INSTITUTE OF ACCOUNTANCY ARUSHA

IN COLLABORATION WITHCOVENTRY UNIVERSITY (UK)

MASTERS IN BUSINESS ADMINISTRATIONIN INFORMATION TECHNOLOGY MANAGEMENT

REPORT ON THE IMPORTANCE OF IS/IT STRATEGY AND CHANGE MANAGEMENT IN ORGANIZATION.A CASE STUDY OF MSD

MODULE NAME: IS-IT STRATEGYMODULE CODE: ECM28EMDCOURSE WORK :INDIVIDUAL ASSIGNMENTLECTURER: Dr. Titus TossyDUE DATE:13/05/2013

SUBMITED BY:MNZAVA, EMMANUELMBA-ITM/161/T.2012

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LIST OF ABBREVIATIONICTInformation and Communication TechnologyISInformation System StrategyMSDMedical Stores Department

EXECUTIVE SUMMARYOverviewThe Medical Stores Department (MSD) is a semi-autonomous branch of the Ministry of Health in Tanzania which is responsible for the procurement, storage and distribution of medicines, medical supplies and laboratory supplies to health facilities throughout the country. In support of these activities, MSD currently runs the ORION Enterprise Resource Planning (ERP) system as its core business application. The system was implemented in 2002, since which time MSD has experienced significant changes in sales volume, market expectations, and has acquired additional responsibilities, especially in the area of vertical program product management. While the business has changed significantly, the functionality of the system has remained relatively static during the ten years since its implementation. MSD staff has developed numerous parallel systems and workarounds to address the challenges facing them, but while these efforts have addressed immediate business needs the value of the ERP system as the central hub of enterprise-wide information has declined and the integration of operations between business units has suffered. A post-implementation audit of ORION completed in 2008 concluded that the system does not support the current or future needs of MSD and should be replaced, either through an upgrade of the current ORION product, or with the implementation of a new application or applications. A medium term strategic business plan for 2006 to 2007 authored in 2006 drew similar conclusions, and the sentiment expressed by executive management and staff indicates a general dissatisfaction with the current ORION implementation.

TABLE OF CONTENTSLIST OF ABBREVIATIONiEXECUTIVE SUMMARY2TABLE OF CONTENTS3BACKGROUND4Medical Stores Department Overview4Current ERP System4INTRODUCTION7IT Values8Excellence8Team Spirit8Integrity9Professionalism9Transparency9What is change management?9ENVIRONMENT ANALYSIS10The concept of value chain10Identifying External and Internal Environment12Why Change management is important13THE CASE OF MSD16CONCLUSION17REFERENCE18

BACKGROUNDMedical Stores Department OverviewThe Medical Stores Department is a semi-autonomous branch of the Tanzania Ministry of Health and Social Welfare, with board of directors overseeing its operations. It is charged with the procurement, storage and distribution of medicines, medical and laboratory supplies to government health facilities and non-profit health service organizations within the country of Tanzania. As of 2009, MSD had sales of 62.5 billion TZS, and experienced average year over year growth in excess of 30%1 over a seven year period. In addition, the volume of products handled by MSD from the donor community, which are distributed but not factored into MSD sales volume, has been rising over the same time period. MSD has its headquarters in Dar Es Salaam and operates 9 zonal stores throughout the country .The MSD organization includes Finance, Human Resources, Logistics, Customer Service and Sales, Information Systems, and Pharmaceutical Technical Services (including procurement) departments at headquarters location. The zonal stores report administratively under the Customer Service and Sales department organization. Each zonal store has Finance, Sales, Customer Service and Logistics reporting to a zonal stores manager. Each functional group has a dotted line report back to a headquarters manager in their functional area. In addition to the approximately 410 full-time employees, MSD utilizes a number of contract employees, particularly in warehousing and distribution roles.Current ERP SystemEarly in 2002 MSD changed their core business system, at that time Navision, and implemented ORION, a product of 3i Infotec of India. The project management of the implementation was outsourced under a DANIDA contract. The technical implementation was executed by 3i Infotech working through a local agent, Simba Technology.

ORION was initially configured with 12 modules: Tendering, Procurement, Letter of Credits, Supplier performance, Quality Control, Complaints handling, Finance, Inventory Management, Sales and Distribution, Demand Forecast, Transportation, and Warehouse Management. This wide range of modules was to ensure that all required functionality would be available for utilization by MSD staff. ORION is a centralized Enterprise Requirements Planning (ERP) application and is installed on servers at the MSD headquarters in Dar Es Salaam (Dar-Central). The zonal stores have access to the application via an VPN connection and can register their daily activities, i.e. Customer payments and Sales order entry, directly in the centralized database. Unfortunately the organization experiences significant problems with connectivity between zonal stores and Dar-Central, which has had a negative impact on the zonal operations. Opinions were heard that the system would have been better of as a decentralized system.

MSD Business and Environment Has Changed Significantly Since Last ERP ImplementationA post-implementation audit of ORION completed in 2008 concluded that the system does not support the current or future needs of MSD and should be replaced, either through an upgrade of the current ORION product, or with the implementation of a new application or applications. A medium term strategic business plan for 2006 to 2012 authored in 2006 drew similar conclusions, and the sentiment expressed by executive management and staff indicated a general dissatisfaction with the current ORION implementation. The recommendation was for it to be upgraded or replaced with a new system which is aligned to current and future MSD business requirements.

INTRODUCTIONOver the years, many organizations have made technology decisions and acquisitions that impact organizational information systems (IS) on the basis of what they believe or recommendations from vendors or colleagues from other organizations. The end result of this approach toward decision making and expenditure of funds has been quite unpredictable. The pervasive nature of IS in todays organizations coupled with increased pressure to leverage technology assets has dramatically increased the importance of strategic information systems planning (Bechor, Neuman, Zviran and Glezer, 2009). Today, most organizations insist that technology and IS- related decisions be made with a clear understanding of business and organization strategy and direction. Hoque, Sambamurthy, Zmud, Trainer, and Wilson, (2005) in Winning the 3 Legged Redefine alignment as the situation in which a companys current and emerging business strategy is enabled, supported and unconstrained by technology. Piccoli (2008, p. 155) states that organizations achieve a high degree of fit and consonance between priorities and activities of the IS function and the strategic direction of the firm when they are able to achieve this so-called strategic alignment. Alignment has become one of the top issues and concerns of IS management executives (Gutierrez, Orozco, and Serrano, 2009). MSD Vision and Mission in line with IT Vision, Mission, Values & BehavioursIf there isnt a constant focus on Mission and Vision its much too easy to get mired in the day to day routine. Activities become aimless, repetitive, and boring.Revitalizing a team to perform differently will be much more difficult if there is nothing for it to aspire to. Aspiration must also be in real-world terms that are meaningful and not IT for ITs sake.MSD Mission is what we do best every day and our Vision is what the future looks like to do the Mission very well. Our Values underpin the way we want to perform every action.

The Vision and Mission for IT presented below are build on the MSD aims for the Long-Term Strategy and they encapsulate the key attributes that MSD clients expect MSD to be able to provide.MSD VisionIT Vision

To provide quality medical Services Closer to PeopleTo deliver reliable and innovative IT Services and solutions needed to fulfill MSDs mission anytime, anywhere, on target, on time and on budget.

MSD MissionIT Mission

To make available at all times essential drugs and medical supplies of acceptable quality at cost-effective prices to the population through government and approved non-government and private health facilities.MSD is a Business that is user-centric, business-oriented, innovation-focused, and standard compliant. We strive to provide efficient, effective and modern IT infrastructure and application services to support, optimize and transform MSDs business process throughout Tanzania.

IT ValuesExcellenceQuest for the highest level of performance through continuous improvement of our skills and business practicesTeam SpiritWorking together in a spirit of creativity and mutual respect to achieve common objectivesIntegrityObserving the highest standards of ethics, honesty and accountability at all timesProfessionalismDelivering the best quality service to our clients with utmost rigour and efficiencyTransparencyActing with clarity, equity and objectivity in designing, interpreting and applying MSD policies and procedure.

What is change management?As regulatory pressures, increasing customer demands and competitive forces impact organizations on a worldwide basis, change is becoming the norm rather than the exception. It is therefore becoming increasingly important for leaders at all levels to act not only in their traditional roles as supervisors and managers, but also as transitional leaders or leaders who deploy a specific change management strategy whenever necessary. This is a role that focuses on guiding people through the changes inherent in all kinds of teams, departments and whole organizations today. We therefore need to spend a little time in both defining the term managing change talking about the overall tasks that are involved in managing organizational change.

ENVIRONMENT ANALYSISThe concept of value chainAs Recklies (2001) said, the term "Value Chain" was used by Michael Porter (1985). The value chain analysis describes the activities the organization performs and links them to the organizations competitive position. He believes: Value chain analysis describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organizations products or services. This idea was built upon the insight that an organization is more than a random compilation of machinery, equipment, people and money. Only if these things are arranged into systems and systematic activates it will become possible to produce something for which customers are willing to pay a price. Porter argues that the ability to perform particular activities and to manage the linkages between these activities is a source of competitive advantage (Recklies, 2001) .Porter (1985) distinguishes between primary activities and support activities. Primary activities are directly concerned with the creation or delivery of a product or service. They can be grouped into five main areas: inbound logistics, operations, outbound logistics, marketing and sales, and service. Each of these primary activities is linked to support activities, which help to improve their effectiveness or efficiency. There are four main areas of support activities: procurement, technology development (including R&D), human resource management, and infrastructure (systems for planning, finance, quality, information management etc.).The Value Chain framework of Michael Porter is a model that helps to analyze specific activities through which firms can create value and competitive advantage. The goal of Primary Value Chain activities is to create value that exceeds the cost of providing the product or service, thus generating a profit margin. Inbound logistics include the receiving, warehousing, and inventory control of input materials. Operations are the value-creating activities that transform the inputs into the final product. Outbound logistics are the activities required to get the finished product to the customer, including warehousing, order fulfillment, etc. Marketing & Sales are those activities associated with getting buyers to purchase the product, including channel selection, advertising, pricing, etc. Service activities are those that maintain and enhance the product's value including customer support, repair services, etc.Any or all of these primary activities may be vital in developing a competitive advantage. The primary value chain activities described above are facilitated by support activities. Porter identified four generic categories of support activities, the details of which are industry-specific. Procurement - the function of purchasing the raw materials and other inputs used in the value-creating activities. Technology Development - includes research and development, process automation, and other technology development used to support the value-chain activities. Human Resource Management - the activities associated with recruiting, development, and compensation of employees. Firm Infrastructure - includes activities such as finance, legal, quality management, etc.Support activities often are viewed as "overhead", but some firms successfully have used them to develop a competitive advantage, for example, to develop a cost advantage through innovative management of ISs (porter, 1985) IT is also pervasive throughout all parts of the value chain.Porter's model recognizes five major forces that could endanger a companys position in a given industry. These forces are and in the figure 4 Porters five forces model, including the major determinant of each force presented:i. The threat of entry of new competitorsii. The bargaining power of suppliersiii. The bargaining power of customers (buyers)iv. The threat of substitute products or servicesv. The rivalry among existing firms in the industry

Identifying External and Internal EnvironmentAdapting with the change of environment that is external or internal is one of the key factors of strategic planning.Definition of external environment goes to recognize the threats and opportunities in the working environment. For the things that effect on organizations task and future firm should examine the external environment and this way helps the managers for developing. Searching about demographics of your customer groups or market segmentation is one of the tool for being successful in this issue, and another is nationality of them or groups and community which they accompany in them. There are many other parameters that effect on the organization like political, economic, social, new technological methods and also the revenue and competition. Companies should not forget that internal environment is also very important versus external environment. The strength and weakness of the organization is the parameter of internal environment. For classify the internal environment quality and quantity of resources play a significant role in organization and also core competencies of the firm are very important that consider in the strengths point. Unlike the strong resources, inadequate resource consider in weakness of company or organization. One of the significant parts of internal evaluating is the current strategy of firm and anticipating its future from its mission and vision. Swot analysis is another tool for clearing the opportunities and treats that can help in development of organization.

Why Change management is importantIt increases project success (it has been found that most often the reason for project failure is resistance of people and bad management of the human element in the project). The success of a project is not only related to good strategy or good technical management. Motivation and skills of the team are also important. Change management is of strategic importance, without which companies cannot exist. Their ability to change and adapt quickly brings enormous market advantages. Importance of Information System Strategy in OrganizationTo survive and succeed, a business must develop and implement strategies to effectively counter the above five competitive forces. OBrien and Marakas (2011, p. 49) suggest that organisations can follow one of five basic competitive strategies, which are based on Porters three generic strategies of broad cost leadership, broad differentiation, and focused strategy. The five competitive strategies are: cost leadership, differentiation, innovation, growth, and alliance. Meanwhile, information systems could be a critical enabler of these five competitive strategies (see Table 2).Table 2: Competitive Strategies & Roles of Information SystemsCompetitive Strategy

Roles of Information Systems

Cost Leadership

Organizations can use information systems to fundamentally shift the cost of doing business (Booth, Roberts & Sikes 2011) or reduce the costs of business processes or/and to lower the costs of customers or suppliers, i.e., using online business to consumer & business to business models, e-procurement systems to reduce operating costs.

Differentiation

Organizations can use information systems to develop differentiated features or/and to reduce competitors differentiation advantages, i.e., using online live chatting systems and social networks to better understand and serve customers; using technology to create informe- diaries to offer value-added service and improve customers sticki- ness to your web site/business(Booth, Roberts, and Sikes 2011); ap- plying advanced and established measures for online operations to offline practices (i.e., more accurate and systematic ways of measur- ing efficiency and effectiveness of advertising) (Manyika 2009).

Innovation

Organizations can use information systems to identify and create (or assist in creating) new products and services or/and to develop new/niche markets or/and to radically change business processes via automation (i.e., using digital modelling and simulation of product design to reduce the time and cost to the market (Chui & Fleming 2011). They also can work on new initiatives of establishing pure online businesses/operations. At the same time, the Internet and telecommunications networks provide better capabilities and oppor- tunities for innovation. Combinational innovation and Open inno- vation are two good examples. There are a large number of compo- nent parts on the networks that are very expensive or extremely dif- ferent before the establishment of the networks, and organizations could combine or recombine components/parts on the networks to create new innovations (Manyika 2009). Meanwhile everyone is connected via personal computers, laptops and other mobile devices through cabled Internet or wireless networks or mobile networks, there are plenty of opportunities to co-create with customers, exter- nal partners and internal people.

Growth (including mergers and acquisitions)

Organizations can use information systems to expand domestic and international operations or/and to diversify and integrate into other products and services, i.e., establishing global intranet and global operation platform; establishing omni-channel strategy to gain growth(omni-channel strategy looks at leveraging advantages of both online (or digital) and offline (or non-digital) channels) (Rigby 2011).

Strategic Alliance

Organizations can use information systems to create and enhance relations with partners via applications, such as developing virtual organizations and inter-organizational information systems.

THE CASE OF MSDMSD is in transition period where by new system is introduced and in order for a successful implementation of the new system. IS/IT Strategy of the company should be in line with Organisation Strategy and Better Change management practices.There are areas, which have shown to be critical for the successful implementation of the new ERP because of the culture that existed for years at MSD.The following has been experienced among staffs. Fear for the unknown after implementation of the new ERP. This is when users started to fear for their position after knowing that there will be changes to how they work and interact with the system. Also for some of the managers they had fear for loosing their position for not knowing or fail to catch up with the new system.To address these issues an improved reception of change while keeping staff engaged is more likely to be achieved if someone understands how to put into action the theory of change. Stakeholder engagement is deep-seated to successful change and it is equally original to understand the function and content of a stakeholder engagement strategy, how to plan and execute effective engagements and how to provide a feedback and review cycle to adjust and improve influence. Training in change management can help to provide a deeper knowledge of its principles. and an understanding of how to implement and manage change in an organization by increasing the ability of the firms of course with recruiting training for employees, firms can allocate their force and power in specific part of the firm and with this they can distrusted and develop the firms abilities and also the training that can be use not only for the enhancing the capability but also for using and implementing the strategic change in the firm,(Goll, et al., 2007).The management of MSD decided to introduce training to all staff at all levels to make sure that are in par with the changes that are taking place at MSD. By involving staff at all level of changes and by ensuring they are part of change.Also, The management decided to fully support the use of IS/IT Strategy for MSD to gain competitive advantage in this modern world of Technology where 80% of activities at MSD are done through the use of Information System.About 70% of Staff at MSD are knowledgeable about the use of Information Technology. This poses as a Advantage to MSD when they embrace Technology, while management is making sure that the investment put into the Technology reap benefits to MSD and not a Burden.

CONCLUSIONBecause information has emerged as an agent of integration and the enabler of new competitiveness for todays enterprise in the global marketplace and because strategic IS supports or shapes competitive strategies, the concepts of ISs is so important, IT can be used to support a variety of strategic objectives, including creation of innovative applications, changes in business processes, links with business partners, reduction of costs, acquiring competitive intelligence, and others.

REFERENCEAnkit Bhatnagar. (2006). Strategic Information Systems Planning: Alignment of 'IS/IT' Planning and Business Planning, Unitec New Zealand.Frenzel, C. W. (1996). Management of Information Technology, 2nd ed. Cambridge, MA: Course Technology. Gregus, Michal and Benova, Eleonora. (2006). Strategic Information Management, Comenius University, E-Leader, Slovakia 2006.Neumann, S. (1994). Strategic Information SystemsCompetition through Information Technologies. New York: Macmillan.Stephen T. Bajjaly. (1998). Strategic Information Systems Planning in the Public Sector, University of SouthCarolina. The American Review of Public Administration, Vol. 28, No. 1, pp. 75-85.