Research Analysis
IS Strategy Triangle
A better alignment between the business strategy and the IS strategy and Organizational Strategy would help the company when it needs to implement new programs in order to help increase efficiency. Graybar would need to come up with a better business strategy. A better business strategy would help influence the IS Strategy and the Organizational Strategy. For example, if Graybar were to adopt Walmart’s cost leadership strategy, it would have to change its’ entire way of conducting business to help that business strategy. Graybar would have to provide products/services at a cheaper price, which would differentiate itself from its competitors. This would support the idea behind including SAP because SAP would help standardize processes. Standardizing the business processes would help the company save money. Instead of having different information systems for each function, there would be one, SAP, and it would provide the functions of the business, such as Accounting, with access to information about the other functions of the business, such as Finance. A cost leadership strategy would change the culture of the company, but it could help the company gain a competitive advantage.
Organizational Structure
At the moment, Graybar has a flat organizational structure. One of the main reasons why the flat organizational structure is beneficial is because it encourages innovation. This structure is also beneficial because it provides the different branches an opportunity to be more flexible in terms of how to help customers as each branch is able to better service their clients within a particular area based on their specific needs in that area. For example, through the flat structure, one of Graybar’s branches was able to include SAP systems into its’ way of doing business. The issue Graybar is experiencing is a silo issue. The company does not share core competencies with its functions and it also does not share their competencies with other branches. Because of this, the company is struggling to find synergy between departments. A matrix structure could help the company, as several departments would communicate with one another which would help with the silo problem. The issue that arises with a matrix structure is that knowledge wouldn’t be shared across the company and employees would report to too many supervisors. The matrix structure would also be an issue for Graybar because currently, Graybar wants to implement programs that would benefit every branch and would like for each branch to have access to information about the other branch. For that reason, we considered a hierarchical business structure. Changing the structure to a hierarchical structure would help Graybar’s information flow from top level management to employees. Each branch would also have access to the same information in terms of quotas, sales tools, stock levels, reporting, invoicing/billing, and other sources as well as adding programs to other branches. The issue with the hierarchical business structure is that employees cannot provide ideas that could help the company. We decided that the network structure would help the company with its’ issues the most. Using this business structure, each of the locations would have flexibility with how to run the branch, and branches would also be able to communicate and share information with one another. Graybar would be able to fully use its’ assets and would not be limited to one particular location. In terms of innovation, top management would be able to obtain input from employees, which is what could help initiate the implementation of innovative ideas such as evaluating other firms and requesting the addition of SAP to the business process.
Business Process Transformation
The Business Process Transformation will help Graybar combine each function and provide service in the likes of a CRM. As previously mentioned, Graybar is experiencing an issue with silos and because of that it is impacting their Business Strategy, Organizational Strategy, and their IS Strategy. With the Business Process Transformation, Graybar’s employees will be able to have access to information of the other functions in the company, which will help improve their customer service as well as their ability to understand and improve the information.
ERP System
In Graybar, each branch works as an individual organization. There is communication and information sharing problem between each branch, which causes misunderstanding and lack of cooperation then leads to lost revenue. For ERP system, it helps each branch in Graybar is able to access all company information and date immediately, which encourage more cooperations and communications between each branch. These cooperation and communications will avoid miscommunication and bring more new opportunities for Graybar. ERP system also can improve management in different departments such as financial, human resources and operations. These improvements can bring more revenue to Graybar. For ERP II, Graybar can share information to its external stakeholders. It also has social and collaboration features that can help employees have easier connections to its information, which will provide more opportunities for employees to communicating and sharing information with others. Both SAP and Oracle have their own ERP system. However, ERP system requires a long-term relationships with vendors that company purchased from, which increases the risk of applying ERP system, because Graybar has to put effort to take care of the relationship with vendors in order to keep receiving service from them. Moreover, ERP system is expensive for Graybar to use it, because it’s the “best practice” and sold as a suite. At last, ERP system needs company to have organizational change. It will be a huge change for Graybar if they want to use it. And employees might not be satisfied or willing to change, which may lead to failure.
IT Infrastructure
From the object above, it shows that lower level employees in Graybar are complaining about their current IS influence their productivity. By applying IT infrastructure, the business strategies can be transferred to goals. In order to achieve these goals, it leads to business and architectural requirements. To be more detail about these requirements, it comes to infrastructures that can solve the problems in detail and help to achieve business goals and make business strategies. Followed by this process, IT infrastructure can increase the Greybar’s productivity, because every business strategy or goal can be transferred to detail, which includes hardware, software, network and data. And employees know what they need to do instead of getting confused or misunderstanding.
On the other hand, there are three common configurations of IT architectures -- centralized, decentralized and service-oriented architectures. For centralized IT architecture, company should have a mainframe that runs all applications and stores all data. It easier and safer for Graybar to control and manage all the information in a mainframe. This type of IT architecture also fits the hierarchical structure that we talked about in the last section. For decentralized IT architecture, it means company separate its infrastructures with different devices and locations. It fits Graybar’s flat and decentralized structure, which will be easier to implement this type of IT architecture to company. For service-oriented architecture, it uses small chunks of functionality to build applications quickly. It helps Graybar to have reusability and componentization can create new apps. However, this type of IT architecture fits for company that is new and rapid change is important.(Pearlson, Saunders, & Galletta, 2015, p. 131). According to Graybar, it was founded in 1869 and had over a hundred years in business. We don’t recommend this type of IT architecture for Graybar.
Building a Case
As mentioned above, the information of the business will include the following sections: Executive Summary, Assumptions, benefits, business impacts, risk analysis, and recommendations. We will be proposing Graybar with an exclusive business that they can use in order to make a decision on moving forward past the pilot phase, and eventually roll out SAP to the rest of the company outside of the NY district.
- Business Assumptions
- IT departments will have more control of every office across the nation.
- They will minimize hardware costs as everything will be centralized
- Only SAP licenses required for all users.
- Initial investment will include implementing enough capacity which will remain sufficient for years to come.
- Less maintenance costs as Graybar staff will be able to be trained to support the system.
- Market Review
- After reviewing the market, we have determined, SAP is the leading provided of the CRM application. In fact, this software giant has made a big penetration to the supply chain industry. Competitors like Turtle Electric, Cooper Electric Supply Company, and others have made this investment within the last decade. This analysis has taught us there is room for technological improvements at Graybar. This company is a multi million dollar company and they have reserved some capital for IT improvements. We believe after this analysis the company will invest a portion, if not all, to roll out and implement this application across all offices. We believe the existing IT systems at Graybar has kept them from financially expanding and growing even bigger. Unlike their competitors, they have zero flexibility in their existing CRM system and has caused a huge loss in profit margins as well as a loss in productivity costs.
- Financial Metrics
The metric above shows us the importance of investing in this move immediately. According to the chart above, they are losing close to $50,000 a year in payroll mainly because of duplicated efforts. The losses are not stagnant or by any means lowering. In fact, it looks like the costs keep rising and increase as the years go on. Alternatively, we have provided a solution that can prevent losses and provide cost savings in the long run. Our recommendation can help them centralizing all efforts, departments, including the accounting office, IT department, finance team, and allow employees to work from home while having access to their CRM (SAP). The top level management have failed to realize the impact of these costs. As we can see, in year 4, the company will just have to worry about maintaining the systems and keep the software up to date. The cost starts at $250k in year 1 by rolling out SAP to one single branch. The costs lowers after the system is finally implemented and you can see the savings increase after year 3. We believe this is enough information to make the company’s top executives consider making this business investment.
- Benefits
5) Risks/Mitigation
- Business sales can be jeopardized due to installation issues.
- Alternate offline applications will be provided to the sales team to ensure no downtime.
- Implementation of the system may impact employee retention - long timers, new employees.
- Kaizen workshops and daily extensive training will be provided during the first 30 days through an 8 hour shift - possibly extended to 60 days, if needed.
6) Recommendation
- This business case analysis has shown a favorable upside for the implementation and the roll out of SAP across all offices nationwide.
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