Business proposal

Chris has misstated budget information to the team which also added more stress on the project.  Cliff asked Chris if it was possible to lower the proposed budget from $575k to $400k.  And Cliff made it clear that a 1 million dollar budget was totally out of question.  It was not mandated that the budget be cut, it was only asked if it was possible.

Proposed Solution

In order for this project to move forward a few things need to happen.  We have first identified that all market information need to be fully researched to learn of the actual competition for a retail application using a retinal scanner.  Pat and his team along with ACR Corp. will gather market data for analysis.  Once this information has been analyzed a report will be generated.  A presentation will be given to senior management by ACR Corp.  There must be an agreement by all senior management along with commitment on creating a retail retinal scanner application.  

After all of senior management has bought into the product then a project plan needs to be put together that will give a timeline of the product’s development cycle.  During the planning of the project Kelly would need to have another workload analysis performed so she can properly evaluate her resources within her area.

Chris would be working in parallel with identifying the schematics of what is needed for iScanner to be setup physically at a retail store.  Chris, Kelly and Pat will gather cost information from their respective areas.  ACR Corp. will put a budget analysis together for the cost of the project.

Pat will also be working in parallel to create a ROI analysis on the proposed product.  He will create charts and reports that will be presented as part of the project plan.

Once the project has been planned and reports are ready an end project date, project requirements, ROI and proposed project budget would be delivered to senior management.  Senior management would then need to agree on the project plan, budget and project requirements.  If there are any changes to be made to the budget, requirements or project end date then these changes need to be addressed at that time.

There would be weekly status meetings held to go over the project status and to bring up any concerns, problems or changes in the project.  If there are disagreements they should be brought up at the status meetings.  If there are any bottlenecks in the project that need immediate attention there would be emergency project meetings held.

The objective for this project is to create a retail retinal scanner application for retailers that will increase AcuScan’s sales.  The end product will be of quality just like the iScanner.  

        In the next following pages we have put together a business strategy with market analysis, budget analysis and project charter/plan.  These are the items that would lead AcuScan into delivering a successful retail product to retailers.

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Business Strategy/Market Analysis  

Most retailers do not understand what a great value collecting customer data via retinal scans, but we must also realize the challenges of leveraging this knowledge to create intelligent, proactive pathways back to the customer. Operation optimize - are technologies and techniques for recognizing and tracking patterns within customers – retailers will sift through layers of seemingly unrelated data for meaningful relationships, where they can anticipate, rather than simply react to, customer needs. In this accessible introduction, ACR Corp plan to provide a business and technological overview of Operation optimize and outline how, along with sound business processes and complementary technologies, the retinal retail product can reinforce and redefine customer and retailer relationships. 

Dramatic changes over the past few years have taken place in the way that retailers collaborate with their customers. Continuous business between the retailer and customer is no longer guaranteed. This has resulted in the retailer’s need of finding a way to understand their customer better, and quickly respond to their wants, and needs. In addition, it is no longer possible to wait until the signs of their customer’s dissatisfaction become obvious before an action must be taken.  In order for the retailer to succeed they must become proactive and visualize what a customer fancies; with Operation Optimize the ability to do all this can become a reality.

Back in the days, the local market storekeepers had no trouble keeping track of their customer in their head, and knowing when they entered their place of business; but those days are far and gone. With the complexity of today, it is harder for the retailer to understand their customers and respond quickly. Retailers are now faced with new challenges which they have to deal with; such as, mega super stores, changing markets which includes more customers, more products, more competitors, and less time to react. Furthermore, the attention span of a customer has decreased dramatically and loyalty is a thing of the past. With Operation optimize a retailer can successfully reinforce the value.

ACR Corp. first priority is to drive the highest possible returns for Acuscan; with our skilled project manager, market analysis and budget analysis managers, ACR Corp. possess the potential to align business strategy with project management and evaluate promotion success. This will empower Acuscan to optimize promotional monies and drive profitability to great heights.

ACR Corp. Proposed strategy:

• Define, plan, and model promotional campaigns including budgeting costs, margins, and expected sales lift.
• Leverage past promotion experience to allocate top-line marketing spending to banners, channel, or promotional activities.
• Adjust promotional mix and campaigns on-the-fly based on performance and consumer responses to date.
• React quickly to new vendor-sponsored opportunities to address market trends and to counter competitive actions.
• Improve control over trade funds and accelerate reimbursements due from vendors.
• Publish reports and conduct analysis based on critical information such as promotion effectiveness and profits by region or division, projected revenue lift, and vendor compliance.
• Allocate and measure marketing spends across the company.

Operation optimize will provide satisfaction to Acuscan customers on a continuous basis. In addition, the time it takes between customers new desire to the time the retailer must meet that desire will easily shrink. If a retailer does not utilize Acuscans retinal scan product they will find themselves unable to react quickly enough, and their customer will find another retailer to do business with.

Operation optimize will give the retailer the ability to select items that meet their exact needs, while eliminating the things they sort of want. This means the number of products and the number of ways they are offered will rise significantly. Acuscan customers will have a leg up over their competitors.

Proposed Slogan:

Operation Optimize means a new future for the retailer, which provides them with the ability; to match the right offer, to the right person, at the right time, through the right channel.

Benefits of retail scanner

Retailers will be able to merge prescription information along with grocery items into one customer profile.  Keeping customer data in one profile is beneficial to both the retailer and to the customer.  Now the customer can come into a retail store and go to a kiosk to see the last items that were purchased and the last prescriptions that were filled.  The kiosk will scan the retinal of the customer’s eye and then pull up the customer’s profile.  The customer can then print out the last set of items that they had purchased.  In the future AcuScan could even look into having a handheld retinal scanner where a customer can use the handheld scanner to pull information of their last purchases.

The retailer can send promotional information to the customer for products that the customer had purchased more than once or twice indicating that the customer is satisfied with the product.  

Financial Analysis

A general financial analysis usually use the basic tools of income statements, balance sheets and, other financial documents to understand how well an organization is doing or how well they are not doing in a fiscal year. As the chairperson and financial advisor of our consultant firm I have viewed the budget for the project.  After assessing the limited information that was given to me I found the underlying problems of the company are not just financial.  These problems should be addressed and our consultant firm is the one to handle them.  AcuScan has become successful because of their innovative cutting edge technology and ACR Corp. believe AcuScan will remain on top without continuing to work at staying on top by taking risk.  Our consulting firm is dynamic and in that we have multi talented partners that will tackle and handle problems that are outside of our expertise.  Because I have a stronger financial background I will give an analysis of the financial budget of “Operation Optimize” to give a broader insight to how wiser money decisions will allow AcuScan to complete this project and keep their standing in a growing industry.  I will include the human resource problems mentioned that can be created if the advice of our firm is not considered.

        Here is a summary of recent events at AcuScan to better understand the financial situation they are in.  There were tremendous changes of late that need to be recognized.  AcuScans main product is the iScanner.  The iScanner is a security scanner that uses retinal scanning for security purposes. The device is used in airports and high security areas. The iScanner claims nearly 40% of the market in high tech devices.  In just a decade, the company has grown to 1500 employees based across the United States.  Last year, AcuScan revenues hit $100 million, a record for the company.  In the last two years 500 employees were sacrificed and a revamping of the supply chain management system cut costs by 15%.  The current sales/ service ratio of 50/50 will slide about 30%.  In addition to these reductions and cuts CEO Cliff O’Connor is expecting each department to reduce budgets by 15% to supplement the budget for the new project.

         Based on initial analysis Chris projected the following as the amount of investment needed to launch the new project:

• Software design and reprogramming:                                $200,000 *
• Repackaging design and development                            75,000 *
• Launch marketing:                                                     50,000*
• Advertising costs:                                                   250,000*

Total cost of market:                                           $575,000

                                                                        *Existing staff costs

        This budget would have been more comprehensive using a tool called a New Product Development Process (NPD).  This process includes several steps that Chris did not take into consideration and Pat as a Marketing person should have suggested.  Before creating a budget more emphasis should have been put on developing the product.  As mention in the case study they did not come up with the product as of yet.  With that in mind the dollar amounts used by Chris Martinas were not realistic.  The following steps are guidelines for an efficient budget analysis:

1. Idea Generation  (Pat Lambert and Chris)

• Ideas for new products can be obtained from basic research using a SWOT analysis (opportunity analysis) customers , the company's R&D department, competitors, focus groups, employees, salespeople, corporate spies, trade shows,
• Idea Generation or Brainstorming of new product, service, or store concepts idea generation techniques can begin when you have done your opportunity analysis to support your ideas in the Idea Screening Phase (shown in the next development step).

2. Idea Screening (Chris Martinas)

• The object is to eliminate unsound concepts prior to devoting resources to them.
• The screeners must ask at least three questions:

1. Will the customer in the target market benefit from the product?
2. What is the size and growth forecasts of the market segment/target market?
3. What is the current or expected competitive pressure for the product idea?
4. What are the industry sales and market trends the product idea is based on?
5. Is it technically feasible to manufacture the product?
6. Will the product be profitable when manufactured and delivered to the customer at the target price?

3. Concept Development and Testing (Chris Martinas and Pat Lambert)        

• Develop the marketing and engineering details

1. Who is the target market and who is the decision maker in the  purchasing process?
2. What product features must the product incorporate?
3. What benefits will the product provide?
4. How will consumers react to the product?
5. How will the product be produced most cost effectively?
6. Prove feasibility through virtual computer aided rendering, and rapid prototyping

• Test by asking a sample of prospective customers what they think of the idea.

4. Business Analysis  (ACR Corp., Chris Martinas and Pat Lambert)

• Estimate likely selling price based upon competition and customer feedback
• Estimate sales volume based upon size of market and such tools as the Fourt-Woodlock equation (a  tool to describe the total volume of  purchases per year based on  which initially make trial purchases of the product and those households which make a repeat purchase within the first year. Since it includes the effects of initial trial and repeat rates, the equation is useful in .)
• Estimate profitability and breakeven point

5. Beta Testing and Market Testing  (Chris Martinas)

• Produce a physical prototype or mock-up
• Test the product (and its packaging) in typical usage situations
• Conduct focus group customer interviews or introduce at trade show
• Make adjustments where necessary

6. Technical Implementation (Kelly Thomas, Product Engineer)

• New program initiation
• Resource estimation
• Requirement publication
• Engineering operations planning
• Department scheduling
• Supplier collaboration
• Logistics plan
• Resource plan publication
• Program review and monitoring
• Contingencies - what-if planning

7. Commercialization   (Pat Lambert and ACR Corp.)

• Launch the product
• Produce and place advertisements and other promotions
• Fill the distribution pipeline with product
• Critical path analysis is most useful at this stage

These steps may be used as needed. Some steps may be eliminated. Everyone plays an important role in the process.  To reduce the time that the NPD process takes, many companies are completing several steps at the same time.  This is where the teamwork and expertise of the partner come into play. Most industry leaders see new product development as a proactive process where resources are allocated to identify market changes and seize upon new product opportunities before they occur.  AcuScan is using a reactive strategy in which nothing is done until problems occur or the competitor introduces an innovation. Many industry leaders see new product development as an ongoing process (referred to as continuous development) in which the entire organization is always looking for opportunities.

Because the NPD process typically requires both engineering and marketing expertise, cross-functional teams are a common way of organizing projects. The team is responsible for all aspects of the project, from initial idea generation to final commercialization, and they usually report to senior management (often to a vice president or Program Manager). In those industries where products are technically complex, development research is typically expensive, and product life cycles are relatively short, strategic alliances among several organizations helps to spread the costs, provide access to a wider skill set, and speeds the overall process.

Also, notice that if Chris and Pat’s expertise are critical to the process, choosing an appropriate blend of the two is important.  As important is the financial analysis of project from an outside source allows and aids both members from step to step.

There is also a mention of ROI by Chris Martinas initial financial overview.  The Return on Investment is the ratio of  gained or lost on an  relative to the amount of money invested. The amount of money gained or lost may be referred to as , /loss, gain/loss, or net income/loss. The money invested may be referred to as the , , , or the  of the investment. The ROI could only be calculated with other critical financial tools such as the interest, and other financial information from the organizations Balance Sheets and Cashflow Statements.  ROI is usually computed in a grid a more than one year to see the overall gain or lost.  Chris can not include this in the initial financial overview.  This is financial ratio that is not easily applied in the short time period provided.

Not looking beyond the initial budget introduced by Chris Martinas as the financial and part of a dynamic consultant firm we can fill the missing piece of the puzzle for AcuScan.

Project Charter

        

We have also come up with a project charter.  The charter has a signoff area in which all of senior management will signoff.  The project charter outlines the deliverables of the project and set the project’s boundaries.

A project charter allows management and the project team to better understand the costs, goals and boundaries before the project is approved and work commences. Once approved the charter gives formal authority to the project manager to carry out the work. (Francis and Horine, 2003)  Without a charter priorities get confused and unnecessary, out of scope, work is more likely to be undertaken, wasting resources.

The charter can make or break a successful project. It can make it by specifying necessary resources and boundaries that will in turn ensure success; it can break it by reducing team focus, effectiveness and motivation. (Swinney, 2001)  A charter takes place at the beginning of any project.

Projects that start without a charter in place may have problems because the project is then not clear and will have inherent challenges. These challenges can include budgetary issues because someone didn't fully understand the project scope of work or how change orders should be processed, to issues relating to team communication expectations.

We saw that because AcuScan did not have a project charter the project never got anywhere.  AcuScan had budgetary issues and communication between Pat, Kelly and Chris was poor.  

In an updated report in 2001 the Standish Group found that executive support is the most critical factor to project success. Companies that practiced senior management support of projects were more likely to achieve positive results and reduce problems throughout the project life cycle. Additionally, projects that did not have proper sponsorship – but were still continued – delivered.  (McKeever , 2006)

AcuScan’s Project charter is located in a separate file named: AcuScan_Project_Charter-Plan.doc located in the same directory as this case study.

Project Plan

ACR Corp will draw a project plan using Critical Path Analysis, CPA.  By using CPA we will be able to come up with an end date for the project.  We will also be able to properly plan recourses and identify resource contention.  Critical Path Analysis also identifies all of the tasks (Work Breakdown structure, WBS) that are in the project.  We will be able to identify tasks that can be in parallel with other tasks. (Woolf, 2007)

Using Critical Path Method also identifies the time each task will take therefore allowing ACR Corp. to calculate the longest path and shortest path of the project.  We will be able to see what task have dependencies and work on avoiding resource contention. (Virine and Trumper, 2007)  The tasks that are critical will be prioritized and resources for these critical tasks will be critically chained to the project.  This means that during the time of the assigned critical tasks those resources are not to work on anything other than the project.

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Summary

ACR Corp. has identified the problems that AcuScan were having and reasons why the retail retinal scanner project did not get off of the ground.  We have put together a proposed solution that will not just only get the project completed but will ensure that the project will align with the business strategy.   When an organization link their projects to their business strategy, they are better able to accomplish their organizational goals. (Jamison and Morris, 2004)

We will use market data and history of the company to come out with a cohesive understanding of AcuScan’s business strategy.  Success is what ACR Corp. believes in and from what we have learned and seen from AcuScan success is the core drive that pushed out such a great product which was the iScanner.  We look forward to being apart of the next great product that AcuScan will put out.

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References:

Susumu Ogawa (Winter 2006). Management of Technology and Innovation

Reprint 47214; Winter 2006, Vol. 47, No. 2, pp. 65-71

Springer Berlin Heidelberg, (2006). Operations Research Proceedings 2005.  Fourt-Woodlock equation  (Business and Economics, Volume 2005,

Software helps optimize retail promotions.(Cognos Continues Retail Industry Leadership, Launches New", Product News Network, Nov 13 2006 Issue

Francis, D, & Horine, G (2003). PMP.Exam Cram.

The Standish Group International, Inc. “The Chaos Report (1994).” West Yarmouth, MA: The Standish Group International, Inc., 1994 www.standishgroup.com/sample_research/chaos_1994_1.php.

McKeever , Chuck (2006). The Project Charter – Blueprint for Success . CrossTalk - The Journal of Defence Software Engineering, Retrieved March 25, 2008, from http://www.stsc.hill.af.mil/Crosstalk/2006/01/0601McKeever.html

Swinney, Zack. (2001, February 18). Project Charter. iSixSigma.com. Retrieved March 26, 2008, from http://www.isixsigma.com/library/content/c010218a.asp

Woolf, Murray B. (2007). Faster Construction Projects with CPM Scheduling. McGraw Hill. ISBN 978-0071486606. Critical Path method

Lev Virine & Michael Trumper (2007). Project Decisions: The Art and Science. Management Concepts. ISBN 978-1567262179. 

Jamison a. & Morris P. W. G. (2004). Moving from corporate strategy to project strategy.  In P.W.G. Morris and J.K. Pinto (Eds), The Wiley guide to managing projects (pp. 177-205). Hoboken, NJ: John Wiley & Sons, Inc.