Problem/Issue Statement
Marcus Kingo entered the waste collection business in 2008 and his company grew at a rapid pace. However, his current IT system was causing information handling errors which was leading to a loss of customers. Kingo needs to find an affordable IT system that would meet his operational requirements (keeping the virtual business model) and allow the business to grow.
Some of the symptoms of Kingo’s problems: errors in customer contact information, forgotten emails, manual calculations and billing mistakes were causing negative customer interactions – with the most serious issues stemming from the data clerk. Incorrect versions of the Company’s database were sent to the morning call operator on several occasions causing major delays since only one version of the database could be used at a time.
Most Canadian waste collection businesses were small models, typically operating with one truck. Customers tended to have many options of who they could use for their waste collection. Knowing this, Kingo needed to fix his problems before he lost too many customers.
Situation Assessment
The context of Kingo’s problem lies in the fact that customers were becoming dissatisfied with the Company’s service. 1-888-Junk-Van grew rapidly from 2008-2009, doubling their sales from $300k to $600k, but their operational model was not following suit. Kingo believed in his virtual model and not having a central office location, however having a database that needed to be e-mailed back and forth without the ability to be used by multiple employees at a time was causing issues.
The decision criteria for Kingo in the new IT system were as follows:
1. There needed to be a centralized database which could be accessed remotely since everybody would be working on it simultaneously from different locations. Internal information should no longer be e-mailed back and forth between the call operators and the data clerk.
2. E-mails to customers should be automatically sent from the system in order to avoid mistakes and resulting delays.
3. With no IT background and a business too small to justify hiring a dedicated IT worker, the solution needed to be easy to implement and operate.
4. The system needed to be flexible and robust enough to handle evolutionary changes in the market or the business.
5. Vendor support was essential; Kingo wanted to be able to rely on someone for support for as long as his Company was using the system.
6. Time to implement was critical. The new system needed to be up and running as soon as possible.
7. Last, but certainly not least, Kingo was on a budget. The system needed to be affordable.
Alternative Courses of Action and Evaluation
After some research, Kingo came up with five options. Here is a list of each of the options with their benefits and pitfalls.
1. Enterprise Resource Planning (ERP)
a. Pros: ERP systems were built around a central database, they were designed to be accessible remotely and claimed to integrate business processes by covering all aspects of a business.
b. Cons: An ERP system would be something for a larger organization; even small business quotes were for 20 to 25 users and were typically $2,500 per user per year with additional upfront costs close to the same amount. Kingo read online that a starting package for a business with 4 user licenses was actually $12,000. While it was nice to have a system that would encompass a whole business, ERP systems seemed mainly focused on production and finance modules which were not top priorities for Kingo.
2. Microsoft Access.
a. Pros: Upgrading from Works to Access could be done on a budget and in a short time frame. Access could be installed on individual machines or remotely through the internet and accessed through a secure virtual private network. Licenses were $179 each and Kingo felt that he could use his personal time on nights and weekends to install the needed software on individual machines.
b. Cons: While Microsoft Access would seem easy to implement, has vendor support and could be implemented in 2 weeks, in order for the system to be a central database on a remote server would require Kingo to most likely hire some additional IT support which could be costly and time consuming. MS Access also does not e-mail directly through the system.
3. Google Docs
a. Pros: Google Docs offered online applications to easily create text documents, spreadsheets, slide presentations and forms. Forms would be particularly useful to Kingo as they could be easily created and shared with employees. Employees could work collaboratively on the same file and e-mail distribution was supported. The cost was relatively low as well. For Kingo it would be approximately $50 per user per year. Google Docs could also be implemented in a matter of a few weeks.
b. Cons: Kingo knew of some friends who were afraid of using cloud computing, storing sensitive company data on tools and resources that were not completely in Kingo’s control. Also, data would have to be in one large spreadsheet, forcing everyone to see every field. Google Docs did not support the idea of a relational database where tables can reference certain information or fields in different tables.
4. Custom Application.
a. Pros: Kingo could have someone completely customize an application for his business. It could be web-based, which would be a central database and provide remote access. The development could take approximately 4 weeks which may be longer than Kingo would like, but still a relatively short time period.
b. Cons: While this seems like a good alternative, this could be very costly. King received an initial estimate of $2,000, however this did not include data migration which would be an added cost. Maintenance would also be an additional $60 per hour per developer and there is no way to estimate how much maintenance would be required. Another risk with a custom application – there is no way to preview it. You simply explain to the developer what you want and get an end result; there is no way of knowing if his needs are actually being met. Also, “vendor support” is billed by the hour post-implementation. This could easily add up, again with no way to estimate how much.
5. Platform as a Service (PaaS)
a. Pros: PaaS was defined as the provision for computational resources, namely storage, hardware, network capacity and some basic software functionality. With PaaS, users could use common applications, as well as build their own unique applications using a shared computing platform. After a trial by a PaaS provider, Kingo felt he would be able to build forms and connect tables himself. The system was fairly robust and easy to use. Also, implementation, including data migration would take only 3 days. This could be a system that could grow with the Company, and there was no long term contract required, Kingo could increase or decrease his service as needed, even having the ability to cancel with one month’s notice.
b. Cons: Similar to Google Docs, PaaS was on a cloud computing infrastructure bringing about the same hesitance in terms of sensitive client information being stored in the “cloud”. Service packages for PaaS ranged anywhere from $300 to $600 per month, depending on how much storage space, the number of user licenses and the number of applications needed. Also, if customization was required, there would be an additional charge billed at the rate of $180 per hour.
Evaluation of Alternatives
In looking at each of Kingo’s alternatives, it is important to look back at the drivers for his decision. 1-888-Junk-Van’s new IT system needs to have remote access, be a central database, have e-mail functionality, be implemented in a short time frame and not be excessive in terms of cost. Each of Kingo’s 5 alternatives should be ranked for each of his decision criteria. After the ranking, Kingo should see which option comes out as a top choice in the majority of the decision criteria.
Recommendation
I would recommend going with the PaaS system. While the system could cost $300-$600 per month, implementation would only take 3 days and the system has the resources necessary to have a centralized database and forms. After the onsite trial, Kingo felt the system was easy enough to use where he could build the forms and tables himself, without the need for additional IT resources. It is also beneficial to Kingo that there is no long term contract required. If he felt after implementation that the system was not as straightforward to use he could cancel with only one month’s notice and try to find a different solution.
Presentation
For my presentation, while I think my recommendation may not be the least costly I think it is the most effective in terms of the business processes and where Kingo would like to take the Company in the future. It would be important to show the pros and cons of each alternative, but reiterate to the Company’s management that they need to have a good system in place that is able to grow with the business. It only took one year for their existing system to start causing problems. While cost is definitely an issue and a key driver, a good reliable system is going to come with a cost. I think Kingo’s statement, “people do not fail, only bad systems do” is important to mention here. We don’t want to establish another bad system that will only cause more delays and customer complaints in the future. As mentioned under Evaluation of Alternatives, a table showing each option with each of the decision criteria may be helpful for management to easily see the pros and cons of each alternative.
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