STAKEHOLDER ROLES AND RESPONSIBILITIESEB2007-2007
Information Systems Failure at Integrated Solutions
Integrated Solutions is an industrial services provider with a large global presence. The company is primarily headquartered in the United States but has large-scale operations (including offices and personnel) in Canada as well as most nations in Europe, Asia, South America, and Africa. The company is considered to be the market leader in its industry. In the glory days of the company, it was considered the most technologically sophisticated in its industry and had an excellent technological infrastructure. However, over time, the inability to keep up with the immense changes in technology had resulted in some old legacy systems, more than half of which were not properly integrated. The company’s problems related to IT started in the latter half of 1996. Around that time, a lot of customers would call to check on the status of their orders. It took Integrated Solutions days to respond to most of these queries. On the other hand, some of its competitors would take only minutes to respond to such requests. Due to the global nature of the company, some of its customers would place multiple orders in different countries. Because the company’s information systems were not properly integrated, such services would take even longer. Employees prepared most of these reports by hand, leading to delays and a higher risk of errors than if the process were automated. The company’s pricing structure was also very complex, often requiring tremendous customization, and the existing information systems helped little in this matter as well.
Frustrated with the state of the company, Integrated Solutions decided to turn to a consulting firm to turn things around and finally contacted a consulting group to develop a long-term IT plan and to replace the existing systems. The consulting firm proposed the development and implementation of a globally integrated information system, which it believed would be the perfect solution for the company’s situation. The plan received a “go ahead” signal from the chairman, and the CIO was immediately given the responsibility to execute it. The plan also had the active involvement of the president, the CFO, and other personnel from some of its overseas regional offices. The estimated cost of the new information system was approximately $36 million.
Unfortunately, after three years very little had been accomplished on this project. Some of the regional personnel had objected to the development of the new system, and that had been the beginning of the problems associated with the project. Initially, there was a lot of debate and controversy over the choice of the development software. The consulting firm had proposed the use of Visual Basic; however, many key members of the company did not welcome this. One European executive had proposed the use of a certain tool that had met with a lot of success in Europe. Another member from another part of the world proposed yet another warehouse management tool, which he believed would fit the requirements of the firm. After some time, the European tool was selected.
However, the developers in the United States were not familiar with this tool. As a result, a team was gathered in Europe and was flown to the United States to work on the development of this new system. The European team first developed a prototype of the new system. However, when the team started building the actual system, it started taking much longer than was expected. After a while, people realized that the prototype had very little functionality, and it was impossible to understand exactly what the actual global system would look like just by looking at the prototype. The company executives soon became convinced that the new system would not be the solution for the problem, and they started focusing their attention elsewhere.
The company made the decision to acquire an outside vendor package instead of building the system in-house and selected a vendor from Britain for this purpose. The vendor chosen was small, however, and people could put little faith in its ability to provide solutions to all the company’s IT-related problems. Thus, even after many years, Integrated Solutions was unable to develop its own global information system and had to turn to a packaged solution from an outside vendor. It cost the company approximately $50 million ($14 million more than the original budget), apart from a significant delay in the completion of the project. In addition, the company suffered tremendously in the stock market (its stock price fell by 50 percent) and lost a lot of its existing market share, thus losing its position as the market leader.
Many factors led to the failure of the development and implementation of the global information system at Integrated Solutions. More than the technology, the company’s management was responsible for some of the problems with the project. Many of the overseas regional managers pushed products of their own choice and refused to accept the system as developed on a different platform. The CIO’s inability to take control of the situation, along with the lack of trust and respect between the CIO and the chairman, led to the chaos surrounding the choice of the development tool. The lack of strong leadership thus led to the choice of an inappropriate development tool and a packaged solution of lower quality.
Case 2: Information Systems Failure at Integrated Solutions
Today, the company is trying to recover its position. It is now focusing on developing a new system based on the modules of its existing information systems and is hoping that, in due time, it will be able to recover its original position as the most technologically advanced market leader in the area of industrial services.