Textbook: IT Strategy Issues and Practices 3rd edition

Answer the following Questions based on the Mini Case: Investing in TUFS

Discussion Questions

1. What went wrong with the TUFS investment, and what can be done to prevent these problems in the future?

2. What does Northern need to do to realize the benefits that were projected for TUFS?

3. How can Northern measure these benefits?

4. Chapter 4 of the text discusses how to build a strong relationship with the business in implementing IT projects. If you could go back in time to develop a plan to investigate and implement a TUFS-like system, how would you approach it differently based on the concepts presented in Chapter 4. Be specific.

Mini Case: Investing in TUFS

Why do I keep this around? Martin Drysdale wondered. It infuriates me every time I see all that satisfaction over something that is now the bane of my existence.

He looked gloomily at the offending photo, which showed the project team happily clinking pop cans and coffee cups in a toast: Heres to TUFS! The Technical Underwriting Financial System (TUFS) was the largest single investment in IT ever made by Northern Insurance, and it was going to transform Northern by streamlining the underwriting processes and providing strategic e-business capabilities. The TUFS team had brought the project in on time and on budget, so the party was a thank-you for all of the teams dedicated, hard work. But it was two years ago when the camera captured the happy moment for posterity, and Martin, CIO for Northern, had celebrated with the rest.

Yeah, right, Martin grimaced as he turned from the photo to the e-mail message on his computer screen, summoning him to a meeting with his boss that morning to discuss TUFS. The system had turned into a nightmare in its first few months of operation. Now his job was on the line. What was supposed to have brought efficiency to the underwriting process and new opportunities for top-line growth had become a major corporate money pit. TUFS was still eating up the vast majority of Northerns IT budget and resources to fix the underwriting errors that kept appearing, and resistance to the system had grown from sniping and grumbling into calls for Martins head. No wonder were not saving any money, though, with senior underwriting managers still insisting on receiving some of their old reports, even though TUFS lets them look up the same information online anytime they want, Martin fumed. The meeting with the CFO was to discuss TUFS and the companys very significant investment in this system. Feeling like a condemned prisoner on his way to the gallows, Martin grabbed his suit jacket, straightened his tie, and headed up to the seventh-floor executive suite.

An hour later Martin was feeling very well grilled as he was confronted with a long list of the problems with TUFS. The CFO, Melissa Freeman, had done her home- work. Before her was a binder full of TUFS documentation, stretching back almost three years from when the project had been first identified. According to my calculations, Northern has spent almost $4 million on this system, if you include all of the resources dedicated to fixing the problems identified after implementation, she noted. And I have yet to see any cost savings in the underwriting department. Why?

Its true that there have been some unanticipated changes to the system that have cost us, but the underwriters have never bought into the system, Martin conceded. They insist on following their old procedures and then using the system at the last possible moment as a double-check. What can we do if they wont use the system the way it was designed?

Could there possibly be a reason why they dont like the system? Freeman asked. It seems to me from looking at these change reports that the system hasnt been meeting our basic underwriting needs.

Martin acknowledged that there had been some problems. But my guys are technicians, not underwriters. They didnt get much participation from the underwriters in the first place. The underwriting department wouldnt take the time to bring my people up to speed on what they needed and why. As well, we were facing a very tight deadline, which meant that we had to defer some of the functionality we had originally intended to include. That was senior managements decision, and everyone was informed about it when it was made. He added that they were now asking for a TUFS training program and a help desk to handle questions that underwriters might face while using the system!

A help desk and training program werent in our original plan, Martin reminded Freeman. These extras are eating away at the systems benefits. According to the business case prepared by the users, TUFS was supposed to pay for itself over its first two years of operations from savings realized from the underwriting process. The systems problems certainly accounted for some of the extra costs, but the users hadnt made any of the process changes that would help those savings be realized. They think we can just plug in the system and cost savings will appear like magic. And other parts of the system are going to take time to deliver benefits.

The other parts he was referring to were the e-business capabilities that TUFS provided. If you will recall, this system was approved in the days when we had to have ebusiness or we were going to be dinosaurs. In retrospect, we could have cut back on this functionality more easily and left some of the underwriting functionality in, but who knew?

Well, as you know, our financial resources are very limited at present. Freeman leaned forward. Ive been asked to make some recommendations to the executive committee about whether or not we should put more money into this system. TUFS has been our number-one priority for two years now, and quite a few people are saying that enough is enoughthat we need to make some major changes around here.

Martin took a deep breath, waiting for the ax to fall. Freeman continued, What I need to know now from you is this: What went wrong with our TUFS investment, and what can we do to prevent these problems in the future? What do we need to do to realize the benefits that were projected for TUFS? How can we measure these benefits? And how can we best decide how to apportion our IT budget between TUFS and these other projects?

As he slowly exhaled and felt his pulse resume, Martin nodded. Ive got some ideas. Can I get them to you in writing by the end of the week?