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.