SMB Case – Rock Solid Industrial Parts, Inc.
March 13, 2018
Rock Solid Industrial Parts, Inc. is quickly expanding in size. Growing from 1 location and 39 employees to 3 locations and 70+ employees, it is recommended for new IT/IS solutions to compete with larger companies in the thriving market. These IT/IS solutions will increase efficiency and effectiveness as well as build a stable foundation for Rock Solid Industrial Parts Inc. to further expand after its three-year strategic plan.
It is apparent from the years working here that Rock Solid Industrial Parts, Inc. is a stable and growing business. The current strategic plan is to aggressively expand into Southern California and the Mountain states region and increase sales from $33 million a year to $72 million after the third year. With the plan of attack in order, there is one big part missing, a new IT/IS system. This system will be scalable so the company can continue to grow over the next 10 plus years.
The implementation and integration of an IT/IS system will not be easy for the loyal employees of Rock Solid Industrial Parts. They have been doing simple process that have been working for many years, however with the expansion plan, new, more effective and efficient ways must be implemented for Rock Solid to reach the goal of $72 million in sales. The budget of $250 to $750 thousand is manageable to provide a IT/IS solution that will support sales, inventory management, marketing and accounting.
The process that Rock Solid will be undergoing is a called the informate process. Since the company currently does not have and systems set up, the new information systems will be implemented into this environment. The informate process provides the right amount of risk for Rock Solid while undergoing the changes over the next three years. Also, the process emphasizes the people and implementation phases of a new system. For Rock Solid to maximize efficiency through the informate process, implementation must be detailed. There will be some disruptions as the new systems will change the procedures employees will be required to use, however there will be no change in responsibilities across the company.
Over the next 3 years, Rock Solid Industrial Parts, Inc. plans to grow in size to over 70 employees. Even with this growth Rock Solid is considered a small business. Departmentalizing the company provides employees with clear understanding of what their roles are as well as what systems they will be needing to do their job. Some of the departments will include marketing/sales, human resources, operations, and accounting and will be organized following this organizational level pyramid. The executive's focus will be analyzing Rock Solid Indusial Parts Inc. and make strategic, long-term decisions for the company. Ultimately, executive success is measured in the value created for the shareholders. Management influences the frontline employees. They will use the IT/IS solutions to collect data and provide reports to show the company's growth in revenue through this process of change. Front-line employee's will oversee and perform the day-to-day tasks of the operation. Each system that will be implemented will be tailored to each department creating a smooth transition and a stable foundation for Rock Solid Industrial Parts Inc.
The people are the most important aspect in the informate process. They act as executives, managers, and end-users for the new software and hardware. Most of the company's employees have been with Rock Solid for 25 years and are the backbone to its growth and success of over the years. Their knowledge of technology however lacks and only includes making basic excel files and emailing. The current way of doing business does work, but with Rock Solid expanding, it will need systems in place to help the people do their jobs more efficiently as the workload increases. The most loyal employee's will be reluctant to change as many are stubborn to change a process that is not broken. Getting them on board with the changes being implemented is a key task that must not be overlooked in the process. The appropriate training and support is needed to get current employees on the side of change.
The first communication system that has been chosen is the Office 365 Business Premium package. It will be installed on every employee's computer and comes with several helpful applications. It includes all Microsoft Office applications and includes services like Skype for Business so employees that work from home can attend meetings and allows up to 250 people per call if the company were to grow to this size. Outlook provides users with a calendar function as well as email to help schedule team meetings. The hierarchy organization of the company splits employees into different departments. The Microsoft Teams application allows for this separation by providing a platform which that individual department can use to organize important data and documents and easily access them. This package offers all the necessary requirements for Rock Solid as it moves forward and most importantly is easy to use. 5 years since its release, Microsoft Office 365 has become the most popular enterprise cloud service. There are over 1.2 billion users of Office across the world and 60 million Office 365 commercial customers. Since it is so widely used, there are support pages that Microsoft offers and online forums for help if Rock Solid employees are in need. The Office 365 Business Premium package costs $150 per user/year. It is an annual commitment that must be renewed each year.
The next software that the company will be implementing is a Customer Relationship Management tool to interact with clients. The best fit software is Sales Force Lightning Professional which is a cloud based CRM system.
A study was shown that “Without a CRM system, 79% of all marketing leads are never converted to sales.” Connecting the company to a CRM platform like sales forces gives sales and marketing teams potential leads so they can target and communicate with prospects and make sales faster. A Salesforce Customer Relationship Survey was conducted from 2014-2016 and surveyed 10,500+ customers and showed a +25% increase in revenue and in marketing ROI as well as a +35% increase in customer satisfaction3. Salesforce collects all customer data and compiles it into information that can be used by each department to either target new clients or communicate and build lasting relationships with current clients. In consideration to the industry this company is in, long lasting relationships are very important. A CRM system like Salesforce will leverage this fact. It gives immediate access to the entire team on a customer's history in which they will be able to add personal touches on every sale the team makes while building trust. In another research, it is shown for every dollar spent on a CRM system, it pays back on average $8.71. There also is a Salesforce mobile application so that all records can be accessed on the go in real time through a mobile device. This will tailor to the sales team and employees that work from home. Salesforce Lightning Professional will cost $900 per user/year.
The next system that will be integrated in Rock Solid Industrial Parts Inc. is Microsoft Dynamics 365 for Financials and Operations. This software supports financial management as well as inventory management. It brings together financials, supply chain, and retail capabilities with built in predictive analytics and intelligence. With this capability, users can quickly make important decisions and better forecast spikes in customer demands to avoid inventory shortages. It also has the intelligence to recommend similar products to customers. With 100K+ SKU's in inventory currently, and with the expansion into new repair service areas, the margin of error is increasing. Microsoft Dynamics for Financials and Operations will give supply chain management the precise
organization and efficient flow it needs to be successful and keep consumers happy. A survey from 2014 showed that 79% of companies focusing and implementing a high-performance supply chain achieve revenue growth greater than the average within their industry. Only 8% of companies with less capable supply chains reported above average growth5. In this diagram by McKinsey & Company it shows different levels of supply chain ranging from baseline to visionary. With just a basic supply chain system there will be 50% less lost sales, 10-15% drop in transport and warehousing costs, 5-10% less administrative costs, and 20-50% less inventory laying around eating up warehouse space. On the financial side of Microsoft Dynamics intelligence compiles the company's financial data and is delivered to the user on a dashboard where they can see and understand everything. Having this data easily accessible will help users make key business decisions faster and with more confidence. This software also gives the company room to expand after three years as it can be scaled up to medium to large corporations and is compatible as it can integrate with existing software like Salesforce. Microsoft Dynamics 365 for Financials and Operations will run for $2,280 per user/year.
For these software's to run properly, the company must increase the number of switches and access points in order to gain better connectivity to the internet. Currently, Rock Solid is supported by AT&T consumer DSL plus consumer grade switches which will not be effective enough to support the expansion. The first pieces of hardware the company will be buying is Cisco Meraki MR42. These access points feature performance-critical connectivity and network wide visibility, security and control. They provide a secure network for both guests and has 3x3 MU-MIMO increased connectivity speed. The Meraki MR42 access point runs for $1,000 each. The next piece of hardware will improve the company's current consumer grade switch. Rock Solid will purchase Cisco's SF300-48P 48-Port 10 100 PoE managed switch with gigabit uplinks. These run for $200 each.
The current processes at Rock Solid Industrial Parts Inc. are basic and time consuming because of the non-technical staff and system in place. The informational system that will be implemented will be a big change but will also maximize the efficiency and profit as the company moves into its three-year expansion plan. Before these new systems can fully operate within the company, the employees must be trained how to work each of the new software's. The steps of implementation will go as follows: set clear guidelines, goals and expectations, prerequisite courses with hands-on training, follow up, go live and monitor activity.
The sales and marketing department will oversee the implementation of Salesforce. The first step will be telling the sales and marketing employees what they can expect from a CRM system as well as what the company expects out of them. In addition, the employees will be shown how this process will help them be more efficient with their tasks compared to the past processes they are used to. This is an important step because it will help employees understand why the company is undergoing these changes as well as get them on board with it. Once all expectations and goals are expressed, a three-week mandatory prerequisite course and hands on training period will begin. Salesforce provides free online courses where the employees will go through a series of trials, modules, and projects to learn the basics. Hands on training, 24/7 user support, and video step-by-step instruction are also offered by Salesforce. The week following the training will be the follow up stage where any further questions about Salesforce will be answered and demonstrated in person. This week is especially crucial as it is the last week before Salesforce is implemented live with real cliental data. It is noteworthy that because this software is so widely used, if an employee forgets how to do something they can use many of the resources and forums that are accessible. Once the CRM system is live, it will be monitored by the respective manager in each region where they will help and encourage the adoption of Salesforce further.
Both financial and operations departments will undergo a similar process as marketing. The financial and accounting department will receive expectations on what Microsoft Dynamics can do on the financial side like budgeting and forecasting. The operations department will receive expectations of what Microsoft Dynamics can do on the operations side like supply chain management and inventory management. The two departments will be trained to their respective tasks but undergo a full prerequisite course of Microsoft Dynamics 365 for Financials and Operations to get a better understanding of the software's functions and capabilities. Like Salesforce, Microsoft Dynamics offers free training and support as well as forums that can help with specific questions an employee may have. There will be both a group and separate follow up stage the following week of training to get ready for full implementation. The respective managers will monitor the live activity of Microsoft Dynamics and further encourage the adoption across their employees.
Office 365 Business Premium will be implemented company wide. Training and follow up steps for this software will only be a week as applications such as Excel will not be covered because employees have prior experience. This software serves as the main communication tool so it will focus on just that. Communicating with teammates using Skype and creating a department workspace in which teams can collaborate through Microsoft Teams. Office 365 uses the same support system as Microsoft Dynamics and has many other resources that employees can use to further educate themselves on the software.
Microsoft Dynamics 365 for Financials and Operations
Office 365 Business Premium
Salesforce Lightning Professional
HP Elite Book 800
Overall Total Cost of Project
Microsoft Dynamics 365 for Financials and Operations will only be given to those employees of the financial and accounting, operations, and HR departments. The annual cost for 1 user is $2,280 and in the first year there are 10 employees in these departments. 1 employee was added each of the next years coming to a total cost of $74,440 for Microsoft Dynamics in the three-year span. Office 365 Business Premium will be installed on every employee's computer and is $37.50 a year. With 39 employees the first year, and additional 20 the second, and 15 more in the third, the cost for Office 365 comes out to $4,449.50. Similar to Microsoft Dynamics, Salesforce Lightning Professional will only be installed onto employees of the sales and marketing departments. At an annual cost of $900 per user, 17 employees need the software the first year, 18 more employees need the software the second year, and 15 more will need it the third year. The total cost of Salesforces Lightning Professional will surmount to $91,800. Each employee will receive a HP Elite Book 800 laptop. The price of each laptop is $1,249 and will be given to 39 employees the first, 20 the second and 15 the third. Unlike the software's, laptops are not billed annually so the cost each year is not compounded. The total cost for the new laptops is $92,426. The hardware consists of new desktop computers, access points and managed switches. New Surface Studio desktop computers will be given to those that work in the office costing $3,500 each. For the headquarter office in San Jose 30 employees will need these desktop computers costing $105,000. Each year as the offices in Southern California and Mountain States, the company will purchase 7 more desktops. 4 for inside sales, 2 for App engineers and 1 for the Financial and Accounting head that will double as manager in each of the offices. The total cost of desktop computers over three years is $154,000. The company will buy 2 Cisco Meraki MR42 access points for the first year and 1 more for each of the offices the next two years. The company will also purchase 1 Cisco's SF300-48P 48-Port 10 100 PoE managed switch each year. The total cost for hardware across three years comes out to be $158,600. The total cost of the new system is $421,715.50 and is within the allotted budget.
In every competitive industry companies are always looking for ways to gain a competitive advantage and IT/IS solutions have been increasingly used to do so. There are many software's that have been proven to work but every company is unique which is why finding the right IT/IS solutions can be difficult. Understanding each departments role within a company will help find the best fit software. When a company is reluctant to change like Rock Solid, it is important to focus more on the implementation and the people which is why informate is the best process of change. As this company continues to grow, it is vital that it has the right IT/IS foundation to maximize Rock Solid Industrial Part's Inc. potential.
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