November 05, 2007

Operations Management Lesson 10 Exercise

Operations Management Lesson 10 Exercise

As my job in IBM consists in selling Software products, for this blog I’ve chosen to talk about the difficulty of integrating the acquired company in Software Group division from a sales point of view, because the system presents several bugs.

These last years for IBM have been very important in order to grow the business and one way was the acquisition of important Software companies, especially in Tivoli brand that is focused on security, storage, automation and networking.

This strategy brings IBM a lot of vantages, mentioning some of them:

-        IBM buys Know-how of products;

-        IBM guarantees a deeper presence on customer

-        Extends market share

-        Extends presence on customer

-        Extends products portfolio

In order to gain the maximum advantage of the above conditions, acquisitions could be “quick and easy” from the process integration point of view.

Problem identification - Why-why analysis

When an acquisition occurs, from sales point of view we can incur these problems:

-        New products do not exist in IBM list price and are not able to be quoted for long time

-        Quotation is demanded to old company which applies different rules from IBM and the discount request process, as well

-        Customer data transfer process from the acquired company to IBM is always slow and incomplete

-        Sales people do not achieve targets as they are able to sell new products too late

If these situations last for long time, other problems could happen:

-        people coming from acquired company loose motivations and leave IBM, reinforcing competition

-        time to market is bad

-        lack of responsiveness to customer requests

-        market growth does not fit with the forecast

-        wasting time in getting information about customers that are not present in any database

-        customer satisfaction goes down

-        lack of maintaining 100% product functionatities

The answer is: “Why IBM takes much time to integrate new companies?”

The root causes are:

-        Lack of person committed in doing this (people from acquired companies are not familiar with the huge IBM world and cannot be operative immediately; then the process of taking them on board is very long)

-        Lack of clear processes and rules in case of acquisition (IBM does not employ dedicated people to this kind of situation)

-        Lack of flexibility of tools (Tools used for getting product configurations or processing orders are complicated, need to be uploaded worldwide and need formal authorization in compliance with the rules of each country where applying).

To get improvement to this kind of situation is not easy, but working on the right people to be committed in working on acquisition, from the integrating process point of view, applying clear rules will be a good start.

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