Harrah's High Payoff From Customer Information

Problem/Issue Statement

Harrah’s Entertainment, Inc. adopted a business strategy that focused on knowing their customers, superior value, and rewarding customer loyalty.  In order to battle competition and grow this business strategy, Harrah’s needed to implement creative marketing tools and information technology software. To execute the new business strategy, substantial investments in information technology were required to integrate data from a variety of sources for use in Harrah’s patron database (operational data store) and the marketing workbench (a data warehouse). The company wanted to truly understand the customers’ preferences by mining data, running experiments and learning what met customers’ needs.  In order to do these tasks, Harrah’s chose to adopt a new IT solution which included a data warehouse, customer loyalty program (Total Rewards) and closed loop marketing.  

The main problem Harrah’s Entertainment experienced was operating its 21 casinos as separate entities where each casino manager ran their properties as independent fiefdoms and marketing was conducted on a property by property basis. Customer relationships were not understood or managed.  Harrah’s did not know their customer’s behaviors or preferences and were falling short of identifying specific target customer segments. Other symptoms of this problem including segmented advertising and offers, an absence of an all-encompassing brand image and a clear strategy for the company to expand into additional gaming markets.

The scope of the problem extends to Harrah’s 21 casinos that serve over 19 million customers and employ over 40,000 people. In addition, multiple databases were maintained and needed to be integrated to create one customer database where analytics could be conducted.

Situation Assessment

The context of the problem is based on the new business strategy that Harrah’s adopted which included establishing one brand image for the gaming company, building lasting relationships with its customers and a more cost-effective plan to attract, maintain and enhance customer relationship.  The context of the problem stems from Harrah’s expansion into multiple gaming locations, response to fierce competition and capitalizing on tight margins.  It was critical for Harrah’s to invest in software that could understand customer preferences and create target marketing offers. 

When assessing how Harrah’s should address the issues stated above, the following decision criteria should be considered:

-  Create a single brand image through marketing tactics

-  Foster customer relationships

-  Predict and analyze customer preferences and habits

-  Leverage IT systems to compete with new players in market

-  Prepare for future growth in industry

List of Plausible Alternative Courses of Action

To address the issues Harrah’s faced, management decided to develop WINet, which would collect customer data from various source systems, integrate data around customers, and identify market segments and customer profiles. It also helped create appealing offers for customers to visit Harrah’s casinos. WINet pulled data from a patron database that serviced as an operational data store. By creating WINet, Harrah’s was able to leverage their customer database and tailor offer’s to their customers.

Data was collected from a variety of source systems which included specific details about customer’s demographics, duration of stay and special events attended. All customer information was tracked. The Marketing Workbench (MWB) was created to serve as Harrah’s data warehouse. This is where analytics are performed. 

In addition, Harrah’s also developed its Total Rewards program, a customer loyalty program. This highly evolved program tracks, retains and rewards customers over time.

Harrah’s also implemented closed-loop marketing was developed to design, test and retain results for future use. The company was able to learn what types of campaigns or treatments provide the highest net value.

Harrah’s management team was able to successfully integrate the comprehensive data of their customers nationwide and derive target marketing programs designed for specific customer segments. The new business strategy aided by the IT solutions resulted in a 62% internal rate of return on investments in information technology, 14% revenue growth in same store sales and increased frequency of visits by customers.

However, Harrah’s competition is adopting similar technologies to learn about customer preferences, habits and needs.  It is in Harrah’s best interest to leverage these IT capabilities and continue to grow in order remain the leader in the gaming industry.  The company should constantly enhance the data warehouse and consider integrating a more dynamic analytical tool to further evaluate customers and possible offer insight into future habits.

It is commendable that Harrah’s did not fall victim of investing in gimmicks such as sunken pirate ships and roller coasters.  These investments are frivolous and fleeting. Rather, the company decided to be an early adopter of a data warehouse which was used to support its customer loyalty program and closed loop marketing efforts.

The company uses closed-loop marketing which allows it to learn what types of marketing campaigns provide the highest net value. Thousands of experiments were conducted and results were evaluated. Feedback provided insight into which campaigns generate a higher relative value. It is in the Harrah’s best interest to continue researching customers and finding which campaigns are best received by specific target markets. This will not only help foster customer relationships but also provide insight into trends, demographics and changing customer preferences.

Since Harrah's is revamping its website, the company can use this time to experiment with advertising offers on the site.  Harrah's can offer a free night stay, coupons to shows, restaurants. This also gives Harrah's the opportunity to integrate the Total Rewards program online. By enabling online access, the customer can track points, view upcoming rewards and offers.  This also gives the company the opportunity to link email addresses with customers and rewards. 

Another area Harrah’s should develop is in online hotel booking.  Currently, the internet is booming and growing at an exponential rate.  Competitor casinos and other hotels chains now offer online hotel booking to customers. Since Harrah's is in the transition of rebranding and revamping the website, it can enable hotel booking to provide a fast convenient way for customers to plan their trips. 

Harrah's needs to develop target marketing programs for not only the gamblers but also the customers who visit the casino and utilize the restaurants, shows and special events. Through the customer database, the company should develop ways to create special offers to customers who have visited the casino in the past for special events. For example, if a customer has visited the casino for a large boxing match, the company leverage this knowledge and send offers.
 
Harrah’s management team was able to successfully integrate the comprehensive data of their customers nationwide to derive target marketing programs designed for specific customer segments. The new business strategy aided by the IT solutions resulted in a 62% internal rate of return on investments in information technology, 14% revenue growth in same store sales and increased frequency of visits by customers.

Evaluation of Alternatives

When evaluating the decision criteria that Harrah’s developed one can see that Harrah’s was in need of two major items: develop an IT structure to support the new business strategy and in turn leverage the IT system to learn about customers.  Harrah’s was very successful in addressing all of the decision criteria.  Not only did Harrah’s successfully integrate the voluminous customer data but it also created a cohesive brand image. The new business strategy aided by the IT solutions resulted in a 62% internal rate of return on investments in information technology.  In addition, 14% revenue growth in same store sales and increased frequency of visits by customers.

However, Harrah’s should not be complacent and stagnant with their patron database and marketing efforts.   The alternative suggestions for Harrah’s such as developing a highly capable website site and offering discounts on coupon website further support the decision criteria and the new business strategy.

Since Harrah’s was a market leader in their decision to create one brand image, integrate all customer databases throughout the 21 casinos and offer a superior customer rewards program, the company should continue their imaginative ways when evaluating addition alternatives.  The company has prospered by adopting this market leader position and should continue for the future.    

Recommendation

After reviewing the success of Harrah’s new business strategy and IT software, it is clear that the company needs to continue with their practices.  My recommendation is to grow and enhance the already effective patron database by adding more analytical tools that can be used in conjunction with marketing efforts. In addition, the company should introduce apps for mobile devices and link the Total Rewards program.  The company should utilize its website to further their marketing offers.  Overall, Harrah’s should not abandon their business strategy or IT structure. It has proven to be capable and an effective means to grow the company.  

 

Presentation

·    If I were presenting as a consultant to the class, I would state that I have been commissioned to identify the effectiveness of Harrah’s new business strategy which was supported by a new IT structure that encompassed the WINet database, Total Rewards program and closed-loop marketing.  All features would be described in detail. I would address the decision criteria the company prepared and how their improvements led to addressing all facets. I would offer recommendations on how to further their marketing efforts and commend the company on their successes.

·         Visual aids to be used in presentation:

o   PowerPoint presentation for the major improvements and integrations the company implemented;

o   Decision criteria for the new business strategy; and

o   How to continue to be a market leader and further their understand their customers.

Bombardier ERP Implementation Reflection

Memo

To:	Senior Management
From:	Allison DeLorenzo
Date:	April 8, 2014
Re:	Bombardier ERP Implementation Reflection

This memo is prepared in response to the presentation held on Tuesday, April 8, 2014 with the consultant team, regarding how Bombardier can improve its ERP implementation at the third location and subsequent locations. As stated in the presentation, Bomardier's second implementation at Saint-Laurent greatly improved from its first implementation at Mirabel.  Bombardier wonderfully completed some facets of implementation. These facets included knowing why the company was implementing an ERP system, recognized the value in early planning, understood the business processes and planned for data migration. However, Bomardier fell short in key phases which if addressed properly could led to better implementation results.  The consultants discussed that Bombardier needs to improve upon building a business case for an ERP system with a positive ROI, gain executive and organizational commitment, ensure proper project management and resource commitment and invest in training/change management.

To address the inherent disconnect between management, employees and the project team and the issues mentioned above, a best practices framework was presented. After listening to the consultants recommendation and analyzing my own research, I agree that Bombardier needs to implement a best practices framework.  Even though the company greatly improved from the first implementation, there are still numerous issues not being addressed.  The best practices framework of presented was comprehensive and helps the company understand the importance facets.

One item I would address differently is regarding the invest in training and change management phase.  I would address these separately since they are very different items.  Investing in training is necessary and highly qualified trainers/consultants should be readily available to train and support users. A suggestion would be to formulate a detailed training program including materials and workshops prior to implementation.  As for change management, this needs to be a stand alone best practice. Change management should also include a business transformation plan which should identify roles and responsibilities that will change when the ERP is implemented.  Since employee's positions are based upon functions, the plan will introduce employees to new roles and assignments prior to implementing the ERP system.  By giving employees time to adjust to new responsibilities, this can alleviate the negative feelings towards learning a new system.

I believe the recommendation to adopt a best practices framework is in Bombardier's best interest.  The company has committed a great deal of financial and personnel resources to this project and implementation is key in determining overall success. The best practices framework should not only be carried out by the project team but also management while the employees should be aware of this framework. If the best practices framework is carried out properly, implementation at the third location is projected to surpass the Saint-Laurent implementation.

Bombardier “Successfully Navigating the Turbulent Skies of a Large-Scale ERP Implementation"

Problem/Issue Statement

Through acquisitions and expansion, Bombardier Aerospace inherited data, processes and specific systems of each company.   This “silo organization” model resulted in problems and inefficiencies especially in inventory, through the purchasing and procurement department. The individual systems did not communicate with each other efficiently and it was difficult to share data between all facilities. 

Due to these inefficiencies and problems, Bombardier Aerospace committed to replacing its legacy systems with a state-of-the-art integrated Enterprise Resource System. Implementing an ERP system was thought to be the answer to maintaining a competitive advantage in the turbulent market.   The primary goal of the system was to improve the visibility and reduce the value of the inventory held by the company.

These large ERP systems are complex and frequently result in lower than expected performance. Research has shown that less than 50% of implementations achieve expected benefits while only 17% of the companies experiences more than eighty percent of their projected benefits.  After the first failed attempt to implement an ERP system in 2000 costing the company about $130 million, the company decided to hire a consultant company, assembled an in-house ERP development team and establish a new vision throughout the organization “One Company”.

After years of development and delays, Bombardier decided to implement the Bombardier Manufacturing Information System (BMIS) one plant at a time, the first being at the Mirabel plant located near Montreal. The second implementation occurred at the Saint-Laurent plant.

The main problem the company facing during the implementation/roll out phase of the ERP system. Even though there was an improvement in the efficiency and success of execution at Saint-Laurent plant from the first implementation at Mirabel, there is room for great improvement. There is an inherent disconnect between the business and project team causing a lack of communication. This is adversely affecting the roll out and training periods. To address the main problem going forward, the company needs to prepare a Best Practices framework to follow.

The following symptoms have been identified:

·        lack of communication between business and project team;

·        specialized knowledge concentrated in a few individuals;

·        members of management who are openly adverse to the new system;

·        training was not seen as a priority;

·        new system was not see as a priority with business members;

·        lack of time for training/poor time management;

·        employees still utilizing legacy systems to complete functions of their jobs;

·        embellishing scorecards to hid issues;

·        lack of protocol to measure success of implementation;

·        employees lack a general understanding as to why they were being sent for training and why the system was necessary;

·        training was intense and users complained it focused on exceptions and details;

·        employee roles were still being defined during the implementation causing further questioning;

·        issues timing of when to roll out at different locations/departments;

·        lack of methods/protocol to address change orders or errors with technology;

·        Users lack of ownership of the system;

The scope of the problem involves the rest of the plants and locations of Bombardier that will implement the ERP system. This includes over 27,130 employees and13 facilities worldwide. Before moving further in the implementation process, it is imperative to establish best practices to ensure a seamless transition for the employees and the project team. Bombardier has already improved from the first roll out, so these best practices later identified will enhance the process.  Using a best practices framework, will rely on management to take a proactive role in the implementation and embrace the new ERP system. 

Situation Assessment

The context of the problem is based on the implementation (both positively and negatively) at the first two locations: Mirabel and Saint-Laurent.  The context of the problem stems from not having a consistent plan for rolling out the ERP system which causes issues with the project team, employees and management.  The lack of best practices is causes disorganization and distress among trainers and employees.

When assessing which Best Practices Bombardier should include in the framework, the following decision criteria should be considered:

·        Set clear goals and objectives

·        Stronger communication between management and employees and between project team and company

·        Gain management’s support for ERP

·        Address the timing issue

·        Address training issues

List of Plausible Alternative Courses of Action

The alternative course of action for Bombardier is to adopt a Best Practices framework for ERP implementation.  After researching ERP Best Practices from numerous corporations and consulting firms, eight key requirements have been identified.  These key requirements address not only the main problem but also the symptoms.   

The best practices framework Bombardier should implement are based on the following:

1)     Understand business processes and key requirement.

The absolute first step in executing any business system is to gain a thorough understanding of the processes that comprise the business operations. A complete knowledge of the business processes is essential for implementing an ERP system. In addition, prioritizing business requirements is very important.  The best strategy for this is to satisfy immediate business needs then longer-term objectives. The project team should discuss with employees their everyday work and what it entails.This will eliminate the discount between the new software and employees.

2)     Clear goals and objectives.

The next step in the best practice framework should be to define clear goals and objectives on three fronts: project team, business management and employees.  These goals should also be obtainable and define the benefits the company expects from implementing an ERP system. Employees need to know why the system is necessary. The new ERP system affects many departments throughout the organization and by making goals/objectives clear it will help everyone get a sense of the company’s direction. It will also create a sense of responsibility to individual employees. 

3)     Choosing the right software.

Bombardier needs to match the software to the organization’s needs, business processes, functional requirements and normal business operations. For example, Bombardier chose to use SAP and implement the BMIS system for manufacturing facilities.  

4)     Ensure proper project management and resource commitment

A dedicated project manager who is involved in both planning and ongoing management is essential to implementing an ERP system. In addition, Bombardier needs to commit resources to the project through all phases of implementation.  This includes financial support, management support and end user support. Bombardier has shown a commitment to this project, however it should maintain this commitment until completion.

5)     Gain executive and organizational commitment

In order for the goals and objectives to be clearly communicated to the organization, executives and top management need to support the ERP system. Management should hold ramp up/roll out meetings to address the benefits of the system and why the company is choosing to implement it.  In addition, this will foster a positive attitude toward changing to an ERP system since people are inherently adverse to change. The was seen at the Saint-Laurent location which positively helped implementation.

6)     Plan early

Bombardier should prepare a detailed plan outlining the implementation plan and timeline for each location.  By pinpointing particular steps and addressing when and how they will be done will take the guess work out during the critical implementation phase. As seen in the first two roll outs, business personnel did not communicate in a timely manner to employees regarding training sessions. In addition, timing of implementation to consider the business functions it is affecting.  For example, implementing the new financial/accounting system in the fourth quarter is not the best decision.  

7)     Invest in training

Since employee roles and responsibilities can be affected by the ERP, training should concentrate on business workflows and how these changes affect job roles and the people who do the work. In addition, highly qualified trainers/consultants should be readily available to train and support users on the daily use of the system including addressing issues that may occur.  A detailed training program should also be established and adhered to.

8)     Change management/business transformation plan

Bombardier should prepare a business transformation plan. This includes identifying roles and responsibilities that will change when the ERP is implemented. Employees need to be introduces to new processes and job roles over a period of time so they have time to adjust. As seen in Bombardier, the planners and buyers did not have ample time to adjust which negatively affected the implementation and caused resistance to the ERP system.

Evaluation of Alternatives

When evaluating the eight key requirements for the best practices framework, it is important to analyze which option covers all of most of the main problem, symptoms and decision criteria. The best practices framework helps the implementation process by planning early, enhances the communication between management, project team and employees and addresses the lack of commitment by the business personnel.  In addition, these eight key requirements give the project team and management a road map of all the moving parts involved in the implementation process.  Bombardier should review and analyze these eight requirements and make additional or revisions as they see fit.   

Bombardier needs to be realistic in choosing the key requirements that are incorporates into the best practices framework. Eight best practice requirements have been identified, now Bombardier should review them and see which fit their needs. These best practices should be incorporates at the third location's implementation and all subsequent locations.

      Recommendation

After reviewing the issues Bombardier experienced at the first two locations, it is clear that the company needs to incorporate a best practices framework.  My recommendation is to use some or all of the key requirements identified above.  By using a best practices framework, Bombardier will not only improve on the technical implementation but it will also address the negative feelings held by employees.  The framework will generate commitment from management which in turn will help communicate the positive changes to employees. Bombardier also needs to set clear goals and objectives and communicate them to the entire business.  This will help employees understand why the BMIS is being implemented.  Bombardier should also plan early for the roll out at each location including proper notification, training schedules, and provide a detailed plan of how/when implementation will occur.  Bombardier’s business personnel should plan accordingly and change roles and responsibilities prior to implementation.  This will alleviate employee frustration and distress.  Training should be provided to all employees before, during and after implementation.  The project team should prepare a detailed training plan for each location, including the training schedules, contact information and materials. 

Presentation

      If I were presenting as a consultant to the class, I would state that I have been commissioned to identify some of the Best Practice frameworks that exist and could be applied to Bombardier.  I would discuss how each key requirement can be used during the BMIS implementation process. 

      I would detail the main problem and issues faced during implementation.  I would also address the decisions criteria and the needs of the company.  I would discuss the eight Best Practices requirements identified.   

     Visual aids to be used in presentation:

o   PowerPoint presentation for the major issues/symptoms occurring during implementation locations;

o   Decision criteria for the best practices framework; and

o   How the best practice requirements can be incorporated in Bombardier.

I would “sell” the eight key requirements to Bombardier by stressing the importance of adopting a best practice framework.  The company needs a detailed plan that provides solutions to the main problem and symptoms.  All of the key requirements can be applied to company and will aid in improving the implementation of the BMIS system.  Since the implementation process is already improving,  by addressing the rest of the symptoms will create a seamless transition not only for the project team but for the business personnel and employees. 

Should ABC Law Firm Invest in Microsoft Project?

ABC Law Firm depends on Microsoft Excel and Word for preparing diagrams, tables, charts and flow charts which are incorporated throughout the practice. For example, the firm relies on a bullet point checklist to ensure the proper steps are completed when a new employee is hired through the employee orientation day or to ensure proper documents are presented during a real estate transaction.  In addition, timelines are prepared in Word and Excel to ensure proper litigation calendaring for important dates and filings with the Court. Preparing charts and table timelines in Excel and Word can be time consuming and the customization features are limited.  


After researching Microsoft Project as a possible software application for the firm, I found it has a multitude of functions and is a robust software program. Microsoft Project enables the user to organize tasks, duration of tasks, predecessor events, assign resources/employees and organizes the tasks into numerous charts including Gantt charts and network diagrams.  The user can designate a team planner, monitor usage of resources and track progress.  Microsoft project also enables the user to generate reports such as resource allocation, cost overview, project overview and task completion/milestone. As a first time user of Microsoft Project, I found the software to be complicated and extremely detailed. In order to use the program to its highest functionality, training needs to be completed. 

Now the question is presented: Should ABC Law Firm Invest in Microsoft Project?

Microsoft Project is a wonderful program to illustrate, monitor and report on projects with numerous moving parts, personnel and resources.  The exceptional detail in the functionality offered by Project is simply not necessary for the legal work conducted at ABC Law Firm. The firm does not partake in large resource planning projects, employee scheduling or projects where this program could be utilized. The only function of Project that ABC Law Firm would benefit from is the timeline however, if the firm invests in Microsoft Visio that need will be fulfilled. This program is better suited for project management firms, real estate developers both commercial and residential and IT developers. 

At this point in time, ABC Law firm should not invest in Microsoft Project. The size of the firm coupled with the work conducted simply does not warrant an investment into this program.

Business Impacts of Virtualization on ABC Law Firm

ABC Law Firm currently uses Windows 7 and all Windows based software and applications including Microsoft Office 2007.  The accounting system, Tabs3, and the document management system, Worldox, run on a Windows based platform.  An alternative to a Windows operating system is a Linux based operating system called Ubuntu which has very similar capabilities to Windows.  Ubuntu offers Libre Office that including word processing, spreadsheet and presentation applications. Ubuntu is an open source operating system where numerous contributors can change, modify and re-compile the code to fit their needs.  In addition, Ubuntu is free of charge and offers an application called Wine that can make Windows based software and applications compatible with and run on Ubuntu. 

The question is posed: Should ABC Law Firm virtualize the workstations with Ubuntu as an alternative operating system?  Virtualization refers to creating a virtual version of something rather than an actual version, which can be used on computer hardware, operating systems or desktops. 

After researching this alternative, there is a major security threat posed with running Ubuntu on the workstations of ABC Law Firm.  Since the operating system is open source, anyone can program back door access which could lead to security risks. This could lead to confidential data being comprised including employee and client financials and personal information.

In addition, Wine acts as a API layer between Ubuntu and the Windows based software.  Wine does not guarantee that the accounting system and document management system will operate with Ubuntu which again can cause major concerns.  Since the firm is in its fourth year of operation, investing in another accounting system and document management system would not be prudent.

Another dimension to review is the third party support agreements the firm has in place.  ABC Law Firm has third party support agreements in place with Tabs3 in the amount of $3,000 per year and Worldox $2,800 per year. These two software programs are specifically made to run on a Windows based platform. If the firm was to run these applications through Wine and Ubuntu, the service agreements can be null and void leading to further issues for the firm.  Lastly, our third party IT representative would not be able to support Ubuntu since he does not have specialized training in it.  Lastly, centralized Linux/Ubuntu support may be difficult to locate and is costlier than Windows which can about increase IT costs.

This analysis is purely addressing the drawbacks to virtualizing the workstations with Ubuntu as an alternative operating system.   It would be in ABC Law Firm's best interest not to use Ubuntu as a dual operating system. In addition, this analysis does not consider the training costs involved including lost billable hours, installation of Ubuntu and maintenance.


However, desktop virtualization has proved to be a highly effective means of conducting business for ABC Law Firm. ABC Law Firm established desktop virtualization or virtual desktop infrastructure (VDI) for all employees through its remote access. When employees are not physically in the office, they can access their workstations through a specific remote access website. Employees are designated to a specific workstation with a username and password. Employees can interact or "log in" to the host computer (workstation) using another desktop computer, laptop or mobile device through an internet connection. 

The firm's data and confidential information is never actually saved to employees' personal desktops or laptops since it could create potential security risks. In addition, if personal devices are infected with a virus the firm's workstations and server will be protected since no information actually exists on the personal devices.  

The question is posed: Has desktop virtualization had any impacts both positively or negatively on ABC Law Firm?

One major impact that desktop virtualization had for the firm was during Hurricane Sandy. The firm's physical office was without power and employees were not able to travel to and from the office. Remote access granted employees the ability to work from home and continue generating revenue through billable hours.    

The table below describes the potential lost revenue if the firm did not implement desktop virtualization. As one can see, the firm could have lost about $180,000.00 during those 8 days without physical access to the office.  That would have had a significant impact on a firm only in its second year of operation.  Desktop virtualization is a wonderful tool to provide employees not only during inclement weather days but also while traveling or attending meetings.

Potentially Lost Revenue
Title	Hourly Rate	Average Hours Billed Per Day	Total Revenue Per Day	Work Days without Power	Total Lost Revenue
Partner 1	$425.00	7	$2,975.00	8	$23,800.00
Partner 2	$375.00	7	$2,625.00	8	$21,000.00
Partner 3	$375.00	7	$2,625.00	8	$21,000.00
Of Counsel 1	$350.00	7	$2,450.00	8	$19,600.00
Of Counsel 2	$350.00	7	$2,450.00	8	$19,600.00
Of Counsel 3	$350.00	7	$2,450.00	8	$19,600.00
Of Counsel 4 (part time)	$350.00	4	$1,400.00	8	$11,200.00
Of Counsel 5 (part time)	$350.00	4	$1,400.00	8	$11,200.00
Associate	$250.00	7	$1,750.00	8	$14,000.00
Paralegal 1	$125.00	5	$625.00	8	$5,000.00
Paralegal 2	$125.00	5	$625.00	8	$5,000.00
Paralegal 3	$125.00	5	$625.00	8	$5,000.00
Paralegal 4 (part time)	$125.00	4	$500.00	8	$4,000.00
				TOTAL REVENUE LOST	$180,000.00

Strategic IT Transformation at Accenture Reflection

Memo

To:	Senior Management
From:	Allison DeLorenzo
Date:	March 5, 2014
Re:	Strategic IT Transformation at Accenture Reflection

This memo is prepared in response to the presentation held on Tuesday, March 4, 2014 with ConsultCube LLC, a United States consultant team, regarding whether Accenture should invest in and implement a completely new IT governance framework, COBIT 5 or maintain its current IT governance system. As stated in the presentation, the main criteria driving this decision are cost efficiency, regulatory compliance, risk and business process management, training, and flexible control. Accenture is currently using its own IT governance system that was created as a result of the re-branding from Arthur Anderson in 2001.  The current system consists of steering committees, project sponsors and an ROI auditing process. In addition, the current system is cost effective and has aided in the overall reduction in IT costs (i.e. approximately $8,000 savings per employee due to new infrastructure and IT governance system).

After listening to the consultants recommendation and analyzing the risks involved with both courses of action, I agree that Accenture should maintain its current IT governance system. Even though COBIT 5 is used worldwide and incorporates industry-proven best practices and applications, Accenture's current model already has these practices and standards in place that prove to be working effectively.  The current IT governance system addresses 4 of the 5 main principles of COBIT 5 including risk/regulatory compliance analysis, monitoring and measuring IT projects. The fifth principle requires a decentralized management style which would change Accenture greatly. The system was specifically developed for Accenture whereas COBIT 5 is generic and can be applied to all industries.  By maintaining Accenture's current system, the company will avoid COBIT 5 material costs, exorbitant training costs, constultant fees and loss of productivity.   Lastly, the current system is flexible and can adapt as Accenture grows. 


One interesting fact that was discussed during the meeting was that at the present time there is no evidence of other IT companies comparable to Accenture that have implemented COBIT 5.  Due to this fact, there is no tangible measure of how a COBIT 5 accreditation will impact business and what the company can gain from it which further solidifies the recommendation to maintain the current governance system. 

I believe this recommendation to maintain the current governance system will aid in Accenture's future growth and IT cost reductions. Adopting COBIT 5 is not a prudent decision at this time.