Canon Financial Services, INC. the Systems and Methods Committee

Canon Financial Services, Inc. The Systems and Methods Committee

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Canon Financial Services, Inc. The Systems and Methods Committee Ira Yermish St. Joseph’s University, USA

Canon Financial Services, Inc. (CFS, www.cfs.canon.com) is a wholly owned subsidiary of CANON USA. Originally, an independent office products leasing company, CITILEASE, founded by Albert Smith who remains the president, CFS has grown to be an important financial arm for the U.S. Canon copier and office products business. Since CITILEASE was acquired in 1990, the operation has grown dramatically. In 1996, CANON USA recognized CFS as one of its premier divisions. A key success factor for this growth has been the strategic management of information within a corporate framework of outstanding customer service. The strong leadership of Smith and his organization as well as the commitment to information technology resources has fueled this explosive growth. In this case study we will first examine the structure of the copier and office products leasing industry. Few businesses find it desirable to purchase copiers, fax machines and other computer equipment. There are several reasons for this, not the least of which is the flexibility of capital in light of rapidly changing technological capabilities of the products being leased. The complex relationships of CANON dealers, independent dealers and service organizations, customers, credit reporting agencies, banks and CFS will be described, especially with respect to the complex flows of information necessary to complete the leasing application and contract tasks. Having established the industry basis we will describe CFS’s organizational structure and how information flows within the organization and among external organizations. The information technology infrastructure will be presented along with a brief history of the issues leading up to the current state of this structure. For example, the requirement to outsource the basic lease maintenance software will be examined in detail, especially from the point of view of this decision’s impact on strategic flexibility. The main focus of this case study will be the steering committee charged with

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addressing the information technology issues throughout the organization. The Systems and Methods Committee includes representatives from each of the departments and is chaired by the manager of information systems. Perhaps most striking about this organization is the role the president plays within the committee deliberations. The key players within the committee will be presented along with their comments about the committee operations. We will then place the reader at a point in time with a number of issues currently being addressed by the committee. A summary of the activity with respect to these issues will be presented. The reader will be asked to examine the issues and make a recommendation for a course of action for a new problem presented to the committee.

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THE COPIER AND OFFICE EQUIPMENT LEASING INDUSTRY

g n i h s i l b u P up o r G a e Id t h rig y p Co g n i h s i l b u P up o r G a e d I t h g i r y p o g C n i h s i l b u P p u o r G a e Id t h g i r y Cop Large and small business alike are faced with the daunting task of maintaining an efficient and up-to-date array of office machines. Once upon a time, the office manager placed a single call to IBM or Remington Rand and all manner of office equipment from manual typewriters to mainframe computers would appear. The equipment could be purchased or rented depending upon the needs of the customer. Arrangements were made either through the supplier or the company’s banker. Today, the situation is much more complex. There may be dozens of vendors for a single item and many more options for financing the purchasing decisions. Nowhere is this more evident than in the copier and office equipment industry. The copier industry has grown dramatically since Xerox lost its monopoly on the xerographic process. Much of this growth has been driven by technology advances from Asian rim countries. What was once a completely domestic industry tightly held by Xerox, IBM and a few others, is now spread over a multitude of companies. One in particular, CANON, has been at the forefront of this industry as may be demonstrated by their high level of patent activity. Over the last ten years they rank only second to IBM in the number of U.S. patents obtained. An aggressive approach to the development and marketing of these products is evident. Their marketing has had a national focus, with strong distribution through wholly-owned marketing subsidiaries and smaller independent dealers. See Figures A and B for a statistical summary of Canon’s recent growth, and their Web site (www.canon.com) for a more extensive review of this growth. But it takes more than quality products to sell copiers and other office equipment. Businesses must make careful resource allocation decisions every day, decisions balanced by the needs for flexibility and efficiency. One of the most frequently used methods to address this issue is the use of third-party financial sources to fund the purchase and maintenance of needed equipment through a true lease or lease-purchase arrangement. A lease is a non-cancelable rental contract between a financial services provider (the “lessor”), such as Canon Financial Services, and the customer (the “lessee”). The lessee agrees to pay a specific dollar amount in rental payments for a fixed period of time (the “term”). At the end of the term, the lessee may exercise an option to purchase the equipment, may return the equipment, or may continue to rent the equipment. There are a number of purchase options available in equipment leases. A “fair market value” purchase option is determined by the selling value of the equipment at lease termination. The purchase price is not determined at lease inception. This option usually has

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the most affordable monthly payment. A “fixed purchase” option establishes the purchase price at lease inception, usually as a percentage of the original equipment cost. This option works well for the lessee who is seriously considering but not committed to ownership at the end of the lease. A “lease purchase” is a contract that includes a bargain purchase option (e.g., $1) at the end of the lease term, an option appropriate for the lessee that expects to keep the asset at the end of the lease. For larger customers, there are a number of other options. For example, a “cost per copy” scheme provides for payment of the equipment on a “per copy” or “click charge” basis. These charges could be bundled together to cover multiple machines. In this mode, the customer actually pays for asset and supplies usage rather than a fixed charge. Often the lessee will need to expand or improve the equipment during the lease term. An attractive leasing feature is the ability to “upgrade” the existing lease. With an upgrade, the lessee signs a new lease for the new equipment and the remainder of the old lease is terminated. A “buyout” is the method the lessee may choose to close out a contract prior to the end of the lease to gain ownership of the asset. For the customer, leasing permits total financing of equipment, including tax, with no down payment. Customers are more comfortable with equipment financing provided by the equipment manufacturer. By offering this opportunity, the manufacturer shows commitment both to the product and the customer’s satisfaction. The equipment leasing company also provides services to the dealer. With leasing the dealer can offer equipment, service, supplies and financing under the manufacturer’s brand name. The financing package makes it possible for the dealer to close sales, reduce price objections and facilitate repeat business. Thus, the role of the equipment leasing company is simple: provide a means for the customer to acquire equipment without a large outlay of cash while at the same time relieving the equipment dealer of the burden of carrying the loan. From a strategic point of view, leasing companies usually compete on price. Since the transaction is a strict financial transaction, the leasing company’s profit is simply the spread on the interest charged versus the leasing company’s “cost of capital” minus the costs of operations. Leasing companies value their asset portfolio by the “yield” expected from the asset base. The interest rate charged, the expected losses associated with credit risks, and the residual value of returned equipment all factor into this portfolio yield. Leasing companies may also compete on service. As we’ve seen above, a leasing company could provide several leasing option alternatives. Flexibility in service arrangements to both the dealer and customer often provides these kinds of alternatives. Thus a leasing company may choose to differentiate itself from others through a service strategy or its ability to make sound credit and rate decisions. It doesn’t take a great deal of effort to enter this industry since the major requirement is cash or ready access to cash. There are thousands of small leasing companies as well as a number of larger players.

g n i h s i l b u P p u o r G a e d I t h g i r y Cop g n i h s i l b u P p u o r G a e Id t h g i r y Cop g n i h s i l b u P p u o r G a e Id t h g i r y g n Cop i h s i l b u P CANON FINANCIAL SERVICES up o ORGANIZATION r G a e Id t h rig y p Co Canon Financial Services, formerly CITI-LEASE (founded in 1974), was acquired in 1990 by Canon, USA. Since its founding, Albert E. Smith has been the president and chief architect of the strategy and growth of Canon Financial Services. His mark appears in the

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mission and operating strategies of the organization. Figure C shows how he has crafted this mission and corporate culture to fit within the Canon philosophy. Figures D, E and F show the growth of the organization structure and operations. In 1996 CFS was recognized by Canon USA as one of its most profitable subsidiaries. In the summer of 1999, CFS’s asset portfolio reached over $500,000,000. The organization is designed to recognize that there are multiple customers, the equipment dealers as well as the lessees. Marketing programs are developed to appeal to the needs of each group. Much of the organization is targeted towards the interrelationships between the parties. The “customer” is truly the center of the organizational focus. At more than one meeting, the case writer experienced a secretary appearing at the door with a message about a customer calling for Smith. Almost invariably, he would suspend the meeting until the customer’s issue was addressed. The message was clear. As a financial broker, CFS sits in the center of a complex environment. This environment, shown in Figure G, has been drawn to emphasize CFS’s cultural positioning of the customer as the most important element. What isn’t apparent is the relationship with the subsidiary and independent dealers. Though CFS is a wholly owned subsidiary of Canon USA, it is not always the case that the other subsidiary dealers channel their customer leases to CFS. Why is this the case? Smith recognizes that not all lease decisions are made on the basis of service. Smith points out that the main competition, e.g., from Advanta Leasing Services (www.advantalease.com), Copelco Capital (www.copelco.com) and GE Capital (www.ge.com/capital) offer different programs and rates. For example, more than half of MCS Business Solutions (a Canon wholly owned subsidiary) leases are placed with Copelco. He makes it clear that his organization should be attacking this issue with better products and services, and efficiencies that lead to better prices. To implement his cultural philosophy, Smith established a series of standing committees that meet regularly to address the strategic and tactical issues of the business. Figure H is a listing of these committees, their leader, frequency, planned duration, purpose and regular attendees. These committees implement the participatory and cross-functional team philosophy while maintaining a traditional hierarchical functional organization. Additional, ad hoc committees are formed to address specific issues, e.g., the “Cost Per Copy Committee” that has been focused on the issues of inconsistencies in the billing practices of subsidiaries for asset usage based leases. This committee has had the responsibility of identifying the underlying problems with this process and directing technological and organizational approaches to solving them.

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g n i h s i l b u P up o r G a e Id t h rig y p Co g n i h s i l b u P up o r G a e d I t h g i r y INFORMATION TECHNOLOGY AT CFS p o g C n i h s i l b u P p u o r G a e Id t h g i r y Cop During his tenure as president of CFS, Smith has recognized the vital role that information technology has in the leasing industry. His background as an accountant and as a bank executive provided the understanding of transaction processing and information gathering. What he also understood was that the company was in the business of selling and processing leases, not creating lease software. A small, off-the-shelf minicomputer-based lease management system and a standard PC-based accounting system established the core of the operations. Rapidly, the success of the business outpaced the ability of the lease management system to meet the processing and dynamic needs of the firm. Larger, more powerful systems were sought.

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At this point the organization realized that any standard leasing software package would reduce the flexibility of CFS to create new leasing products and to provide more flexible internal operations. They also realized that there was no internal programming expertise nor the financial resources to create such a package. CFS searched for a package that would have the basic power to meet their operational needs, the flexibility to create adaptive programs, and a software vendor with a track record of stability and customer service. In 1992 they selected the InfoLease package from Decision Systems, Inc. (DSI, www.decisionsys.com), knowing that this decision would have to carry them for many years to come. The InfoLease system was written using a proprietary language, UniBasic, within a “post-relational” database, UniData (www.ardent.com), in a Unix environment. Dumb terminals provided a character-based presentation, using a hierarchical and often cumbersome menu structure. A powerful report writer, RECALL, was included to permit userdeveloped reports to augment the basic operational reporting of the system. Unfortunately, these reports didn’t always provide enough flexibility to meet the changing needs of CFS. For these, customizations of the InfoLease system were required. One of the issues facing a vendor of a standard application package, sold to many customers, is the complexity of support introduced when changes are made for individual customers. As each revision or update of a system is developed, the customizations must be reapplied and tested against the base system. This leads to errors and delays, and sometimes frayed customer-vendor relationships. The Systems and Methods Department within Operations was charged to support this system, create RECALL reports, and maintain relationships with the vendor. If you look at Figure F, a typical daily recap of operations, you should notice the difference between applications and bookings. Recall that the goal is to get as much business as possible, balancing the risks of customer default. Not all of the applications are booked. Usually the reason is inadequate credit. CFS uses several credit bureaus to aid in this process. There is a pressure, however, to accept or deny credit as soon as possible. The dealer wants to make a sale before the customer can explore other options. To address this issue, a software package, BACAS, was purchased to integrate the credit scoring process directly in the application entry process. Credit scoring is a complex process, especially since CFS deals with a large variety of customers, from the Fortune 500 firm down to the sole proprietor. This process was custom coded into the standard package that integrated the credit bureau lookup with the InfoLease application. This system served the needs of CFS for several years. Unfortunately, the vendor ceased to exist and the package could not be properly supported, especially when it came to Y2K compliance. Fortunately, another vendor, Fair Isaac (www.fairisaac.com), developed a business-oriented credit scoring system that could meet CFS’s needs. The issue of vendor stability was clear in this situation. This situation also demonstrates the issues of interconnected software and hardware components. A further example of interconnected systems was introduced when CFS realized that customers were not being serviced in a rapid fashion because lease documents weren’t readily available. Stored in banks of file cabinets and occasionally misfiled, these documents, invoices, applications and payments were needed to serve the customer properly. In 1995, CFS contracted with PMI to provide an optical storage facility to make it possible for customer service representatives to view documents previously scanned and stored in an optical storage library. Unfortunately, this LAN-based software did not work with UNIXbased InfoLease. Integrating this software required that the basic local area network had to

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be expanded to each desktop and software that would permit the capture of data from an InfoLease session to drive the optical storage retrieval process. Fortunately, PMI programmers were able to create this interface, though it hasn’t always been highly reliable. Figure I represents the systems configuration as of 1999. The latest version of InfoLease resides on the IBM Risc/6000 system and other applications reside on a variety of application servers distributed on the Ethernet backbone. Figure J lists the range of applications used at CFS, their primary users, system residence and support mode. This configuration is maintained by the Systems and Methods Department, managed by Ray Chestnut. Chestnut has a programming and finance background, including an extended stay at ADP. Operationally, this configuration must be supported during the twelve hour workday at CFS, needed to meet the customer support demands across the United States. Chestnut’s staff is responsible for local area network (LAN) maintenance, including keeping PCs in running order; daily, weekly and monthly processing streams on the InfoLease; creation and maintenance of user-specified RECALL reports; and general system support. Almost all custom applications software is outsourced to programming vendors.

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g n i h s i l b THE SYSTEMS AND METHODS COMMITTEE u P up o r G a e Id t h rig y p Co g n i h s i l b u P up o r G a e d I t h g i r y p o g C n i h s i l b u P p u o r G a e Id t h g i r y Cop The Systems and Methods Department provides critical technology support to the rest of the CFS organization. The venue where their issues are addressed, ideas explored and new strategic technology projects proposed is the Systems and Methods Committee. Regularly present at these meetings are the president, the directors and associates in the Systems and Methods Department, and are chaired by the manager of systems and methods, Ray Chestnut. Additional CFS staff attends when issues concerning their departments or operations are being addressed. Finally, an outside information systems consultant is frequently present to provide technological guidance and different viewpoints. The structure of the meeting is as follows. Several days before the meeting, a packet of information, including the agenda (Figure K) and a complete history of each item to be discussed (see Figure L for an example of one of these histories), is distributed to each of the expected participants. This information is also available on the Project Management area of the corporate intranet if CFS associates need to review the status and history of any project or service request. At the meeting issues are discussed item by item. First issues relating to projects requiring the support of DSI (the InfoLease vendor) are discussed. These are taken in priority order. Next, issues concerning applications being developed in-house or by software vendors that do not require DSI support are discussed. Finally, those projects involving general applications software residing on the local area network are discussed. After all of the existing projects are discussed, a process which may take anywhere from one to five hours, new projects are proposed by members of the committee. For example, Item 4 in the In-House list in Figure K was previously added by Sal Barabuscio, director of asset management. He suggested that an application to track the handling of returned assets, previously developed by an outside consultant, could be upgraded to enhance the efficiency of his operation. The committee explores the issue and determines if it has strategic value or not. If so, it will be added to the appropriate category. If not, it may be submitted to the Systems and Methods Department as a regular service request. Finally, all of the completed projects are noted and the remaining uncompleted projects are re-prioritized in light of current needs and resource constraints. Smith says of the Systems and Methods Committee: “You have to keep it simple, like

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a game with blocks. You need a stable base, one place where everyone is together and you can see all of the issues and the interactions. There are times when I have to override the committee in order to keep the system simple and to keep the issues within the corporate strategy.” Barabuscio, a longtime member and very active participant comments: “There are times when the process is frustrating. I have ideas and approaches that I think will make a difference to my department, to my customers and ultimately to CFS. It isn’t always easy to get the entire committee to see things outside of their own department’s interests. On the whole, however, there are times when the cross-fertilization has great effects.” Chestnut, unlike his predecessor in the role, is able to handle the challenges of ideas, particularly from Smith. “I understand,” he says, “that he is attacking the ideas and not me. It does take a thick skin, sometimes, to keep repeating a point month after month.” The December 16, 1999 meeting was typical of most meetings. The agenda (Figure K) was followed. Twice during the meeting, Smith was called out to address customer concerns. Though he suggested that the committee continue its deliberations, he asked for a recap of the discussions when he returned. Fortunately, this month was productive with few major problems, unlike the previous month, where several system outages caused significant production problems. Several new projects were presented. One LAN project involved the installation of Palm Pilot desktop software for directors. Another project suggested the investigation of alternative telephone service providers since the current provider wasn’t living up to expectations. Finally, Joe Lombardo, director of marketing and national programs, was concerned that with all of the information technology in place and with all of the software supporting their operation, it was very difficult to see long term marketing trends and to do complex analyses of sales data. His manager of marketing, Becky Steiner, spent hours transferring numbers from RECALL reports to Excel spreadsheets. How could this be the case? Looking over the inventory of software there must be something there that could simplify this operation. The consultant knew what other companies did to address this problem: Create a data warehouse. The question was: How?

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APPENDIX

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FIGURE A: THE GLOBAL CANON GROUP ORGANIZATIONAL STRUCTURE Group

Number of Companies

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Number of Employees

Countries

R&D, Manufacturing and Marketing R&D, Manufacturing and Marketing R&D Subsidiaries

12 7

6,245 512

Manufacturing Subsidiaries JAPAN AMERICAS EUROPE ASIA

5 7 4 10

3,522 3,634 2,236 15,555

Japan USA, Mexico Germany, France, UK, Italy Taiwan, Malaysia, Thailand, Singapore, PRC

Marketing Subsidiaries and Affiliates JAPAN AMERICAS

4 12

13,731 7,771

26

12,121

ASIA

9

2,578

OCEANIA

5

1,471

Japan USA, Canada, Panama, Brazil, Argentina, Chile, Mexico Netherlands, Switzerland, Finland, UK, Norway, Sweden, Belgium, Germany, Austria, Hungary, Poland, Czech Republic, Italy, Spain, UK, Ireland Singapore, Hong Kong, Malaysia, Philippines India, Thailand, ROK, Taiwan Australia, New Zealand

Other Related Companies

3

144

Japan, UK, Hong Kong USA, France, Australia, RPC, Philippines

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Japan, Singapore, Hong Kong

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FIGURE B: CANON GROUP 10-YEAR SUMMARY STATISTICS

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FIGURE C: CANON, INC. PHILOSOPHY AND CFS MISSION Canon, Inc.

The corporate philosophy of Canon is kyosei, which means “living and working together for the common good.” Our aim in pursuing this philosophy is to support the development of a society in which all people enjoy happiness and fulfillment regardless of differences in culture, customs, language and race. However, there are many imbalances in our world – in areas such as trade, income levels and the environment – which are hindering the achievement of kyosei and must be addressed in the future. By promoting kyosei, we are actively striving to resolve these imbalances. True global companies should establish good relations not only with their customers and communities in which they operate, but also entire nations and the environment. They must also bear the responsibility for the influence of their activities on society. For this reason, Canon’s goal is to contribute to the prosperity of the world and the happiness of humanity, and thereby continue to grow while helping the world achieve kyosei.

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Our mission: We are committed to increasing sales of Canon products in the U.S.A. through subsidiaries, divisions and authorized Canon dealers. Dealers and other customers will see us creating and satisfying their expectations by providing premier service and innovative, value-added products. We will optimize the use of Canon resources and inspire involvement, personal development, and high ethical standards. Corporate Culture:

• There should be a small number of highly qualified people, great systems, and participatory management. • A flat organization is the best design with all but core competencies outsourced. • We are organized into Business Channels that blend sales and operational responsibilities. Sales and operations are integrated and balanced instead of being pitted against each other. • Work flow is subject to constant review. It must be as simple as possible and documented in the operations manual. • Operational change – Our systems are open, subject to continual change in response to dealers/customers, competitors, technology … everything. Envisioned change should be based

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on information discussed with those known to be affected, documented in a proposed operating instruction, circulated to management, revisions discussed and resolved, revisions incorporated, and the revised operating instruction issued. Work flow changes only upon final issue. · Our operations will be centralized in one location. This allows better coordination of our efforts and more efficient sharing of information. · Jobs are designed with broad content and teams are used frequently. All jobs involve thinking as well as doing. · It is the function of people to figure things out. It’s the function of the computer to repetitively do the things we have already figured out. When we find ourselves overburdened, we must design data processing solutions. Computers must serve users, not vice versa. Computers must be user friendly.

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FIGURE E: CFS OPERATIONS SUMMARY STATISTICS

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FIGURE G: CFS INTERORGANIZATIONAL FLOW

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FIGURE H: CFS STANDING COMMITTEES Meeting Leader

Frequency Duration Monthly 1 Hour

Purpose

Attendees

Discuss Variances in model

President, All Directors and all Managers

Credit Review Monthly 2 Hours Director of Subsidiary Leasing

Discuss problem areas apparent during review of files by Credit Manager

President, Director of Subsidiary Leasing, Director of Independent Leasing, and Credit Manager

Full Company Meeting President

Quarterly 1 Hour

Each manager provides overview of progress on the Strategic Plan

President, Directors, Managers and interested associates

Human Resources HR Manager

Monthly 2 Hours

Discuss associate development

President, HR Manager and invited Directors

Independent Dealer Service Review Director of Independent Leasing

Monthly 2 Hours

Discuss problem areas made apparent President, Director of during review of files by Manager Independent Leasing, IDS , Manager, IDS Supervisors and QA Manager

Legal Review Director of Asset Management

Monthly 1.5 Days

Review the status of all legal accounts President, Director of Asset Management, Collection Management, Legal Specialist

Marketing Meeting Director of Independent Leasing

Quarterly 2 Hours

Discuss market, focus on competitive President, Directors, and rates and products Marketing Manager

g n i h s i l b u P p u o r G a e d I t h g i r y Cop g n i h s i l b u P p u o r G a e Id t h g i r y Cop g n i h s i l b u P p u o r G a e Id t h g i r y g n Cop i h s i l b u P up o r G a e Id t h rig y p Co Budget Review Controller

Month End Close Monthly 2 Hours Director of Operations

Discuss variances in budget to actual income and actual expenses

President, Director of Finance, Controller, and Accounting Manager

President’s Roundtable Twice each President and Month HR Manager 3 Hours

Study current business practices and principles to develop management skills

President, Directors, Managers and Supervisors

President’s Forum President

Quarterly 2 Hours

Select group of associates discuss business with President over lunch

President, HR Manager and selected associates

Product Development President

Monthly 1 Hour

Brainstorm product ideas for feasibility President, Directors, and follow through to fruition Marketing Manager and other Managers

Senior Management Meeting President

Monthly 2 Hours

Review current projects and new business issues, and discuss organizational design

President, Directors and HR Manager

Senior ManagementExpanded President

Monthly 2 Hours

Review current projects and new business issues

President, Directors and Interested Managers

Strategic Plan Review President

Monthly 2 Hours

Discuss actions plans that were due in the prior month and any past due items

President, Directors, and all Managers

Streamlining President

Monthly 1 Hour

Share ideas on improving the processes and procedures followed by CFS

President and selected associates

Subsidiary Dealer Monthly 2 Hours Service Review Director of Subsidiary Leasing

Discuss Problem areas made apparent President, Directors, SDS during review of files by manager Manager, and QA Manager

Systems and Methods Systems and Methods Manager

Review current projects and new system requirements

Monthly 3 Hours

President, Directors, interested Managers and invited guests

16 Yermish

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FIGURE I: CFS APPLICATIONS SUMMARY Application

Description

Acuity

General Ledger Software

AskSam

Text Storage and Retrieval

a e d I t h g i r y Cop Asset Management

Returned Asset

Management System

CC:MAIL Corel WebDesigner CorelDraw

Electronic Mail Web Graphics and Design Drawing Package

Location

Primary Users

Support Modes

Special Server

Accounting

Vendor

LAN

All Users

Vendor

LAN

Asset

Vendor

All Users Marketing

Vender, CUSA Vendor

Marketing

Vendor

Management

LAN Workstation Workstation

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Meter Reading Tracking

LAN

Lease

Vendor

Application

Processing

Dun & Bradstreet

Credit Reporting and Scoring

Special Server

Credit

Vendor

FrontPage 98

Web Site Development

LAN

Marketing

Vendor

InfoLease

Lease Management Software

Risc/6000

All Users

Vendor, Systems

IntraNetware (4.11)

LAN Operating System

LAN

All Users

Systems, Vendor

Lotus 1-2-3

Spreadsheet Software

Workstation

Accounting

Vendor

Lotus Organizer Monarch

Calendar and Groupware Tool Report Extraction Software

LAN Workstation

Managers Accounting,

Vendor Vendor, Systems

NetObjects Fusion

Web Graphics and Design

Workstation

Marketing

Norton Ghost

Standard Workstation

LAN

Office 97 Pro

Microsoft Office

Workstation

Workstation

Systems

Maintenance

Applications Suite

OmniPro, OmniForm

Scanning and Forms

Systems

Vendor

Systems

Workstation

LAN

All Users Systems

Workstation

Workstation

Executive

Vendor

Management Software

Optika

Optical Storage

Special Servers

All Users

Vendor, Systems

Palm Pilot Desktop

Management System Calendar, Address Book

Workstation

Directors

Systems

Payment History

Customer Payment

LAN

Asset Managt

Vendor

History Reporting

PcAnywhere

Communications Software

Special Server Systems,

for Remote Access

Systems

Vendors

PeopleSoft

HR Software

CUSA

HR

CUSA

Quantum

Sales and Use Tax Software

LAN

Accounting

Vendor

RealWorld

Accounting Software

LAN

Accounting

Vendor

Roll Forward

Accounting Support Application

LAN

Accounting

Vendor

SQL

Database Software

Special Server

Accounting

Vendor, Systems

UniData

Database Management

Risc/6000

All Users

Vendor, Systems

VSI Fax WinFax Pro

Fax Fax Software

Risc/6000 LAN

All Users Systems

Vendor, Systems Systems

WordPerfect 6.1

Word Processing Software

LAN

Executive

Systems

WordPerfect for Unix

Word Processing Software

Risc/6000

All Users

Vendor, Systems

Canon Financial Services, Inc. 17

FIGURE J: TYPICAL SYSTEMS AND METHODS MEETING AGENDA

g n i h s i l b u P p u o r G a e d I t h g i r y Cop g n i h s i l b u P p u o r G a e Id t h g i r y Cop g n i h s i l b u P p u o r G a e Id t h g i r y g n Cop i h s i l b u P up o r G a e Id t h rig y p Co Meeting Date December 16, 1999 Type Priority

Request Description

Target Adjusted Dates

Assigned To

DSI 1

Reconcile 1996 Tax Filings Restore 1996 InfoLease and Accounting Data from Backup tapes for IRS Audit analysis.

12/31/1999

Donna

2

Implement a fast means of entering credit applications in InfoLease The Application process involves entering data on several screens within InfoLease. Some of the data must be repeated. Provide a mechanism to enter information via WWW browser.

08/15/1998 12/31/1999

Ray

3

DSI Settlement Bugs A persistent problem with InfoLease causes some small errors in end of month closing reports.

Open

Ray

4

Modify Invoice Process to allow flag for mailing stuffers The printing process outsourced to a direct mail firm needs to include options for selectively including marketing pieces within the invoice package.

06/30/1999 12/15/1999

Ray, Donna

In-House 1

Implement Fair Isaac Credit Scoring System Since the BACAS credit scoring system was not Y2K compliant and could not be adequately supported, a new automated credit scoring system was required.

05/31/1999 11/30/1999

Ray

2

Cost Per Copy Upload Automation In response to problems identified in the capture of meter readings from Subsidiary Dealers, a special application is being developed to connect dealers system with InfoLease

07/31/1999 12/30/1999

Ray

3

Lockbox Check Numbers Revise the Lockbox program to include check numbers for load into InfoLease

03/31/1999 01/30/2000

Donna

4

Inventory Database Update to Track Bids Implement an addition to the Asset Tracking Program for tracking bids on re-marketed assets

01/31/2000

Ray

5

Automated Fax Processing Re-activate InfoLease Faxing Process

09/30/1999 01/15/2000

Mike

LAN 1

Lotus Notes Implementation Implement Lotus Notes for Groupware operations and to replace CC:MAIL.

09/30/1999 12/31/1999

Mike

2

Selectively Clear Optika Cache Memory Develop process to remove old images from disk storage arrray.

11/30/1999 12/31/1999

Mike

3

Electronic Mail Purge Policy Develop policies and procedures concerning the retention and purging of electronic mail.

11/30/1999 12/31/1999

Mike

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FIGURE K: PROJECT LOG FOR SYSTEMS AND METHOD AGENDA ITEM

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Systems and Methods-Meeting Strategic Project Update as of December 16, 1999 Project Description: Lockbox check numbers

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Objective: Rework lockbox process to allow for inclusion of check numbers; and move lockbox out of computer room.

1/19/1999, Lockbox processing has been successfully moved external to the computer room. Ray has been in touch with First Union regarding the inclusion of the check number in its transmission. They have sent me layout of the micro code of the check and indicated that they can send the whole micro line, but do not and are not able to dissect the line and provide specific pieces. This, however, may not be a problem, as I believe I can grab the piece that corresponds to the check number programmatically. I am continuing to work with First Union on this issue.

g n i h s i l b u P up o r G a e Id t h rig y p Co g n i h s i l b u P up o r G a e d I t h g i r y p o g C n i h s i l b u P p u o r G a e Id t h g i r y Cop 2/18/1999, Testing has started with First Union to determine the extent within its currently offered transfer methodology that any data manipulation (that was previously done in the PNBATF transfer (our current production methodology)) is lost. This will determine the extent that downstream programming will be effected by going to the new transfer.

3/19/1999, Testing of the PNBATF -vs- the currently offered transmission, indicated that no data manipulation is being done by the PNBATF transmission (although there was one blank line difference in the two transmissions that was probably caused by phone line noise). This indicates that the addition of the check number will not be complicated by other data issues. Project will move forward as soon as resources can be diverted from the tax reconciliation issues. 4/19/1999, No further progress.

5/19/1999, The alternate means of transmitting the LOCKBOX data to CFS (the first prerequisite to adding the check number) via ProComm was tested more in-depth than as indicated above in the “Status 3” paragraph. While the data is not being manipulated the file size of the PNABTF and ProComm transfers are different due to blank padding of data. First Union is investigating the reason for this. It is possible (but not likely) that the padded blanks could cause problems in the downstream programming which manipulates and populates data into InfoLease. 6/16/1999, We successfully converted over to the ProComm the LOCKBOX transfer methodology. Donna will contact Venice Hall at First Union to arrange for a test transfer that included the check number. We will then verify which steps of our downstream programming will process the check number without modification (if any) and assess the level of programming changes needed. 7/20/99, Donna to report.

8/20/99, First Union sent to CFS a test file of data that includes test check numbers. Donna will run a test to see if any of the down-stream programming can handle the extra field without modification.

9/16/99, The format of the check data was not sent in the format requested (left justified, including

Canon Financial Services, Inc. 19 leading zeros). First Union is changing this data, and Donna will test the corrected data before Tuesday. 10/19/99, The data file from First Union with the check number was correct and was tested with the Lockbox procedure. As expected, the lockbox conversion process (step 2 of 4 steps) failed with the new check number field in the input file. Process 2 could not make sense of the extra data field. Donna analyzed the input and output files of process 2 to define the data manipulation performed by this process and is in the beginning phases of programming the required code to include the check number. It was decided that this would be a program that we could write in Visual Basic. In addition, DSI was contacted regarding the changes that would need to be made to their two programs that are used to move the data from First Union into Infolease. We were informed that this would not require any changes to the DSI programs, because they are already set up to handle the check number through the existing interface programs (step 3 and 4).

g n i h s i l b u P p u o r G a e d I t h g i r y Cop g n i h s i l b u P p u o r G a e Id t h g FURTHER READING i r y p Co g n i h s i l b u P p u o r G a e Id t h g i r y g n Cop i h s i l b u P up o r G a e Id t h rig y p Co 11/17/99, We have obtained the original program code, all the logic appears to be in place and the corresponding Visual Basic code is in the process of being written. However, work on this project has been suspended due to 1996 tax issues that have taken top priority.

12/15/99, Received a call from First Union at the end of November informing us that we will not be able to put any changes into effect until early February due to a Y2K freeze. We have added the code for processing the check number to the original source code, and this has been tested thoroughly. As soon-as the moratorium is lifted we will be ready to proceed with the addition of the check number to the input file which uploads into InfoLease.

Applegate, L.M., F.W. McFarlan, and J.L. McKenney (1999). Corporate Information Systems Management, Fifth Edition, Irwin/McGraw-Hill, Boston, MA. Ripin, K.M. and L.R. Sayles (1999). Insider Strategies for Outsourcing Information Systems, Oxford University Press, New York. Lacity, M.C., L.P. Willcocks and D. F. Feeny (1995). “IT Outsourcing: Maximize Flexibility and Control,” Harvard Business Review, May-June. Quinn, J.B.(1999).“Strategic Outsourcing: Leveraging Knowledge Capabilities,” Sloan Management Review, Summer. A. DiRomualdo and V. Gurbaxani(1998). “Strategic Intent for IT Outsourcing,” Sloan Management Review, Summer. Earl,M. and D. Feeny(2000). “How To Be a CEO for the Information Age,” Sloan Management Review, Winter. McKenney, J.L. (1995). Waves of Change: Business Evolution through Information Technology, Harvard Business School Press, Boston, MA. Kimball, R. (1998). The Data Warehouse Lifecycle Toolkit : Expert Methods for Designing, Developing, and Deploying Data Warehouses, John Wiley and Sons, New York.

Dr. Ira Yermish is an Assistant Professor of Management and Information Systems at St. Joseph’s University in Philadelphia. His teaching and research areas include systems analysis and design, data base management, data communications, information resource management, and business policy and strategic management and has been active in

20 Yermish

executive education. He is currently coordinator of the SAP Alliance project. Dr. Yermish was awarded a certificate for Excellence in Teaching in 1988. In addition to his current academic activities, he is an active management and information systems consultant. Dr. Yermish earned degrees from Case Western Reserve University, Stanford University the University of Pennsylvania. His early professional experience included positions with Univac, Control Data, RCA Corporation, the Institute for Scientific Information, and founder of MagnaSystems, Inc. When not teaching or consulting, Dr. Yermish is an avid cyclist, runner, photographer, choral singer and board member of the Choral Arts Society of Philadelphia.

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