Strategic IT Management Final Project IZHAR GROUP of companies

Written By: Kamran Ahmed Khan ID # 053621-015

Date May. 20, 2006.

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Table of Contents
Executive Summary Business purpose of the Company Company Mission Statement and History Past and Present Performance Structure analysis Strategic vision Information needs of the company Operational needs Managerial needs Strategic needs Industry analysis Porter’s five forces model Company analysis SWOT Analysis Strategic opportunity matrix Value chain analysis Recommendations Alternatives Comparative analysis of alternatives Portfolio management Implementation strategies Tactical plans Operational plans Change management Conclusion References

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EXECUTIVE SUMMARY The Information need of the company is that, company is using different software in different departments. Which is not providing enough information to middle and Top management to increase company’s efficiency and Performance. It is recommended that this new ERP System will integrate all departments of head office, with their suppliers and customers. New application will also be integrated with all factories and major sites through extranet technology. With this ERP System, middle and Top management will be able to get enough information on daily basis in different formats. New application will provide new reports (designed using Crystal Report). These reports are not available in current system, which will increase Top management decision-making and as a result it will increase whole productivity and profitability of company.

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BUSINESS PURPOSE OF THE COMPANY MISSION STATEMENT To achieve client’s satisfaction by providing task specific, time efficient, cost effective engineering products and services with continuous improvements in workmanship and specifications. HISTORY Established in 1960 by the Chairman Mr. Izhar Ahmad Qureshi, a reputed name in Engineers’ community of Pakistan, IZHAR has become one of the leading construction GROUPS. With its broad and rich experience, high standards of

technical performance in the numerous major construction projects of various types, ranging from Civil Works, Housing and Urban Development, Heavy Industrial Construction, Defence Oriented Projects and Sophisticated Engineering Construction, IZHAR has earned an outstanding recognition from the nation.

IZHAR is always ready to carry out any construction project of any size at any time anywhere, with its best services and performance for its clients in the region. “Time to contact IZHAR is when you have started thinking of your project”. Our variety of experience stretching over 45 years, equipped with dedicated and motivated team of professionals, provides you complete turnkey construction solutions.

Our professional staff and hardworking experienced crew work with our clients assuming a tight schedule, economical construction and above all quality workmanship throughout the entire project. We are capable to take up large projects of any size with proven track record and pioneering innovative role in revolutionizing the construction environment in the country. IZHAR GROUP has following divisions.  Izhar construction private limited

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 Izhar concrete private limited  Izhar steel private limited  Izhar housing PAST AND PRESENT PERFORMANCE REGARDING IT As already described that company was established in 1960. At that time there was no concept of Information technology in Pakistan. As the time passes on company keep on bringing changes for development. When the Information technology emerged in our country, company decided to shift from its manual operation to automated operation using Information Technology to improve its efficiency, performance and for customers’ maximum satisfaction. FINANCE In 1992, company shifted from its Manual Accounting system to DOS base Accounting Software, which proved to be very helpful in improving company’s efficiency. In 1995, company felt that this DOS base software is not very fast and user friendly. So company decided to use GUI (Accounting Software designed in Visual FoxPro), which was faster and very user friendly as compare to DOS base Accounting software. In 2003, company decided to transform from its present Accounting Software to new Accounting Software (Accounting Software designed in Visual Basic-6 on front end, Access on back end and Crystal Report 8.0 as reporting tool), which was faster and can manage more data as compare to previous Softwares. Company is still using this Software. HUMAN RESOURCE Human Resource department was also working manually, but in 1992, using Information Technology this department was also shifted to DOS base payroll system and then to GUI (Payroll System designed in Visual FoxPro) like Accounting Software in 1995. Company is still using this Software.

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PURCHASE AND SALES Purchase and sales department were working manually till 2003, then company decided that it is necessary to transform these two departments from its manual operations to Automated operations, this decision increased the efficiency and performance of these two departments and also over all performance of the organization. PRODUCTION, DESIGN AND CONSTRUCTION Company was using old methods of production and designing for more than three decades since its inception, but thanks to Information Technology that provide some latest soft wares like CAD CAM, STADD-III (Structural analysis and design) and prima Vera (Project planner). With the use of these Soft wares company has increased its productivity and able to respond quickly to its clients. INFORMATION TECHNOLOGY Considering the importance of this department a proper IT department was established in 1995, although company was using DOS base soft wares since 1992. Now this department is most valuable among all departments because Software Engineers are developing more efficient and user-friendly soft wares. With the help of reports (MIS) generated from these Softwares Top management is able to make quick and good decisions. With the use of Information Technology over all performance of company has increased and right now company is in this position to complete all tasks quickly and efficiently, which was not possible when company was operating manually. STRUCTURE ANALYSIS Top management is responsible for decision making in organization. Decision making process is based on MIS and also forecasting. Management information system provides reports to top management; those are very useful in understanding current position and future scenario, which is very useful in decision-making process. Thanks to information Technology

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that provide computer-generated reports and enable them to make quick and effective decision-making, which is beneficial for the whole organization. As far as forecasting is concern it is totally based on experience and in depth knowledge of the situation. STRATEGIC VISION Strategic vision includes both technological and organizational factors. It must consider the organization’s maturity and sophistication. Intelligent IT executives do not attempt to transform organizations from relative technological immaturity to maturity in one planning cycle. Company will start transforming from its current application to new application step by step. INFORMATION NEEDS OF THE COMPANY OPERATIONAL NEEDS Although most of the company’s operations are automated but many things still need to be done, like integration of different departments like Finance, Human Resources, Purchase, Sales, Marketing, Production, Design and IT. All above mention departments are within organization, besides this company also need to be interlinked with their suppliers and with the suppliers of suppliers for bringing effective changes in procurement and production operations. If company is interlinked via wired or wireless technology with its suppliers, it will reduce lead-time and cost due to on time delivery of raw material. Company also needs to be interlinked with their customers for quick response to their demands/orders and useful feed back for improvement. MANAGERIAL NEEDS Although current system is doing well but managers need more information to improve efficiency and productivity of their departments. Managers’ need is to integrate all departments, suppliers and customers. STRATEGIC NEEDS

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Current system needs to be integrated with other departments because it is very difficult for top management to get required information and to get comparison of other departments for decision-making purpose. INDUSTRY ANALYSIS PORTER’S FIVE FORCES MODEL RIVALRY: Rivalry is very high in this industry, because there are many competitors in the market with high productivity and Goodwill. Competitors are using Information technology advantage to boost its productivity like CAD CAM, STADD and integrated systems. SUBSTITUTE: IZHAR Group is also providing substitute products like Pre-cast concrete roofing and Pre-engineered steel building, so company has competitive advantage over its competitors. BARRIERS: Entry barriers are medium in this industry. With a skilled team and medium investment anyone can enter in this industry. Exit barriers are medium because firms can wind up their business easily due to less initial investment. BUYERS’ POWER: Buyers power is very high in this industry because it is a highly competitive market. Buyers can bargain and can select lowest bid out of many options. SUPPLIERS’ POWER: Supplier power is very low in this market because there are many suppliers in the market and firms can purchase raw material from any supplier at lowest price with high quality. COMPANY ANALYSIS SWOT ANALYSIS STRENGTH: Strengths of company are its Goodwill, Professional managers, skilled labor force, Professional and experienced staff and huge reserves. Organization has dedicated & motivated team of professionals and has great success in innovating new products in the past and will continue like that in future.

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WEAKNESS: Company’s main weakness is that, it is not using full advantage of Information Technology. With the use of Information Technology Company can perform well in future. OPPORTUNITIES: Organization has great opportunities all over the country like cities, villages and industrial areas. Company also has opportunities in neighboring countries like Afghanistan. THREATS: Competitors are great threat to company, who are delivering quality work and producing quality products/work using latest technology. STRATEGIC OPPORTUNITY MATRIX The senior IT executive are going to develop an ERP system which is equally important for strategically and operationally, and vital over a long term. This ERP system will provide strategic competitive advantage in addition to supporting important operational function.

10 3 Strategic value 4 0 Operational Value

2

1 10

The senior IT executive plots this new Application at “2” because it is highly important for strategic and operational needs. COST AND BENEFITS Program Name New ERP System User Sat. IT Sat. Strategic Importance Tactical Importance

Cost

Benefits

8

9

9

9

1 Million

2 Million

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This program is relatively new and is anticipated to be of great strategic importance. Both end users and IT department are quite satisfied with its current form. It is anticipated that new system will give high future payoff. VALUE CHAIN ANALYSIS Primary Activities Outbou Outbound nd logistics logistic s The Value Chain

Inbound logistics

Operation

Marketing and

sales

Services

Procurement Infrastructure

Human Resource Management technological Development

Support Activities

INBOUND LOGISTICS: Bringing material into business from suppliers without using IT advantage. OPERATION: Converting material into final product/service using CAD CAM, STADD-III (Structural analysis and design) and prima Vera (Project planner). OUTBOUND LOGISTICS: Shipping out final product to the customers without using IT advantage. MARKETING AND SALES: Marketing and sales of product/service. To inform buyers about products and services, induce buyers to purchase them, and facilitate their purchase. SERVICES: Includes all the activities required to keep the product or service working effectively for the buyer after it is sold and delivered. PROCUREMENT: Is the acquisition of inputs, or resources, for the firm.

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HUMAN RESOURCE MANAGEMENT: Consists of all activities involved in recruiting, hiring, training, developing, compensating and (if necessary) dismissing or laying off personnel. TECHNOLOGICAL DEVELOPMENT: Pertains to the equipment, hardware, software, procedures and technical knowledge brought to bear in the firm's transformation of inputs into outputs. INFRASTRUCTURE: Serves the company's needs and ties its various parts together, it consists of functions or departments such as accounting, legal, finance, planning, public affairs, government relations, quality assurance and general management. RECOMMENDATIONS ALTERNATIVES 1) Doing nothing (Status quo). Just keep on doing what company is doing right now. 2) To integrate all departments of head office to facilitate Top Management in quick decision-making process and development. 3) To integrate all departments of head office, as well as to integrate all supplier and customers. 4) To integrate all departments of head office, as well as integrate all supplier and customers and also integrate factories and major sites via extranet technology. COMPARATIVE ANALYSIS OF ALTERNATIVES First alternate is not feasible because in future scenario only those organizations will survive, who will respond quickly to their clients and will give their customer a required satisfaction. If company will follow Status quo policy, it will leave behind from their competitors. In this situation it would be very difficult for organization to survive in the highly competitor market, which is using latest technology for competitor advantage.

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Second alternate is feasible as compare to first because it will help out Top Management in quick decision-making process. When all departments will interlink, it will increase the efficiency of organization. Third alternate is basically a Value Chain concept. In which we will interlink all organization departments as well as all suppliers and customers via wired or wireless technology. It would be difficult for organization to train employees, how to work as a chain with their suppliers and customers. After training and hiring some senior professionals company can over come this problem and can attain a comparative advantage. Fourth alternate ERP system is little expensive and required more training, but it’s the Best alternate to increase the efficiency and performance. If all factories and sites are integrated with head office, it will be very easy for the

middle and Top management to check the performance and efficiency of each factory and site on daily basis. On the basis of daily reports Top Management would be able to understand the problems on daily basis and solve them quickly to increase over all performance of company. PORTFOLIO MANAGEMENT DEPRECIATION AND OBSOLESCE As the business conditions are changing because we are going to interlink all departments of Head office, suppliers, customers, sites and factories. So company has to change its Application system because current system is not suitable for handling huge and complex data. In new ERP system we will use Visual Basic.Net on front end, SQL server 2000 on back end and Crystal Report 11.0 as reporting tool. DEVELOPING NEW SYSTEM

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In order to understand that current system is getting obsolete and cannot manage huge and complex data. It would be very costly if company will go for enhancement of old system. Company should develop a new system. New ERP system will manage huge and complex data because company is going to interlink all Head office departments, its suppliers, its customer, sites and factories using both wired and wireless technology. Company has skilled software developers and programmers; those understand the current system very well and can develop new system up to Top management requirements. To develop a new system huge long-term investment is also required because company is going to invest on software, hardware, communication links and training of not only their own staff but also suppliers and sub-contractors. Company is going to develop new software on the basis of value chain concept. DATA RESOURCES In order to develop new system, database need to be very reliable. The database provides the lifeblood that sustains organization’s daily operations. These data resources, their database management systems and the hardware on which they reside are vital and critical adjuncts to the application portfolio itself. SATISFACTION ANALYSIS New ERP system will have good documentation; develop in modern language, user friendly, trouble free and well architectures. 10 A User satisfaction B 0 0 IT Satisfaction 10 C

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Programme “A” is representing a new ERP system development, which is lower than 10,10 because of changes in business condition during system development. TRENDS IN RESOURCE APPLICATION The next Figure shows the development of funds over time in maintenance, enhancement and new development of application. Resources devoted to new application decline over time as compare to maintenance and enhancement that increase over time. That’s why company has decided to develop new application, which will be beneficial for the company in long run.

Total resources

Resources Maintenance and Enhancement

New Development Time

IMPLEMENTATION STRATEGIES TACTICAL PLANS Tactical plans forms basis for assessing organization’s performance. They also provide objective information for measuring the firm’s progress towards long-range goals. Implementing of tactical plans consists of selecting hardware and software, installing hardware and software systems, training of users and IT people, converting from previous processes to new procedure and establishing measurement systems. They also provide what kind of training is required to over come resistance of new technology. Managers

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must schedule these activities, assign human and material resources and develop detailed budgets to complete the plans. OPERATIONAL PLANS Operational plans add detail and direction to the organization very near term activities on day-to-day and week-to-week basis. Implementation of Operational plans include, identification of hardware and software vendors, setting vendor criteria, developing space alternatives and developing system analysis of current procedures. CHANGE MANAGEMENT Change management is a management technique for planning, coordinating, handling and reporting system changes that could negatively impact service delivery. Changes can involve modification of hardware, software, operating system changes, equipment relocation, network and environmental changes. The objective of change management process is to ensure that system changes are implemented with minimum or acceptable risk level. IT and client organization must follow a planned approach to change implementation that minimize problems and achieve desired service level during transition. CONCLUSION As already mention in Information needs of the company that company is using different software in different departments. Which is not providing enough information to middle and Top management to increase company’s efficiency and Performance. It is recommended that this new ERP system will integrate all departments of head office, with their suppliers and customers. New ERP system will also be integrated with all factories and major sites through extranet technology. With this integrated System, middle and Top management will be able to get enough information on daily basis in different formats. New application will provide new reports, those are not available in

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current system, which will increase Top management decision-making and as a result it will increase whole productivity and profitability of company. REFERENCES  www.izhar.com  Discussion with department heads of the company.

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