Case Study 5 – Santa Cruz
Case Study 5‐1 Carestream Health
In 2019, Carestream Health employed more than 6,000 employees and operated in 150 countries. It was founded in 2007 when a private equity investment firm, Onex Corporation, purchased Kodak’s Health Group. At the time of its acquisition, Kodak’s Health Group had three primary businesses: Film, Mental Digital, and Digital Dental. Eileen Wirley, the CIO of Kodak’s Health Group, became the first CIO at Carestream Health. The main goal for the business overall, and IT in particular, was to create cost‐savings through simplification. In IT this translated into consolidating applications so that every part of the business was standardized in terms of its processes and systems. In 2014, Carestream had a single instance of SAP running across the entire company and several horizontal processes such as HR, ordering, supply chain, and purchasing.
When the Carestream CEO Kevin Hobart asked CIO Bruce Leidal to envision what the Film business of the future, Leidal knew mass‐scale digitalization was inevitable. He said: “We could either build the bus or get run over by the bus, so I had to figure out ways to free up some funding to explore how our back‐end processes could be redesigned for this transformation.” In 2014 and 2015, Leidal adopted a customer‐centric approach for his group and created a target digital architecture that included a customer portal, e‐commerce software, mobile apps, electronic data interchange (EDI), web content management, and an IoT platform to connect the company’s film printers. Bruce tried to anticipate the foundational IT that would be needed to support the transformation to a new digital business model.
In 2016, the Carestream leadership team and board of directors strategically changed the focus from cost savings to monetizing the Carestream assets it had acquired. At the same time it sold its Digital Dental business.
To plan for the transformation, the CIO and CEO invited key stakeholders across the Film industry to each join in one of a series of two‐day workshops. Each workshop had six to nine participants who helped explore the Film processes in depth. Present at each workshop were business decision makers, a consultant, an IT person who was assigned to take notes, Carestream’s Director of Design from the Marketing Department (Peter Lautenslager), and Leidal. Together the participants described and documented the current processes with all of their complexities, as well as discussed the preferred way to execute the work. The consultant in each workshop cut short unproductive debates about best practices and made recommendations based on the discussions. The IT person documented the process using Visio, which helped in visualizing the processes by creating flowcharts and diagrams that could be employed in the subsequent systems development efforts. Lautenslager used the information and documentation from the workshops to build storyboards, which offered a visual representation to nail down the steps in the future process and make the process tangible. The storyboards of the future state scenarios were integrated into two high‐level stories, electronic ordering (eOrdering) and a customer connection initiative.
A proposal for the new program (i.e., eOrdering and customer connection) was costed out and refined to reflect necessary organizational redesign based on information garnered at meetings with global functional groups such as HR and finance. The storyboards, processes, and new organizational design related to eOrdering and Connected Customer were presented to the Executive Leaders Team and approved in May 2017.
The transformation involved and impacted numerous Carestream departments (e.g., logistics, pricing, sales, legal, product development, field service, and shared service centers). A large program team was assembled with five major leaders: a program manager who was responsible for delivering the overall program, a business program manager who worked with business stakeholders and was responsible for the business side of the program, a project manager who assisted the program manager on project management activities, a technical lead who was responsible for all software and architecture, and an outsourcing manager who communicated with the offshore developer. The first four eOrdering components of the large program were developed (i.e., Shop Carestream, remote management services, customer registration and activation, and managed print services and self‐serve kiosks) using agile development methods. These first components of eOrdering were ready for roll‐out in 2017.
The initial adoption and use of Shop Carestream was disappointing. Its adoption rate stalled at 20%. After Hobart set a goal of 100% participation, massive efforts were undertaken to understand the reasons behind the low adoption rate. It was learned that ordering and processing requirements varied in different countries and regions of the world. Local adaptation to eOrdering was implemented and metrics were created to assess progress of Shop Carestream adoptions and to track business (e.g., number and percentage of manual orders, number and percentage of shop Carestream orders, number and percentage of EDI orders) and customer benefits.
The operations of the eOrdering platform were turned over to business owners in Summer 2018. The adoption rate of Shop Carestream has hovered around 85% and customer satisfaction and costs derived from eOrdering have kept improving, thus placing Carestream in a “position of competitive advantage” according to Andy Mathews, Carestream’s Director of Film Business Planning and Strategy. CEO Hobart is “generally very happy” and noted cost savings, a reduced headcount from attrition and staff who were doing work that added more value.
Read the Case Study 5-2, Santa Cruz Bicycles. Answer the following questions:
What, in your opinion, was the key factor in Santa Cruz Bicycles’ successful process redesign? Why was that a key factor?
What outside factors had to come together for Santa Cruz Bicycles to be able to make the changes they did?
Why is this story more about change management than software implementation? For more information on Santa Cruz Bicycles see this: https://en.wikipedia.org/wiki/Santa_Cruz_Bicycles
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