Research Proposal on "International Technology Management"

Quoted Instructions for "International Technology Management" Assignment:

(THIS IS AN INDIVIDUAL ASSIGNMENT)

Part 1: Company Background - Oasis Bicycles

Oasis Bicycles is a Taiwanese-owned bicycle company but designed in the UK and made in the Netherlands *****“ a global company. The Oasis Bicycles Company is based in Taiwan and is one of the world*****s biggest bicycle manufacturers with annual sales of around US€400 million *****“ 93 per cent outside Taiwan. According to its CEO:

*****Because of the small market for bicycles in Taiwan, we don*****t have any choice *****“ we have to be a global company. The biggest market for us so far has been Europe, which account for just over half our sales. We started manufacturing in the Netherlands because of the attractive market in Europe. We expected to sell more than 400 000 bikes by the end of 2015. That*****s out of a demand for bikes in Europe of about 15 million annually. To start with, we will be making just 100 000 bikes a year from our European factory, but we envisage this climbing threefold in the next 10 years. The main reason for transferring some production from the Far East to the Netherlands is to increase flexibility.

Fashions are changing quickly and market trends must be followed closely. Having a production base next to the market means that we should be able to satisfy our customers better. Wage costs in the Netherlands are 60 per cent higher than in Taiwan but, because we should get better productivity in Europe, this will not affect overall costs too much. We are considering opening another plant in the US and to actively increase our marketing effort there *****“ we expect to decide on this around year 2010. Our Taiwan plant makes about 1 million bikes a year out of a total 2.5 million bikes for our company *****“ including bikes produced by a joint venture in China. I expect the proportion of Taiwanese bikes to decline over the next few years as we switch production from Asia.

Developing new products is as important as manufacturing. Bicycles are as much a fashion item as a piece of machinery. We sell bikes in several thousand variations. In the early 1990s we introduced up to three new products every year. Today, however, that figure has grown to between five and ten, reflecting increased demands by customers. One of our strengths is the ability to introduce regional product lines, within the context of an international approach. About three-quarters of the products we sell around the world are the same *****“ but for the remaining 25 per cent we give our regional people freedom to specify products they think will appeal locally.

Worldwide, we have 65 designers and development engineers. We spend 2 per cent of our annual sales on design. Forty-five of the designers are in Taiwan, the rest are based in China, Japan, the US and the Netherlands. Through the global design approach we aim to pool many different concepts *****“ the people in China and Japan concentrate on commuting bikes, the designers in the Netherlands contribute ideas from the European racing bike tradition, while in the US they are more likely to be working on variants of mountain bikes. In Taiwan, we try to incorporate all of the ideas, working on new materials such as carbon fibre to reduce the weight of the frame. Our designers can talk on the phone and swop ideas using computer-aided design, but they get together twice a year in Taiwan to review their work. The common language we use is English.

Subsequently, the company has shifted some manufacturing from Taiwan to mainland China because the latter has lower costs for labour and land. China now accounts for over half the company*****s production. However, the company still believes that its Taiwanese based research and marketing teams are best placed to understand both the developed markets of the West and the developing markets of Asia.

Issues for you to consider:

Communications

Communications is important to the company*****s business success, a point that was made clear at your appointment. Although the technical, managerial, and planning expertise of the company is not in question, the profitability of the enterprise depends crucially on the quality of the communications within each division, between the company and their clients/customers, between the company and their component suppliers and between each division and senior management.

As Oasis Bicycles have decided to move their manufacturing to Taiwan, senior project managers will now have to spend a great deal of their time in travelling around, visiting divisional headquarters and departmental sites for meetings with senior management and the various project teams for which they have responsibility.

To support this range of communication needs, there are several systems and services in place already in UK and Netherlands. The systems have been developed over a period of several years, using hardware platforms and network operating systems software from a variety of vendors, and running on a range of proprietary and open protocol standards.

In general, the systems have adequately supported existing business practices in Netherlands, where all business functions are located at one site. But a number of problems have been experienced in the recent past involving, for example, the loss and corruption of data. In addition, current systems do not adequately support emerging trends in working practices, such as the creation of dispersed and virtual project teams, adequately catered for in terms of their telecommunications needs.

A particular problem connected with sub-contractors is making sure that they supply their products from Taiwan for manufacturing in the Netherlands at the point in time that they are needed. Should a supplier fail to do so, then the consequences for them might be the triggering of a penalty clause in the contract, which might cost them €20,000. However, the failure of a piece of equipment to arrive on time might well cost the company over €1 million because of the knock-on effects, i.e. materials unable to arrive on time from Taiwan.

Management has made the decision that a significant investment in leading-edge telecommunications technology is likely to result in considerable savings. Existing telecommunications systems have been developed in a somewhat ad hoc fashion over several years. Some of the sub-systems are quite sophisticated, particularly those supporting the exchange of massively-detailed engineering plans. However, other component systems are variously sub-optimum and nearing obsolescence, or else cause problems by introducing unnecessary redundancy: the company as a whole supports four different and largely incompatible electronic mail systems, none of which offers seamless communication with those of other branches.

If Oasis Bicycles are to expand into other countries, the need for a good telecommunications system is vital. Communication in this sense involves real-time, person-to-person links, backed up with appropriate asynchronous links, together with access to appropriate information stores, such as remote databases.

Oasis Bicycles realises that the role of the CIO is to lead, rather than control. The lead which they are to take is that of the strategic implementation of emerging Web 2.0 collaboration technologies in the company. This transformation will require changing more than technology, it will also drive change in cultures and leadership approaches. IT can lead by inviting broad participation in solving these challenges while providing the structure required for scale and focus.

Network

The company*****s belief is that systems will probably need to be significantly enhanced to maintain efficient working practices and, ultimately, to support the company*****s market position. This may well involve creating and implementing a new network design, possibly incorporating an organisational Intranet. One possibility that has been mentioned is the creation of a wide area virtual private network (VPN), embracing all office and remote sites within these European operations.

This is envisaged as using a combination of public and private networks as appropriate. It is also exploring the possibility of making better telecommunications provision for certain construction teams, such as more adaptable Local Area Networks (LANs) configurations to incorporate wireless LAN. The management may also consider investing into satellite technology to help workers to access the company databases and other resources while still on the move.

Record Accounts

The managers at Oasis Bicycles would like a computerized system (centralized, federalised or decentralised) that would allow them to record the sales transactions and update their inventory across all countries. In addition, management would like several reports that would allow them to monitor sales on a daily, weekly, monthly, or yearly basis. Moreover, management would also like to be able to view sales and manage inventory for a particular product line or item.

Part 1: Report

You are required to put together an individual report which would include strategic plans and solutions/recommendations on the basis of the evidence supplied in the case study.

Report should include:

1. An identification of the problems facing the organisation (main focus on telecommunication, wireless technologies, networks and other IT problems as well as problems that underlie the company structure, strategies and business processes). A rationale/justification needs to accompany your identification of problems. Your analysis should examine the major issues or problems currently facing Oasis Bicycles. Keep in mind: All of these activities can benefit from innovative uses of technology. Increased use of collaboration tools can improve communication with customers and suppliers. Technology can be leveraged to provide better, and more timely information to help companies act with speed. Better information can also help mitigate many business risks. (20 Marks)

2. Smart companies work to determine how to manage change rather than simply react to it. Recommend solutions to the problems you identified above, in relation to currently available IT-communication systems and services. Priority of these problems should be identified and a rationale as to why these problems are considered to be of high priority. (20 Marks)

3. Every CIO can feel the momentum as consumer use of Web 2.0 tools raises expectations for flexibility and personalization in the enterprise user community. Global trends of growth and talent availability in emerging markets amplify the urgency for enabling technology. However, requirements regarding scale, security, and ongoing regulation continue to increase, creating seemingly opposing forces in the business environment. Discuss your views. (20 Marks)

Part 2: One Year Later

Issues:

Almost twelve months has passed since you presented your report/analysis of the different AIS applications in use across the company. In the interim the CIO retained a company of IT consultants to carry out a similar review of the key functional areas; Operations, Production, Sales, Marketing and CRM, Accounts (incl. Payroll) and Human resources.

Their report has recommended that Oasis Bicycles invest €100m in a company wide ERP system from one of the large vendors. This would allow the company to consolidate all of its IS (excluding the cargo tracking and approximately ten other specialist applications) onto a so called single instance ERP platform. The CFO is very reluctant to invest such a large amount of scarce capital in IT and he is concerned about the long term competitive advantage and return on investment from the expenditure. The CIO and CKO in turn have argued that moving to the single instance ERP approach will significantly lower the total cost of ownership of the IT/IS in the long run and will provide a significant cost saving.

The CFO*****s preferred approach is to sign what he terms a Transformational Outsourcing Agreement with one of the major IT outsourcing companies. Under this Agreement a significant portion of the company*****s existing IT activities would be transferred to a third party provider and that provider would take responsibility for transforming the systems over the seven year life of the contract. The CFO has done a preliminary analysis to show that this option would be *****cash positive***** from day one and allow the company to focus its investment on core activities.

The board of Oasis Bicycles is due to consider the IS investment alternatives at a board meeting in two weeks time. The CFO has wondered in the past whether the company should now outsource its IT functions rather than continue with its own IS unit, and with this *****cash positive***** option, he has asked for your advice as whether to go ahead.

Report

1. CEOs want IT to provide quality, reliable IT services. However, CEOs also want CIOs to lead innovation and promote change by employing technology to drive the kinds of business transformation that supports corporate objectives, enables new business models and exploits new opportunities. Outline what possible vendors you may suggest Oasis Bicycles to invest with. Also, choose one particular vendor and outline one package/application which you suggest for their Operations, Production, Sales, Marketing and CRM, Accounts (incl. Payroll) and Human resources. (20 Marks)

2. A key strategy that the CIO can drive is to outsource noncore activities*****”from human resources and back-office operations to manufacturing and fulfillment*****”or consolidate them internally as shared services to maximize return. What would your advice be to Oasis Bicycles regarding outsourcing? (20 Marks)

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