Business Case For IT Investment: Micromax’s Lean Six-Sigma Implementation

Purpose of the business case

The business case is about the IT investment of Micromax in terms of increased productivity of their handsets by using Lean six-sigma in the company. The business case will focus on the benefits of the investment done by the company in its different business verticals. The business case will focus on the improvement on waste management, quality management and the waste management of the newly implemented strategy in the whole supply chain management of the company. The business case of Micromax will answer few questions whether they are doing the right things in a right way. Apart from that, the resources and funds required for the implementation of the new strategy are discussed in the business case. The value of the new program will be increased brand image as well as reduced waste and lead times by 80%. It will also lead to savings of cost of almost 15%.

The approach of the business case for Micromax is comprehensive in nature that will involve financial benefit analysis, risk analysis, non-financial benefit analysis, alignment analysis, outcomes and documentation of the business case. Apart from that, the fact sheet will be provided that will describe the operational capability, business capability, resource capability, etc. The viable alternatives for solving the decision-making problem of the employees regarding the implementation of the new procedure in the business units are identified. The financial and non-financial analysis will explain about the constraints and benefit of the IT investment of Micromax. However, it is predicted that the company will earn profits and few business units will earn huge income in terms of more production of handsets. It is recommended that the company can provide extensive training to the people who are associated with the supply chain management and the manufacturing units of the company.

	Building	Implementation	Operation Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	Retirement
Fact Sheet Item	Best Case	Worst Case	Best Case	Worst Case	Best Case	Worst Case	Best Case	Worst Case
Technical Capability
Outcomes	Available infrastructure is capable of building the proposed changes	Infrastructure is not capable, building the proposed changes will lead to breakdowns	Enough capacity at Micromax to implement Lean Six Sigma to their processes	The capacity is not enough to implement the lean six sigma production process	Reliable infrastructure to operate a Lean Six Sigma as proposed	Unreliable infrastructure, cannot sustained the proposed changes as Micromax	Successful project, that is, successful implementation of Lean Six Sigma	Project failed, the proposal was not implemented at all
Alignment	Micromax uses available infrastructure to build the new proposal	Micromax needs new infrastructure to build the new proposal	Available infrastructure useful at Micromax are useful at implementing LSS	Available infrastructure not used to implement the LSS as they are not in line with the proposals	Output is increased after the proposal is implemented by about 20%	Output does not increase after implementation	No additional infrastructure needed, it uses the available ones	Infrastructure was needed, the available did not match the needs of the proposal
Financial benefits	Cost of acquiringIT needs for LSS is relatively low, saving Micromax huge amounts	Cost of acquiring is high and affects the company’s financial position	Additional costs are needed for the new IT investment are at the very minimum for the company	Additional costs for the new IT investment are high for the company to cover the costs	The new investment to improve the production process at Micromax brings more profit of about 12%	There are only lossesafter the new investment is implemented, Micromax is in a bad financial situation	The investment can be applied across other aspects of Micromax apart from the production lines	Systems are obsolete and cannot be applied by Micromax to other business lines
Non-financial benefits	Staff atMicromax are motivated and are willing to build the investment	Staffs are demotivated at Micromax and are not willing to work on the new investment	Improvement of company culture at Micromax towards excellence	Corporate culture deteriorates from the current or remains at the initial level	Improved company image in the market from the commitment to excellence	Company image destroyed since the project failed and could not deliver to the customer what they promised	Micromax’s credibility is built and strengthened because of the commitment to quality and excellence	Credibility destroyed because they failed to commit to quality and excellence

Resources	Company uses available resources to implement the new IT investment	Company needs to acquire more resources to successfully go ahead with the new investment	Resources are not strained when Micromax rolls out the new IT investment	Resources are strained and cannot support the successful implementation of LSS	The use of LSS is resource conscious, hardly impacting the resource balance at the company	Operation of LSS proves to be resource intensive, affecting the resource balance at the company	The resources needed for maintenance is low, it does not use more than it brings in	Maintenance is high, LSS proves to be unsustainable to the company
Expenditure	Manageable budget needed for building LSS IT requirements and infrastructure	Huge budget needed to implement LSS, the company spends more instead	Micromax spends what was planned initially for the new investment	Micromax spends beyond the planned amount for the implementation of LSS	Micromax spends reasonable amount to maintain the LSS investment	Micromax needs a lot of funds to maintain LSS, raising the spending by over 10% of the planned amount	Revenue from implementing the IT investment is higher than spending	Spending on LSS is evidently higher than revenue from the same investment

Risk drivers	Micromax has enough capacity for LSS	Capacity is not enough to build and implement LSS	Skillset is available necessary for LSS implementation at Micromax	Skillset is not available within Micromax for effective implementation of LSS	Micromax makes money after implementing LSS	Micromax incurs losses after the implementation of LSS	Performance is enhanced after Micromax implemented LSS, with efficiency rates of about 6%	Performance does not change after implementation, the efficiency rates are negative
Assumptions and constraints	Technology needed for LSS to be implemented at Micromaxis not costly	Technology needed is costly for Micromax to implement the new technology	The employees currently working at Micromaxare capable of successfully implementing the new LSS	Employees do not understand or have the capacity to implement LSS	Micromax supports the operations after the implementation of LSS	Operations are not supported because the company is skeptical about the success of the investment	Micromax’s performance is improved after successful implementation of LSS	Micromax’s performance stagnates after all the investment in new technology

Operational capability
Outcomes	Available skills at Micromax are fully utilized	Skills are not fully utilized, Micromax does not benefit from the internal capacity	Efficient use of Micromax resources to implement the new project (Lean Six Sigma)	The resources are not utilized efficiently, affecting the smooth implementation of LSS at Micromax	Micromax’s brand position improves after the implementation of LSS	Brand position stagnant as compared to the previous times, LSS brings no value to Micromax	Micromax’s brand perception improves as it implements the new strategy	Brand perception declines or stagnates even after all the resources invested on the new IT investment
Alignment	Number of staff needed available within the company, Micromax has sufficient and relevant roles	Need to hire extra staffs because the available ones do not understand the new IT investment	Matches the available skillset, that is, Micromax’s new investment falls in the line of the available staff and matches their skills	Does not match the available skillset, Micromax’s new investment does not align with existing skillset	The new investment aids achieving Micromax’s vision and goals	The new investment does not help in achieving Micromax’s goals and visions	After investing,the company strategy is boosted because it is in line with existing strategy	Company strategy receives no boost because the two do not match at all
Financial benefits	Acquiring staff to match the investment is affordable for the company	High cost of acquiring staff for the new investment, affecting the company’s financial performance	Implementation costs for the LSS process improvement are low for Micromax	Implementation costs are high for Micromax and affects the financial position of the company	LSS operation costs are low for Micromax, it leads to huge savings for the company	Operation costs are high after the LSS is implemented, no much savings	Increased revenues of about 8% for Micromax because LSS reduces wastes, improves quality, and reduces lead time	Reduced or plateaued revenues for the company because the implementation of the new project was not successful
Non-financial benefits	Good reception by Micromaxemployees because they own the investment	Employees do not appreciate or own the project, which can affect its implementation	Micromax employee are motivate to work their best because the new IT investment makes work easier	Demotivated employees because they do not understand the changes and do not own the project	Micromax’s corporate image is improved because it is implementing industry standard technology	Micromax’s corporate image does not change, it risks to deteriorate	Corporate culture changes because of the new operation standards	Corporate culture does not change because the investment does not change the operation standards

Resources	No training is needed for the implementation of LSS, saving resource needed	Training is necessary, which means the company will spend more on new resource	Micromax does not need extra systems to implement LSS, which means less resource will be used	Micromax has to develop or acquire extra systems meaning that they will spend more	Micromax has enough internal capacity to run LSS successfully, saving the company resource to be used to acquire capacity	Micromax has to outsource services hence more resource to acquire outside capacity	Micromax has developed in-house capacity which is a positive asset to the company and an addition to available resources	In-house capacity is not strong and the company is deficient in resources like that
Expenditure	Micromax saves on costs related to previous production techniques by about 13%	Micromax spends more than it planned leading to extra expense to the company	Additional costs are on the minimum, the planned amount is sufficient to build capacity, implement, and run the LSS	Additional costs are high and exorbitant, increasing the company’s spending	Wages are manageable, the company will reduce the workforce, saving a lot in wages paid to duplicated jobs	Wages are crippling the company because the workforce is ballooning	Marginal spending is low because the new investment reduces wastes by about 80%	Marginal spending is high as the waste in the production process remains high

Risk drivers	Enough resources for the company to build the infrastructure and systems for Lean Six Sigma	Inadequate resources for Micromax to invest in the new production strategy	Micromax has enough capacity to implement LSS without outside help	Micromax lacks required capacity, which necessitates outsourcing of services	Resources are enough to sustain the implementation and operation of LSS	Resources are not enough to sustain the implementation and consequently operations of LSS	Micromax sees value in investing on LSS for improved production process	Micromax does not see any value in implementing LSS as it appears as a loss to the company
Assumptions and constraints	There is a need within Micromax to improve the production process and reduce wastes	There is no need within the company, the current production techniques meet the company strategy plans and goals	Micromax has the will to implement LSS and sees value in implementing	Micromax does not see the need to implement as it does not see any value to their strategic goals	Micromax dedicates resources to the implementation of LSS	Micromax has no resources set aside for the new investment	The company assigns some staff to manage the changes in the company streamlining operations	The company does not assign any staff to manage change, which maintain the confusion it existed before
Business capability
Outcomes	Less production times and reduced waste by about 80%	Production times do not change, remains as it was before	Micromax produces quality products after implementing LSS	The products do not show much quality improvement after the investment	Market for company products increased because of improved production techniques and outstanding quality products	Market does not record any significant changes, quality of products is mediocre	Increased revenues for Micromaxfrom waste, cost, and lead time reduction	Revenues do not increase significantly, no increase directly connected to new investment by the company
Alignment	The LSS investment falls under existing business units	New investment does not fall under existing business units, needs establishing a new business unit	Uses available labor, reducing the needed labor and keeping it at the optimum level	Needs extra labor for the company to efficiently implement the IT investment	Strengthens available business units within Micromax as it streamlines the production process and reduces wastes	Disrupts available business units, increases costs, and wastes remain as they were	Business strategy strengthened by the investment, it improves on quality, waste management, and process improvement	Business strategy does not improve, no notable changes in business processes
Financial benefits	Huge cost savings of almost 15% from implementing LSS in the company	Costs are high, Micromax spends more that the planned amount to implement the project	Expanded income streams as Micromax cuts on waste and improves the production process, enabling the company to focus on other revenue streams	Income streams remain the same, no additional revenue streams or notable cost savings	Profits increase from business units, the new investment reduces costs and wastes while improving the manufacturing process in the company	Profits do not increase or Micromax runs into losses, the investment needs more money than the revenue it brings	Business units earn more income because operations are streamlined	Business units run into losses because the investment brings little change or no change at all
Non-financial benefits	Improve employees skillset because they are trained on new skills for the implementation of LSS	Employees’ skillset does not change because the LSS investment does not add value to the company	Morale within the company boosted because the investment encourages them towards quality delivery and better production processes	Morale deteriorates because the new investment does not motivate the employee in the company	Streamlines operations between units, LSS ensures that the operations are free of waste and quality production is the focus	Operations have problems coordinating because of too much waste and unclear production processes	Strong business units producing quality products at Micromax, which improves customer satisfaction	Business units are not stable, customer satisfaction is non-existent

Resources	Business units not affected, the new investment does not affect normal operations in the company	Cripples business units because it disrupts normal operations in the company	Micromax sources from within, it does not need to procure extra resource for the implementation of LSS	Micromax needs to outsource and procure extra resource, which can be costly to the company	Existing structures at Micromaxenough to run LSS successfully, and if necessary the structures can be reduced	Existing structures are not enough, more are needed which is an additional cost to the company	Resources sufficient for successful implementation, Micromax’sperformance remains steady	Strained resources which eventually affect the company performance
Expenditure	Micromax spends on necessary items only for LSS	Micromax is out of capacity and needs to spend more to have LSS on its legs	Implementing LSS does not dent company budget, the spending is kept on the minimum	Implementing LSS destabilizes company budget, which can be a disaster to the company	Additional spending manageable with the existing company resource	Additional spending very high which the company cannot afford at its current situation	Maintenance costs are very low, the investment operates smoothly with less hiccups	Maintenance is high, needs a lot of money to have it continue past its useful life

Risk drivers	Business units flexible to allow easy integration of the new IT investment	Business units rigid, cannot allow integration of new investment at Micromax	Micromax supports operations of the new investment	Micromax does not support operations because it does not have the financial muscle to sustain it	Adds competitive advantage to the company products and processes, increasing revenue	Does not add any competitive advantage, the company revenue is affected	There is a continuity plan for the LSS, which ensures that the investment does not go to waste	No continuity plan for the investment
Assumptions and constraints	Micromax has extra resources to invest in a new IT investment/program	Micromax is working on strict budget and do not have any additional funds to implement the proposed investment	Available business units accommodate change in the company, allowing the company to implement LSS	Business units are rigid and does not allow new investments to be introduced	Funds are available for new investments within the company as long as they are justified investments	Funds are limited, no room for new investments as far as funds are concerned	Micromax has a continuity plan for the new investment and will ensure that it is operational	Micromax does not have a continuity plan for the new investment at all

In terms of technical capability, the alignment analysis portrays that Micromax will use the available infrastructure for the implementing the new proposal. Alignment in the operational capability includes the number of experienced staffs required for the maintenance of new implemented lean six-sigma processes in the supply chain management processes. The IT investment will strengthen the business capability of the company along with improved production rate in the handsets in all of the strategic business units. The company has talented and experienced employees that will handle the rate of production and its distribution to the retailers and distributors. However, it is to be assumed that the IT investment will utilize the resources available to the company at its maximum level in order to achieve the business goals. The company has enough resource so that they can successfully start the manufacturing process of Lean six-sigma while reducing the lead times and waste management.

Approach of the business case

Alternative:

Option #1 Non-Implementation of Lean Six-Sigma is continuing with current operation process.

Option #2 Implementation of Lean Six-Sigma is initiating new infrastructure technique for improving operational activities.

Alternative

Advantages

Disadvantages

Impact on Stakeholders

Option #1 Non-Implementation of Lean Six-Sigma

· High Strategic Alignment

· Best NPV

· High project risk

· High manufacturing cost

· The stakeholders would be disappointed with outdated supply chain management system

Option #2 Implementation of Lean Six-Sigma

· High Strategic Alignment

· Expected Benefits are with waste management and manufacturing cost saving

· Minimum project risk

· High Cost option

· Improved business process

· Improved supply chain management system

Financial Benefit Analysis – Option #1	1st Year ($K)	2nd Year ($K)	3rd Year ($K)	4th Year ($K)	5th Year ($K)	6th Year ($K)	Total ($K)
Benefits:
Cost Savings	0	0	0	0	0	0	0
Cost Avoidance	0	0	0	0	0	0	0
Revenue	0	0	0	0	0	0	0
Other	0	0	0	0	0	0	0
TOTAL BENEFITS	0	0	0	0	0	0	0
Costs:
Non-Recurring	0	0	0	0	0	0	0
Recurring	$120	$131	$128	$138	$149	$152	$818
TOTAL COSTS	$120	$131	$128	$138	$149	$152	$818
Net Benefit / Cost of Alternative 1	-120	-131	-128	-138	-149	-152	-818
Present Value of Benefits	0
Present Value of Costs	-712
NPV for Option #1	-712
Discount Rate	4%
Financial Benefit Analysis – Option #2	1st Year ($K)	2nd Year ($K)	3rd Year ($K)	4th Year ($K)	5th Year ($K)	6th Year ($K)	Total ($K)
Benefits:
Cost Savings	0	0	0	$21	$25	$31	$77
Cost Avoidance	0	0	0	$14	$17	$18	$49
Revenue	0	0	0	0	0	0	0
Other	0	0	0	0	0	0	$48
TOTAL BENEFITS	0	0	0	$35	$42	$49	$126

Costs:
Non-Recurring	$219	$24	$23	$172	$19	$52	$509
Recurring	$52	$54	$53	$56	$57	$58	$330
TOTAL COSTS	$271	$78	$76	$228	$76	$110	$839
Net Benefit / Cost of Alternative 2	-52	-54	-53	-21	-15	-9	-$202
Present Value of Benefits	119
Present Value of Costs	723
NPV for Option #2	-604
Discount Rate	4%

Financial Summary ($1,000’s)	Non-Implementation Option #1	Implementation Option #2
Present value of Total Benefits:	0	119
Present value of Total Costs:	-712	723
Net Present Value of the Project:	-712	-604

Option #1

Non-financial Summary	Description	Impacted Stakeholders	Ranking
Benefits:
Low change to current process	Cost avoidance at every levels	All	L
Costs:
Waste Management	The organization would be affected from poor waste management	All	M
Brand Image Enhancement	The reduced brand image would affect the sales of company	All staff	M

Option #2

Non-financial Summary	Description	Impacted Stakeholders	Ranking
Benefits:
Improved supply chain management	Logistics would be enhanced	All	L
Enhanced Waste management	Effective waste management would save resource and enhance brand image	All	M
Costs:
Initiation Cost	The initiation cost is greater	All	L
Transition	The organization need to undertake complex and stressful change management	All staff	L

Non-Financial Summary	Non-Implementation Option #1	Implementation Option #2
Summary of Total Benefits:	L	M
Summary of Total Costs:	L	L
Overall non-financial value of the Project:	L	M

Project Risk Assessment	Non-Implementation Option #1	Implementation Option #2
	Probability	Impact	Risk Factor	Probability	Impact	Risk Factor
Risk 1: Customer Loyalty	5	4	20	1	4	5
Risk 2: Time Management	4	4	16	3	4	12
Risk 3: Cycle Time	4	5	20	2	4	8
Risk 4: Supply Chain Management	4	5	20	1	4	5
Risk 5: Cost of Lean Six Sigma	5	1	5	5	4	20
Risk 6: Necessity of Talented Employees	5	3	15	5	5	25
Summary Risk factor			96			75

The outcomes of the IT investment of Micromax resulted in the deployment of the resources (tangible and intangible resources) in many layers. The outcomes can be can be categorized into operational layers, functional layers. The business units of Micromax will earn huge income regarding the increased production of the different handsets of Micromax. However, the risks related to the flexibility related to the IT investment of the company will be mitigated. It will add a competitive advantage to the company that will affect the profitability of the company. The continuity of the plan regarding the different new investment must be operational in nature. In terms of capabilities of the employees, it is to be seen that the morale of the employees regarding using new systems in operations are high as the profitability increases while increasing the quality of the handsets.

If the IT investment of Micromax will run in a proper way, then the company will en sure a very less percentage in the waste management and lead times in the manufacturing process of the business units. The business units thereby improve customer satisfaction by providing them quality products to them. Performance of Micromax will remain steady if the resources of the company are successfully implemented in the required areas. The IT investment will improve process improvement, quality management and waste management.

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