is to remain using the POS terminals with DOS. As this was mentioned to me during a sales call, “If POS is not broken-why do we need to fix it?” Microsoft does not support DOS and Microsoft launched OS in 1985. The type of technology is outdated.  Microsoft doesn’t support DOS so there is a major concern since this is obsolete.  

            The second alternative is to upgrade the POS terminals but not replace DOS. There would be a major problem if the upgrade was POS hardware only. The upgraded POS terminals are not compatible with DOS so this isn’t a practical solution. The results in delaying any new stores without the proper hardware/software would be a negative effect on Zara’s image.    

            The third alternative is to upgrade the POS terminals with Microsoft OS-Operating System. The upgraded hardware accompanied with OS is the most practical IT solution. This would be the most efficient solution and it can increase productivity. Also, you don’t have to carry a floppy disk for daily sales and would save time for management. Microsoft doesn’t support DOS therefore it’s imperative to move to the new technology.    

Recommendation

            After reviewing the three Zara alternatives, I would recommend installing new POS terminals (hardware) with Miscrosoft –OS throughout the company. It’s unacceptable that DOS is currently being used, as Zara has done minimal to upgrade their IT solution. There are several advantages of upgrading to OS: 1) Easy transition, 2) Better visibility with inventory, 3) IT Processing Speed and 4) Boosts employee morale. The hardware POS vendors make it aware that an upgrade would be an easy transition. There was a theory that Xan Salgado; the head of IT stated “95% of inventory is pretty good and you don’t need to be more accurate” is absolutely incorrect. Salgado is sending the wrong message as there leaves room for theft, errors and lost revenue. The new PO OS application allows monitoring inventory more efficiently, thus making Salgado’s theory archaic. There would be fewer phone calls from each store, as the Internet gives access to each store’s inventory. For example, the high speed Internet connection would be added and the dial up would be eliminated. This helps staff and management with quick decision making. The new POS and OS applications boost employee morale. Store managers are looking for an upgrade, as this was mentioned to me, an upgrade can assist managers in making their jobs easier. For example, the floppy disk DOS would be replaced by the OS –no more carrying floppy disks around.             

In my opinion, I would terminate Xan Salgado, the head of IT and Bruno Sanchez technical lead for the POS system for Inditex. It’s unfortunate, but Inditex needs leaders who can implement the new POS terminals with OS. There should be no confusion at this point in Salgado/Sanchez’ career.  Inditex needs an aggressive and technology savvy department that is willing to take control of this outdated program. It starts at the top with the CIO. Zara would have significant increases in expenses: in salaries, benefits and consulting fees.  There would be a significant amount of investment in the new headcount, adding value to Zara’s business to grow and increase revenue. Here is what I recommend for staffing as there needs to be a new IT régime in place for a new effective solution.   

New IT Department:

            1) Hire a CIO – Chief Information Officer

            2) Hire an Infrastructure Manager

            3) Hire 2 Business Analysts

            4) Hire 2 IT Computer Support Specialists

            5) Hire 2 Internet IT Specialists

            6) Hire an IT administrative assistant 

            7) Create an IT Committee Team (long term goal)                    

           8) Reduce and eliminate Salgado/Sanchez positions in the IT department                                                                               

 Also, I encourage Zara to incorporate the Internet into their business model for purchasing clothes on the web. The Internet is major player in purchasing in today’s market and this gives Zara another opportunity to increase revenues. The Internet is a marketing “business partner” and Zara can build on the future with the Internet.  I recommend to pilot Spain as the first country to buy on the Internet as this is home base for Inditex. You can learn from a pilot country before going live for all countries. Spain will give you an opportunity to learn about the Internet business and give you enough time to open it to all the countries around the world. 

Profit/Loss and Balance Sheet - Financials:

            IT expenses would significantly increase due to creating an IT department with salary, benefits and computer depreciation expense by 3.2 million Euros in the first year. There would be approximately 1.2 million Euros in employee salary/expenses and 2  million Euros IT computer equipment depreciation expenses (10 million Euros divided by 60 months -5 year depreciation in computer equipment).  The 3.2 million Euros is an extraordinary amount but there is opportunity in revenues.

There are an endless amount of opportunities to increase revenues.  The Internet would contribute the increase revenues substantially. The Internet allows purchases on-line and this would be an unbelievable milestone to have Zara go into this new line of business (2003 Guesstimate 10 million Euros). The other increase in revenue is inventory. Also, there would be better inventory visibility so managers can to look up other stores to make transfers and this requires less time on the phone (2003 Guesstimate 5 million Euros).   

                                                                                                                       2003 Budget (Revenues - Expenses) with new IT applications only:   
                                                                                                                                                    15 million Euros (additional profits) - 3.2 million Euros (additional expenses)  =  11.8 million Euros Gain!!!

   
IT can make a significant impact in the balance sheet in total assets (Property Plant and Equipment & Cash and Cash Equivalents). Inditex has “too much cash” on hand at 525.9 million Euros in  the 2002 financials listed in Cash and Cash Equivalents (See Exhibit 5). It’s an outstanding to have 525.9 million Euros in positive cash but it’s better to make an investment with cash in order for Zara to increase net income. There has been no major investment throughout the years in technology and IT spending wouldn’t be a bad thing. In my opinion, if there is an increase in technology (Software/Hardware –IT Assets) with the proper strategy and planning, there will be an opportunity to increase revenues and net income. I recommend spending cash funds on IT capital as Property, Plant and Equipment (PPE) would increase. Also, I prepared a financial analysis for Zara, it would cost approximately 10 million Euros in the POS OS upgrade. Overall, cash would reduce by 10 million Euros, PPE would increase by 10 million Euros with IT fixed assets but total assets would remain the same.  See Exhibits Below:   

Exhibit - Inditex Financials (millions of Euro)/2003 Budget
Year	2003 Budget	2002	Comments
Inventories	383	382	Better tracking inventory stagnant
Accounts Receivable	280	238	Increase in sales due to better IT
Cash and Cash Equivalents	516	526	Decrease due to IT fixed assets
Total Current Assets	1,159	1,146
Property, Plant, Equipment	1,423	1,413	Increase due to IT fixed assets PO OS
Other Non Current Assets	495	455
Total Assets	3,097	3,014	PPE/Cash Offset
PPE: Fixed Assets	2003 Budget
POS Terminals -Hardware	6
PO OS -Software	3
Installation/Training	1
IT PO OS Implementation	10

Final Thoughts

            I am excited about the opportunity to look for improvements in technology. There is a plethora of IT improvements that can be made in Zara’s technology and upgrading to POS OS would help contribute to increasing your growth, revenues, net income and net margin. The recommendations will not require a complex solution, as its necessary to upgrade to the POS OS and the addition of purchasing clothes on the Internet is manageable with additional IT staffing.  Zara must identify an IT leader (CIO) in order to make a commitment to implementing the POS OS software/hardware. I understand that time is a major requirement for fashion and upgrading POS terminals with OS can fit the speed for IT processing. I don’t want Zara to be fashionably late in today’s technology.