Chapter 15 Article Review: When You Shouldn't Go Global

The article written by Marcus Alexander examines the obstacles and pitfalls which companies may encounter when going global. In today's economy and with the changes in deregulation policies over the past 15 years, many companies have been enticed to expand their operations globally. While this aggressive strategy exposes companies to global economies of scale, many organizations have been unable to capitalize on a global strategy and have made ill-fated mistakes. He attributes the failures both to the firm's deeply misguided global strategies and the execution was more difficult than anticipated. The author suggests considering three important questions when contemplating going global:

1) Are there potential benefits for our company?

2) Do we have the necessary management skills?

3) Will the costs outweigh the benefits?

"Before launching a global move, senior managers need to conduct a simple but rigorous self assessment to gauge the likelihood of success," according to Alexander. Many companies, such as Royah Ahold, a large Dutch supermarket operator, were able to identify the potential benefits of globalizing but they did not put themselves in a position to realize those benefits.

Chapter 15 Case Study: Nestle Tries for an All for One Global Strategy

2) What type of global business and systems strategy did Nestle adopt? Was this strategy appropriate for Nestle’s business model?

Nestle has not necessarily believed in the concept of the global consumer. None of Nestle’s products is considered a truly global brand, with perhaps the exception of Nescafe, of which 100 million cups are served around the world each year. Nestle does target the world market but does so by creating brand strength locally by each diversified region. Nestle's global strategy fits the multinational startegy which is characterized by decentralization of production, sales and marketing operations to units in other countries. This strategy works well for Nestle since they are in the food market which needs to take into consideration, differing business cultures and local market preferences. Nestle remains the leading food and beverage company in the world so their strategy is effective, however, their decentralization of operations makes it extremely difficult to mainstream IT systems.

3)What management, organization, and technology challenges did Nestle have to deal with to standardize its business processes and systems?

As complex as the challenge seemed, Nestle embarked on a program to standardize and coordinate its information systems and business processes through a system called GLOBE. The company initially installedSAP’s R/3 enterprise resource planning software to integrate material, distribution, and accounting applications in the United States, Europe, and Canada. Instead of technology managers, Johnson tried to build his team from a diverse group of business managers who had experience in a variety of business sectors including manufacturing, finance, marketing, and human resources. It became apparent to Johnson that the greatest challenge of GLOBE might not be technical, but was personal and organizational perhaps. Managers resisted the idea of giving up control over their business processes to particpate in a centralized solution.

4)What strategies did Nestle management use to deal with these challenges? How successful were these strategies?

The implementation of the GLOBE system was paramount to Nestle's global market approach and it required large scale company buy-in. By the end of 2005, Nestle had converted 30 percent of its business to GLOBE, and had the capacity for one major rollout every month. The 80 percent number by the end of 2006 was still looming but the company had learned how to operate as a single unit on a global scale. Nestle is much closer to achieving its goal of standardizing all processes, data, and systems. Chris Johnson was able to develop projections for his team that were both measureable and attainable. Such a large scale important project deserves adequate manpower, budget and time to allow for the system to be properly implemented.

Article Review: Microsoft Unveils Project Management Effort for Partners

On June 3, 2009, Microsoft announced that all of its US partners who utilize Microsoft Office Project Server 2007, will have access to share templates, project methodologies and other project-management assets associated with Office Project Server 2007 via a Web portal. They named this program, "Project for Workgroups." Project for Workgroups provides solutions built by Microsoft's partners to create enterprise project management systems. The aim is to reduce deployment costs associated with project management implementations.

There are so many aspects of Project Management to keep track of that a Manager with multiple projects must invest a great deal of time simply to follow each individual project. Depending on the number of projects running simultaneously, this process may be exceedingly time consuming. Since finding problem areas before they become critical is essential to effective Project Management, any delay could be costly.

Project Management tools that provide a global overview of all the projects in a company’s portfolio, are a time-saving solution that can positively affect the outcome of a project. Having the necessary information at the right time can make the difference between project failure and success. The right tool can also help you to leverage your resources (people, money, schedules and capacity).

Herb Torrens, Microsoft Unveils Project Management Effort for Partners, 6/05/2009

http://rcpmag.com/articles/2009/06/05/microsoft-unveils-project-management-effort-for-partners.aspx

Chapter 14 Case Study: What Went Wrong with Maine's New Medicaid System?

1. How important are information systems for Maine’s Department of Health and Human Services? Analyze the impact of its faulty Medicaid claims processing system.

Information systems play an important role in data management and claims processing for Maine's Dept. of Health and Human Services. Having worked with Medicaid billing and information systems in California, through their intermediary Electronic Data Systems, I am familiar with the importance that information sent through the system plays in claims reimbursement, eligibility verification and treatment authorizations. Thes information systems are very sensitive to data that passes through them and claims get rejected for the slightest of errors. Much of these functions are done through computerized systems such as those utilized by the Medicaid program in Maine. Maine relies heavily on information systems to accurately process over 100,000 claims per day and manage the privacy and medical coverage for over 260,000 of its low-income residents.

The faulty Medicaid claims processing system implemented in Maine had a significant negative impact on healthcare providers and Medicaid recipients. More specifically, providers serving Medicaid patients were not getting paid for services rendered and many were eventually forced to deny medical services to Medicaid recipients. Many healthcare providers who relied on revenue from Medicaid patients, were being faced with streneous financial challenges. Furthermore, once claims began getting processed, the system was error prone, causing an estimated $9 million in provider overpayments rsulting from payments for entire procedures rather than just those covered by Medicaid.

2. Evaluate the risks of the Medicaid claims processing system project and key risk factors.

The Medicaid claims processing project carried many inherent risks and risk factors. The largest risk that this project carried was the mismanagement of processing the data. Many healthcare providers render services daily to Medicaid recipients in the state of Maine and rely on Medicaid payments to support their practices. A major delay in claim reimbursement to those providers creates a large risk for an undesired chain of events which ultimately results in the lack of medical care provided to Medicaid recipients. Another risk for this project was that the state of Maine acquired a company with limited expertise in these sorts of claims processing systems. Although CNSI may have been able to develop an extraordinary claim processing system, they lacked the track record and experience necessary for such a project. Facing time constraints set by HIPAA regulatory compliance and receiving a lower bid from CNSI, the DHS took a big risk and rushed in accepting the RFP from CNSI.

5. If you were in charge of managing this project, what else would you have done differently to increase chances for success?

Intially, I would have done a little more research on the successful model's that other states have implemented and are running smoothly. Many other states outsource their claims processing to specialists, such as Electronic Data Systems, to manage their claims, eligibility, enrollment and treatment authorizations. I would then compare the financial feasibility and comparison of outsourcing versus enlisting a private contractor working with the current IT staff. Assuming, it was in the best interest for the residents of Maine to reject the option to outsource, I would have invested the taxpayer's money into a private contractor with a proven track record and significant history in the field. Upon deciding which contractor to use, I would require a minimum of four proposals to be submitted prior to granting any contractor the project. Once a contractor is selected and the system has been developed and completed, there would have to be a trial period of about two months, prior to complete conversion from the old claims processing, where sample claims would be processed to assure accuracy of the system

Sources: Management Information Systems Managing the Digital Firm, tenth edition. pgs. 589-591. Laudon, Kenneth C.