Management

CHAPTER 6CHAPTER 6
READ THE CASE BELOW AND ANSWER THE QUESTIONS AT THE END OF THE CASE
MedAMore is a chain of drug stores. It started as a regional chain in 1960. In 1995, it developed an innovative software system that enabled it to run drug stores very efficiently. It called this system MedAManage, or MAM. MAM incorporated some innovate business ideas, such as patient-relationship management, inventory management, automated insurance billing, and even utility optimization.MAM consisted of three programs: MAM/Store, which ran on a small computer at a drug store; MAM/Warehouse, which ran on a server in a regional warehouse; and MAM/Home, which ran on a large server at the home office.These three programs communicated through files that were transferred from one location (for example, a store) to another (for example, a regional warehouse). When reliable communications lines existed, file transfers could occur through FTP (definition of FTP at end of case). The system was also flexible enough to accommodate transfers through courier, where necessary.By 2010, MedAMore was doing quite well—in part, because of the cost-cutting moves enabled by the MAM system. MedAMore decided to begin expansion. To do this, it purchased three regional chains. With these purchases, MedAMore extended its reach through the southeast quadrant of the U.S.By 2002, it was clear that the same software systems that had initially fueled MedAMore’s success were now hampering its future. Some of the problems MedAMore was running into were the following:• MAM/Store required regional specializations. For example, different insurance plans needed to be supported in different regions, and these all required changes to the MAM/Store module.• The regional warehouses that had been acquired through acquisition each had different ways of receiving orders from the retail stores and different procedures from ordering supplies from the wholesalers. Each of these differences required changes to the MAM/Warehouse module.• The file-transfer approach to information sharing that had worked so well when MedAMore consisted of 30 drugstores, one regional warehouse, and one home office were turning out to be difficult to coordinate among 200 drugstores, four regional warehouses, two geographic offices, and one home office. Files were often delivered late, sometimes not at all, and occasionally multiple times. This made it difficult for the home office to access reliable, up-to-date financial information, especially in the areas of sales and inventory.It was clear to MedAMore management that the MAM system needed many enhancements. However, upgrading this system was difficult. Each of the three modules (store, warehouse, and home office) was huge, inefficient, and cumbersome, and each included functionality for everything that each entity might need.The modules had grown to over 1 million lines of code each. It was difficult to change one function without affecting others. All of the functions accessed a single database, and changes to one record definition could ripple through the system in an unpredictable fashion. Changing even a single line of code required a rebuild of the entire multimillion-line module.MedAManage had become MedANightmare. Debugging was difficult. Software builds were torturous. Installing new systems was hugely disruptive.These technical problems soon created internal conflicts within the home office of MedAMore. The business side of MedAMore wanted to acquire two more regional chains, but IT was still struggling to bring the existing acquisitions online.This resulted in a rapidly growing divide between the business and the technical sides of MedAMore. The business side saw IT as reducing business agility. The technical side saw the business side as making impossible demands and blamed it for refusing to consult IT before entering into acquisition discussions.The distrust had reached such a point that, by 2011, the CIO was no longer considered part of the executive team of MedAMore. The business side distrusted IT and tried to circumvent it at every opportunity. The technical side built its IT systems with little input from the business folks. Several large and expensive IT initiatives were ignored by the business side and were eventually abandoned.By 2012, MedAMore was in crisis. It clearly needed to revamp its technical systems to make them easier to specialize for regional requirements. This was going to be an expensive proposition, and MedAMore couldn’t afford for the effort to fail.Just as importantly, MedAMore also had to rebuild its internal relationships. The constant bickering and distrust between business and IT was affecting morale, efficiency, and profitability. A company that only five years earlier was an industry leader in profitability—in large part, because of its innovative use of IT—was now struggling to stay out of the red—in large part, because of the inflexibility of those same IT systems.Cath, the CEO of MedAMore, desperately needed a solution. At a CEO conference, she heard how many of her peers were using enterprise architectures to build stronger partnerships between their technical and business groups and deliver more cost-effective IT systems that enabled business agility.Cath decided that this approach merited further investigation. She asked Irma, her CIO, to prepare a recommendation on the use of an enterprise architecture within MedAMore. Irma was impressed with the approach, but recognized that any such initiative needed to be driven from the top and needed to involve the business side from the start.On Irma’s recommendation, Cath called a meeting with Bret, the Vice-President of Business, and Irma. Cath announced that she had decided to create a common enterprise architecture for MedAMore that would unite its technical and business people. This common enterprise architecture would be named MedAMore-Enterprise Architecture, or MAM-EA. After it was completed, MAM-EA would drive all new IT investment and ensure that every dollar invested in IT was delivering the maximum value to the business.Cath knew that MAM-EA was a bet-the-company decision for MedAMore. The MAM-EA vision had to work. Cath was depending on Bret (the business side) and Irma (the IT side) to make it work.
DEFINITIONSFile Transfer Protocol (FTP) is a standard Internet protocol for transmitting files between computers on the Internet over TCP/IP connections.FTP is a client-server protocol that relies on two communications channels between client and server: a command channel for controlling the conversation and a data channel for transmitting file content. Clients initiate conversations with servers by requesting to download a file. Using FTP, a client can upload, download, delete, rename, move and copy files on a server
QUESTIONS FOR THE CASE: You will have to make some assumptions and use some creative insight to answer these questions. 1. What are the strategic goals of MedAMore and what are its key business needs?2. What factors led to the problems that MedAMore is experiencing with its information systems? Note that this is not asking what is wrong, but rather what caused the systems to get out of hand. To answer this question you need to think beyond simple answers such as they expanded beyond capacity. Think about management and process.3. Assess the current information system architecture at MedAMore with respect to the Architectural principles on page 135.4. Page 131 identifies 4 common architectures. Which architecture would you recommend for MedAMore?JUSTIFY your answer with strong arguments.
CHAPTER 9Questions are based on the articles on governance and steering committees.1. What is IT Governance and why is it critical for companies today? 2. What is an IT steering committee and what are the main objectives of the committee?3. Why do organizations need an IT Steering Committee? 4. What are the advantages and disadvantages of an IT Steering Committee?5. What type of managers and corporate culture support an IT steering committee?