Tuesday, February 26, 2013

Zara: IT for Fast Fashion

Problem/Issue Statement

Xan Salgado Badas (head of IT for Inditex) and Bruno Sanchez Ocampo (technical lead for the point-of-sale system) are both concerned that the current POS infrastructure for its largest chain of stores Zara may be outdated and a risk for the company. Although Salgado is arguing for retooling the current operations and Sanchez is opposing the notion, both men have taken each side of the contention at various times. While the current system appears to be working, it is running on DOS, an operating system that is no longer supported by Microsoft. Additionally, although DOS is currently is compatible with the terminal hardware may not be in the future and the hardware endor is not willing to contractually commit to insuring future compatibility with DOS.

The main problem is that the current IT structure, a custom software application written on top of DOS, is both outmoded and limited in its capabilities, and represents a significant risk to the company should its terminal hardware no longer be able to support the archaic operating system.

Some of the symptoms of this problem are the inefficiency created by running an older system, such as the inability of employees to look up their own inventory or other store’s inventories in real time or spending excessive time to complete returns on the small screens on their Personal Digital Assistants (PDAs).

The scope of this problem is the entire chain of operations related to Inditex’s Zara fashion stores, from the vendors to the warehouses and distribution centers to the actual store properties. The POS system impacts the way each part of the chain interacts with one another and an upgrade would significantly alter those relationships.

Situation Assessment

The Zara fashion stores rely on the speed of their product, needing the latest fashion products to satisfy the needs of their customers. Ideally, an IT system in place would be able to track all changes in inventory throughout the 500+ stores and manage this updated database in real time. The company maintains a website, but does not allow for the sale of clothes through this site, primarily since the return rates for online sales of clothing are much greater than those in the physical retail locations. The company is averaging an opening of one store per day and is considering further expansion globally and especially into European markets like Italy where only 3 Zara locations exist but there is potential for a much greater presence. When a new store is opened, all the manager needs to do is insert two installation floppy drives into each terminal that contain DOS and the required applications. If anything were to malfunction with the POS terminal, a reinstallation was very straightforward and consequently no IT support was required to open a new store or was there any need for a large IT support assistance organization. In the event of a serious problem with a POS terminal, a complete software reinstallation was similarly straightforward. As a result, no IT support was required to open a new store, nor was it necessary to run a large IT support organization to assist the stores. The POS system in place is expected to support further expansion if hardware vendors maintain its compatibility with MS DOS.

The decision criteria for a new POS system are would it maintain the operational status quo and not cause any disruptions in current operations, how easily it can be installed and managed by each store, how much time it can save by adding greater functionality, would it protect the company against the risk of maintaining obsolete and resulting incompatible technology, and would it fit in with the current business model of Zara’s such as the great autonomy given to managers and the consistent expansion into global markets.

List of Plausible Alternatives and Evaluation of Alternatives

The first option is to maintain the status quo and maintain the current system in place. Within this option would also be the choice as to whether or not to purchase additional units of the existing POS terminals to offset the risk of the vendor no longer supporting DOS. This choice would be an antiquated one, and seek to keep tasks such as updating inventory a manual one. This would require no immediate investments in training employees on a new system, programming POS terminals or applications on those terminals, and there would be no time where operations must be limited or delayed to accommodate these upgrades. This would put the company at risk of lagging technology, even if they were to purchase a large amount of terminals that could ultimately become incompatible with necessary peripheral devices. This option would keep the stores isolated from one another with the exception being the one modem in each locale. No new functionality exists with this alternative.

The second alternative is to upgrade and add functionality to the POS terminals by integrating a new operating system, primarily Windows, Unix, or Linux. Inditex could update the POS applications to incorporate the functionality and allow the store personnel to use a large screen, keyboard, and mouse to quickly execute return transactions. The company could build wireless networks within and between stores so that installation through floppy disk would no longer be necessary and with each location connected to the Internet, each store could know the theoretical inventory of its SKUs (stock keeping unit or the combination of garment, fabric, color, and size). This would require a sizable investment. To port the existing OS in DOS to a new OS would require 15,000 hours of programming time at a rate of 450 Euros per day, or 5,000 Euros to expand the current POS application. Each store would need to allocate 32 hours to the installation of the new OS system, establishment of a wireless network, and training of staff on the new system at a rate of 2,000 Euros per day. This would, though, mitigate the risk of obsolete technology, add greater functionality to store operations through completely updated information such as inventory head count, and even allow for the possibility of online clothing sales which could generate significant revenue and now be possible to handle since returns would be significantly less difficult through new allowable processes free of previously requisite PDA devices.

Recommendation

I would recommend that, although the investment figures induce sticker shock at first, the company migrate to a new OS system and establish wireless networks within and between stores. The instinct to uphold the status quo and resist technological change is one that will limit Zara’s growth potential both in its existing stores and its future expansion. Ultimately, a POS system running on DOS is limited in how much functionality it can provide to retail stores and the distribution network. Being able to access real time information and having all stores be connected to each other and the corporate employees is invaluable. Eventually some portion of the POS system will become completely outmoded and a DOS operation will not be able to fully interact with some peripheral or necessary application. To stave off the staggering loss that will accompany the inevitable phasing out of DOS compatibility, Inditex must endure the up front investment cots of modernization and update its current systems.

Presentation

The consulting group must keep in mind the context of Inditex’s situation, understanding that the company is generally located in Europe with a slight presence in global markets and is seeking significant expansion. The presentation should anticipate future changes in the market and do the difficult task of accounting for the accountable by assuming how unexpected further technological changes and the current POS system or an updated one could handle market adjustments. The presentation would benefit greatly from a solution that might not just be a full upgrade, but rather a sampling of the updating opportunities such as further developing the custom OS application and establishing wireless networks. Lastly, the presentation should give a fair representation of the benefits and drawbacks of either keeping the current methodology or updating to a new OS and wireless networks.

Reflection

Mr. Sánchez and Mr. Salgado,

I have concluded that despite the insistence by the consultants in last night’s presentation that the responsible choice would be to port our POS application for our terminals to a Linux operating system, that at this time a full-scale upgrade from DOS would be too costly and risky considering our business model and current healthy IT system. Over the past seven years we have been able to grow our operating revenues by nearly 3 billion Euros and multiplied our net income by a factor just over 6 under the support of our current legacy DOS-based terminals. I am forced to disagree with the consultants’ notion that porting to a Linux OS and installing wireless networks would provide a degree of functionality that would dramatically improve our company’s bottom line. Zara’s business model relies on responding to fashion trends and quickly overturning each retail location’s inventory, and the value of maintaining an immediately accessible and completely exact inventory figure is definitely a benefit but not a necessity.

I must admit that my preparation thoughts were more aligned with what was presented to us then what I am now recommending. I originally did propose that in order to stave off the significant losses associated with the terminal vendor phasing out DOS compatible terminals, we should make the sizable investment to migrate imminently to a new OS. This was an argument that the consultants made, warning us that our current expansion rate of a store a day could be completely halted if our terminal vendor decided to no longer supply us with terminals that were DOS compatible. At the time of my writing this I was largely concerned that our terminal vendor would not contractually obligate to continue distributing DOS-compatible systems.

However, upon further consideration, I now realize that what you suggested, Mr. Sánchez, would be a much more reasonable approach. We could purchase a supply of the current terminals and if our supply vendor were to no longer offer devices that supported DOS, which they have actually assured us would not occur, we would then “have plenty of breathing room to port the application a new OS.” The consulting team did make sense, though, in noting that we are the only customer of our vendor that operates in a DOS environment that it does seem like an inevitability that DOS will become outmoded. To address this, I propose that we begin the work necessary to rewrite our application terminal software so that it can be used on a new operating system. This would require an approximate programming time of 15,000 hours, and if the estimate given by the consultants of a 1 year time frame for implementation of their solution is accurate and relevant, then we should begin this initiative as soon as possible. Once the programming is completed, we can then begin on a trial basis switching a sample of our retail outlets to a new OS, possibly the Wincor Nixdorf TPLinux the team proposed
.

Although the consultants’ presentation was very thorough and extremely detailed as to the specifics of the proposal (with the exception of the ambiguity of the exact fees associated with installation and support of a Wincor Nixdorf solution), I must come down on the side of conservatism. Our current business model can be seen in our operating expense figures in comparison to one o f our largest competitors. In 2001, Gap was able to achieve operating profits of 379 million Euros from a gross margin of just under 4.7 billion Euros and Inditex was able to generate over 300 million Euros more in operating profits from a gross margin under 1.7 billion Euros. To an outside observer, our IT infrastructure may seem antiquated, however it is one of the many reasons that we have been able to keep our operating expenses to a minimum and enjoy such healthy growth in profits. By preparing ourselves for the future by beginning to program our terminal application for a new OS, we can cautiously modernize without creating any great disruption to our 1,558 locations worldwide.

Monday, February 18, 2013

1-888-JUNK-VAN Case Preparation

Problem/Issue Statement

The problem in this scenario is that Marcus Kingo, founder of 1-888-JUNKVAN, needed to find a cost-effective IT system that would minimize information handling errors and thus allow the company to both retain its customer base and facilitate the growth of new clients in its planned expansion. The new IT system had to fit his virtual business model and be affordable considering the commodity nature of the nonhazardous waste collection industry.

The problem is an inefficient and underdeveloped IT methodology that frustrated customers and produced numerous information errors. Some of the symptoms of that problem were the unnecessary length of basic administrative tasks like contacting helpers and money collection, mistakes in customer contact information, forgotten e-mails, manual calculations and billing errors, and incorrect versions of the database sent by the data clerk.

The scope of this problem is the entire organization of 1-888-JUNK-VAN, since its information technology infrastructure supports all aspects of Mr. Kingo’s operations. Considering his virtual business model that does not allow for any physical office space, a flawed IT support system negatively impacts all processes and employees.

Situations Assessment

1-888-JUNKVAN entered the non-hazardous waste collection business in 2008 and had already grown substantially in three cities by 2009 under Kingo’s virtual business model, where all employees would communicate electronically and would not report to any physical location. Considering that sales had doubled in the 2008-2009 period, Kingo wanted to expand his business operations under this successful model through franchising, understanding that compound annual growth within the industry was poised to increase from 0.6 per cent in 2009 to 3.9 per cent from 2009-2014. The limiting factor to growth for Kingo’s business was its makeshift IT system that suffered from scheduling errors and incorrect data, resulting in loss of business and irritation to the owner who was constantly dealing with time-consuming errors. Before Kingo could realize his expansion plans, he sought a set of IT tools that would serve as a sound operational system for the business, specifically a central remotely accessible database rather than reliance on e-mail, automated e-mails, and a solution that was simple enough that it did not require an IT professional to service it.

The decision criteria are cost effectiveness, flexibility to change within the business and industry, ease of use considering that his staff did not have high IT skills, vendor support, and how quickly the new system could be implemented.

List of Plausible Alternatives and Evaluation of Alternatives

The possible courses of action are:

1. Implementing a Microsoft Access Database by upgrading from MS-Works to MS-Access. This solution would be affordable with each license costing $179 per computer. If Access was installed locally in several computers, King could complete the installation himself within a manner of weeks. It could also be installed on a shared server so the database could be accessed remotely, but Kingo would either need to study the technical information in depth for significant amounts of time to learn how to do this or enlist outside help. The number of licenses in this situation would depend on the number of users working on the program concurrently.

A Microsoft Access Database would create one unified database that would replace the need for a data clerk to send out a correct version of the database to morning operators, as well as the task of drivers using templates to send information to the data clerk. This solution would most likely be cost effective, depending on which option was selected, and could probably be implemented in a short time period.

2. Building a completely customized application for the business. The cost for this option would be higher with a $2000 upfront chare and a $60/hour maintenance fee per developer, with no exact knowledge of how much maintenance would be required. Kingo would not be able to see the finished product before it was developed and the completed application may not fully meet the company’s needs.

A customized application would have the benefit of ideally solving all of the company’s IT requirements, such as automating e-mails and providing a central database that could be remotely accessed. However, the costs could be significantly greater than other alternatives and a flawed finished product could simply be a waste of Kingo’s time and money.

3. Integrating Google Docs into the IT infrastructure. Google Docs allows up to 10 free user accounts to create text documents, spreadsheets, slide-based presentations, and forms. Users can work simultaneously on the same file and forms could be quickly created and shared. The database function, though, could not be cross-referenced and all employees would need to use one large spreadsheet with all data visible to all users. Additionally, Google Docs did not have a formal customer support structure.

This alternative would allow the company to create a central remotely accessible database with a very short start up time and for little to no money (depending on if the company opted to use the small business option for $5 a month). However, the lack of vendor support and Kingo’s perceived confidentiality issues for the service were troubling.

4. Using the cloud-computing infrastructure provided by Platform as a Service. This option was very similar to Google Docs, but also allowed users to utilize common applications and even build their own applications through a third party. This solution would require more hands-on IT knowledge to build forms and connect tables, which Kingo himself may or may not be knowledgeable enough to handle. The service would cost from $300 to $600 a month, as well as $180/hour approximately for any customization required. The service could be scaled up or down in the future and would only require three days to implement.

Platform as a Service could most likely meet all of the company’s IT needs and be available to do so within a timeframe as short as under a week. However, it is unclear as to whether or not Kingo would be able to set up and maintain the database himself. This option was definitely one of the costliest, and any further customization required in the future to meet the company’s needs could merit that $180/hour fee.

5. Implementing an Enterprise Resource Planning System. The system would be built around a central database that could be accessed remotely and integrate business processes (purchasing, sales, customer service, etc.). The cost would be extremely high as licenses would be about $2500 per user per year with start up fees being approximately the same as the complete annual license charge. License fees might even be higher considering that the estimates were for larger firms. Additionally, the ERP system included modules such as finance and manufacturing that were extraneous to the company and may not be fully adaptable to 1-888-JUNK-VAN’s specific business needs, as well as any future needs as the company and industry evolved.

This option would potentially address the IT problems suffered by the company through a central database, although it is not entirely clear that an ERP system could even be adapted to work for the company itself. The excessive costs and rigidity of the system indicate that an ERP system would not likely address the company’s key problem.

Recommendation

I would recommend that 1-888-JUNK-VAN upgrade from MS-Works to a Platform as a Service in order to solve its current problematic IT system. Using a Platform as a Service model would allow the company to meet all of Kingo’s desires for a new IT system such as automated e-mailing and a remotely accessible central database. Although the new system would require more IT knowledge then an already established system like MS Access, Kingo was fairly certain based on the demonstration from one of the vendors that he would be able to perform the requisite setup tasks himself. The option is slightly more expensive than some of the other alternatives, but its viability in the long run by being fully customizable will save the company any fund needed to update from a future outmoded system. Vendor support for PaaS is much better than other options like Google Docs and as the firm expands to other areas through franchising this customer support will be very helpful in accommodating new employees. The PaaS architecture should minimize errors, mitigate time delays, and allow for the custom needs that the company’s situation demands.

Presentation

The presentation should provide a balance perspective of all the alternatives and give equal weight to each opportunity before “selling” the one that the consulting group has chosen. This case in particular is slightly difficult to interpret considering that a number of the cost estimates are not exact and are variable to different choices and which specific vendor is chosen. Although equal weight should be given to each alternative, equal weight should not be given to each of Kingo’s qualifications for what would determine an ideal IT system. The consulting group should determine which factor, whether it be cost, implementation ease, or product flexibility, is the most important in the decision. Only by choosing one or two variables as the most significant can the group then evaluate which solution would best meet 1-888-JUNK-VAN’s needs.

Case Reflection

After considering yesterday's presentation from the consultants, I have concluded that I agree with their recommendation to upgrade our IT infrastructure through a Platform as a Service solution. Ultimately, this solution was preferable to the alternatives because of its ability to solve our operational inefficiency with an investment that would be less than that required for costlier options like an ERP implementation but also provide more flexibility, customization, and vendor support than alternatives like switching to MS Access. Upon further study, I have also reached the understanding that what was suggested in the presentation actually falls under the banner of Software as a Service (SaaS), rather than Platform as a Service. Initiating a Platform as a Service Solution would involve buying or leasing the physical materials necessary for the network such as the actual computers or network devices, instead of what was actually proposed which was the purchase or rent of a software product to serve our IT needs.

Since the non-hazardous waste collection service has become somewhat of a commodity, it is extremely important that we are able to retain our clients and keep our cost structure low. Using an SaaS option would eliminate the need to rely on an inefficient emailing system that often led to outdated databases and pickup errors. By utilizing a cloud storage service and giving our employees real time access to the database through this SaaS solution, we will best be able to grow in the markets we already exist in and further expand to new ones through franchising. Thank you for your time and I look forward to your decision.

Tuesday, February 12, 2013

Procter & Gamble: Electronic Data Capture and Clinical Trial Management

Problem/Issue Statement

The problem in this scenario is that Proctor and Gamble needs to reduce the time it takes for clinical trials for its pharmaceutical products before they can be brought to market. The company is currently operating on a data collection process that is paper based and tedious as the data is first manually collected on site by the site coordinator, verified by the clinical research associate, and then again entered manually into P&G’s database by the clinical data manager. Considering the claim that each day of delay in releasing a pharmaceutical product cost the sponsor company 1$million, the problem is how to effectively reduce that time while insuring accurate data in the collection process as well as keeping all parties involved satisfied with the methodologies of the process.

The problem is a data collection process that is unnecessarily lengthy and the symptoms of that problem are the parts of the current method that are time consuming such as the double entry of data, the required third entry of data if discrepancies were found between the two original entries by the CDMs, and the significant lag time in sending and receiving the data that is associated with using a traditional paper approach rather than utilizing the internet through Electronic Data Capture (EDC).

The scope of this problem is the whole clinical trial methodology. Although this case is mainly focused on “data lock”, or the time from when the last piece of data is collected from a patient to when a database is locked at the completion of data entry, the scope of this case includes every step in the data collection process and focuses on what steps should be taken to expedite it.

Situations Assessment

The decision being made by Associate Director for Clinical Data Management Ray D’Alonzo takes place towards the end of 2001 or the beginning of 2002. At this time, the health care segment of Proctor and Gamble was rapidly growing in comparison to its other divisions. From 1999 to 2001, earnings from health care had increased by over 150%, while profits from food and beverage, beauty care, and fabric and home care had all risen by less than 10% and earnings from paper had actually decreased. Most importantly, the choice to adopt a web-based approach is being made at a time when Internet technology is on the precipice of wide scale adoption but has not yet been fully embraced. Many of the investigative sites for P&G’s clinical trials had limited or no computer access and very few of P&G’s competitors in the pharmaceuticals markets had already chosen web-enabled electronic data collection

The decision criteria are the amount of savings the company can derive from decreasing the time necessary to conduct the entirety of its data collection, the short-term and long-term position that a new strategy places the company in by selecting a particular method, and the difficulty of either enhancing the current operation or selecting a new model with regard to the necessary learning curve for and acceptance by sponsor (P&G) and medical personnel

List of Plausible Alternative Courses of Action

The possible courses of actions are:'

1. One option is to improve the paper-based process by using express mail shipments on a daily basis and hiring more workers to speed up the data verification process.

2. The second choice is to use digital imaging, where the site coordinator would fax case report forms to the processing site and these faxes are then stored as digital images that can be shown in a split screen with the data entry form for the CDMs.

3. The last alternative is the use of Web-enabled EDC where data would be entered into a data management system directly by the investigative sites. This information is then immediately available to the sponsor, as CRAs checking for discrepancies between entered data and medical records and other sponsor personnel could monitor the trial and conduct preliminary analyses on blinded data.

Each of these options addresses the key problem in cutting down time to data lock differently. Improving the current paper based process seeks to mitigate the time needed between when the data is entered on site and when it can be received by the sponsor through express mail shipments, in addition to the time taken to verify the data with increased staffing levels. Digital imaging reduces the time of the process by eliminating the need for paper deliveries through faxing digital images. The web-enabled EDC method completely changes the model by making the time between on-site data collection and its availability to P&G instantaneous and negating the need for double-entry into the P&G database (or even single entry).

Evaluation of Alternatives

The selection of how to properly upgrade or reform the clinical data collection should focus on efficiency and long-term viability of the alternative chosen. The option should be accepted on the basis of whether or not it places P&G in a better position to effectively and with as few errors as possible conduct its clinical trials in the shortest time period. The evaluation must be based on legitimate cost figures as opposed to instinct. The decision should be more clinical than imaginative, although the vision of the future nature of clinical trials across the industry should be taken into account when deciding whether or not to adopt a forward leaning technology such as web-based EDC.

Recommendation

A quality recommendation would take into account all the factors of the decision instead of just financial figures. In this case, a quality recommendation would consider the reluctance of site coordinators to learn a new technology, the strategic position of the health care division in the context of the company, and the competitive position other pharmaceutical companies have taken with regards to EDC technology. A logical recommendation would simply take the problem of reducing time for clinical trials and choose the alternative that best shortens that period with he least amount of financial resources necessary.

Presentation

The ideal presentation would acknowledge that the case really appears to be more of a referendum on web-based EDC than an actual selection of choices, recognizing that even the man making the decision realizes that the current method has limited potential for improvement. Therefore, the presentation should give a significant amount of time to demonstrating the merits of implementing an EDC system within the context of the industry and the health care division’s growing influence at P&G. Each choice would be sold differently, as improving the current process would focus on how disruptive a massive technology change could be to all parties, implementing digital imaging would center on the merits of moderate change, and the choice of an EDC program would highlight the long-term benefits of overhauling the status-quo and why being an industry leader in this instance is appropriate. The presentation, overall, should give a fair assessment of each alternative and avoid skewing towards an overwhelming support of one method.

Reflection

After careful consideration of the information presented by the consulting team, I feel confident that of the three options to improve our current paper-based process, adopt a digital imaging system, or implement web-based electronic data capture (EDC), EDC gives Proctor and Gamble the best chance at increasing efficiency in the data collection and verification process. Considering that the "out-of-pocket" costs for each new drug our company introduces to the point of marketing approval is approximately $802 million, it must be our top priority to reduce the time to data lock. Embracing an EDC approach has the added benefit of significantly cutting costs of data collection after the initial expenses associated with purchasing new laptops for sites and training site coordinators to manage the technology.

The choice to select an EDC methodology is made with the other two alternatives in mind. Improving our current paper based process has real limitations on saving time, since express mail shipments or additional staff cannot compare to the instant collection of data associated with web-based technology. Digital imaging suffers from the same delay from manual data entry and the storage costs when scaled up for all of our trials require significant investment. An EDC system is definitely not without its flaws, though, as it is the riskiest approach since it represents the greatest change to our existing system. The complaints from site coordinators about EDC technology that it takes longer to uses and does not allow for a quick scan of data like flipping through tangible pages are genuine concerns for us. However, with the direction of technology, the learning curve for EDC should diminish as more hospital employees become more familiar with our interface system that is very similar to navigating a basic web page. We should become leaders in the industry by pushing forward with EDC, which will quicken the clinical trial process and by doing so make the health care division significantly more profitable.

Sunday, February 10, 2013

Visualizing the Benefits of Visio

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Mr. Smith,

The technological application I am bringing to your attention today is slightly different than the two products we had discussed in the previous two weeks of Google Drive and a professional blog. The benefit derived from Google Drive from saved time for the administrative staff and new client revenue from blogging was relatively easy to trace. The product I will be proposing today, Microsoft Visio, will provide more intangible benefits.

If we were to invest in Microsoft Visio, we would potentially be better able to serve our clients as well as analyze our own operations. The cost of this investment is fairly easy to calculate. If we were to purchase the software for each of our 20 computers, it would cost approximately $250¹ for a total of $5,000. Additionally, since our current systems are still running on Microsoft XP, we would have to upgrade our operating system to either Windows 7 or Windows 8. This would either cost $140 per license² (140 X 20=$2,800) for Windows 7 Professional or $200 per license³ (200 X 20=$4,000) for Windows 8. This would bring the grand total for the implementation of Visio to either $7,800 or $9,000, depending on the operating system we would choose to upgrade to.

Now that you have a full understanding of what the cost would be, I would like to specifically address what Microsoft Visio can bring to our law firm. As a small to midsize firm, it is extremely important that we are able to have maximum efficiency in how we intake and manage each client’s work. Using Microsoft Visio’s diagramming function, we will be able to map out exactly how our case management system works and pinpoint what inefficiencies might exist at any part of each process. The templates that exist within Visio are very user friendly and would allow us to create this diagram with preexisting shapes, symbols, and outlays. Creating a diagram or flowchart to illustrate the intricacies of our case management system would be beneficial for internal purposes, or perhaps as a way to explain to current or potential clients exactly how their case is handled. If I were compelled to assign a figure for money saved as a result of a Visio implementation, I could assert that if we increased our efficiency for our administrative staff by 0.25 % we would then see a savings of $5600(0.05*224,000=$5600, 10 workers at an average hourly wage of $14/hour for a combined 320 hours a week or 16,000 hours annually totaling $224,000). While I could assign this arbitrary value to the increased efficiency obtained from a more accurate evaluation of our work flow processes or the value gained from assuring clients their work is being handled competently, this figure is largely imagined and I would not want to base an investment decision on an arbitrary figure.

Microsoft Visio could be helpful in a few other areas. Our attorneys currently use PowerPoint during client presentations and the charts generated by our administrative staff are generally those that are available within the application itself. Using Visio, our staff would be able to include much more professional and aesthetically pleasing graphics for these presentations. Also, we could use Visio to update or create a new organizational hierarchy that would be able to inform all of our employees as to the exact chain of command within our organization. Lastly, although currently our firm focuses on education and criminal law, we have discussed branching out into the lucrative field of patent law. If we were to practice patent law, Microsoft Visio would be extremely helpful since sometimes we would either need to help our clients to create patent diagrams or modify the diagrams ourselves.

Ultimately, I would lean towards recommending against investing in Microsoft Visio for the law firm. The practical applications do exist, however the benefit we would derive from implementing this product do not exceed its cost. Mapping our case management system would be useful, but is not something that is imminently important. Our client presentations could be improved with a new set of graphical options, but not drastically. A new organizational chart could be helpful, but is not necessary. If we were to consider patent law, I would be much more inclined to indicate my support for Visio’s purchase. However, seeing as how there is not a significant tangible benefit associated with acquiring Visio, I do not support its immediate implementation. Thank you for your time and consideration.

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1. http://www.officemax.com/technology/software/business-office-software/product-prod4580100?cm_mmc=Googlepla-_-Technology-_-Software-_-Business%20and%20Office%201Software&ci_src=17588969&ci_sku=23880533

2. http://www.newegg.com/Product/Product.aspx?Item=N82E16832116992

3. http://www.newegg.com/Product/Product.aspx?Item=N82E16832416562&nm_mc=KNC-GoogleAdwords&cm_mmc=KNC-GoogleAdwords-_-pla-_-Operating+Systems-_-N82E16832416562&gclid=CNiJ75XcrLUCFU-d4AodThcA5w

Sunday, February 3, 2013

Blogging and its Potential Benefits as a Marketing Tool

Mr. Smith,

Given our law firm’s recent hiring of additional attorneys and the emphasis that the senior partners have placed on acquiring new business, blogging is definitely a viable option to attract potential clients that would not have been aware of our services otherwise.

The field of law is one that is particularly well suited to blogging, as it gives the firm an opportunity to update the public on changes and trends in the NJ legal system, as well as advise them on the necessary steps to take in various legal situations. This beneficial relationship between the legal profession and blogging is reflected in 2012 statistics. While 28% of corporations are actively blogging¹, just over 60% of law firms surveyed by the ALM Legal Intelligence service reported maintaining one or more blogs². Many of the law firms in our own area competing for the same clients for divorce cases or criminal law cases are operating their own blogs. It is in our best interest to join this trend to not only provide a service to our existing clients, but more importantly to reach out to an untapped customer base.

The start-up costs for setting up our own blog are far from staggering. Considering that we already have an administrative staff member with one of his responsibilities being to operate our web site at a rate of $20, we are already in a position where we have the requisite personnel to begin this initiative. Seeing as how this staff member is only part-time currently, it is reasonable for him to take on the additional responsibilities of a blog. There are a few blog sites that are popular for law firms; for the cost analysis I will be using the costs associated with Wordpress (a popular blogging site that hosts over 60.8 million individual blogs³). In order to obtain our own domain name such as www.smithlawnj.com instead of www.smithlawnj.wordpress.com, the cost would be about $20 per year. If we want our blog to look truly professional, we should opt to purchase a premium theme that would incur a one-time cost of $70. This one up-front purchase would well be worth it as it would save us the time and money associated with creating our own visually pleasing site framework. The real cost of running a blog would come from the time necessary to maintain it with pertinent information and produce original content. If we were to mainly link to other content found on the web, we should allocate about 10 hours a week to the process of finding that material and uploading it. This would cost us the salary of our administrative staff member of $20/hour X 10 hours for a total of $200 a week or $10,400 a year. If we were to have one of our junior attorneys who bills out at $150/hour write original content once every other week with an average of 1.5 hours per post, we would be losing an average of $225 every two weeks or $5,850 in productivity a year. All of these costs would add to an annual cost of approximately $16,270 a year.

Considering that our blog will have content targeted to the demographics of clients we are seeking to obtain in the fields of criminal law, education law, and divorce law and that we will heavily promote our own contact information and personal website for the firm, we can expect to see an increase in business. Based on the average results reported from legal blogging from a midsize firm like ours⁴, a conservative estimate of increased business would be an additional 3 clients per year. If we were to obtain just 3 new clients a year from our blogging, billing at an average of 80 hours per new client and our average rate between junior and senior partners of $200/hour, this would bring in an additional $48,000 in revenue to the firm annually.

There is a distinct reason that our competition is engaging in blogging on sites like Wordpress and Blogspot and that is that it produces tangible results. Based on my estimates, our firm could expect to see a net revenue increase of $31,730 per year from blogging. Aside from the additional benefit that our existing clients might derive from our blog, adopting this technology as a significant addition to our marketing mix would generate new business that could otherwise benefit competing law firms. Thank you for your time Mr. Smith and the consideration of my proposal.