Pay Zone Consulting A Global Virtual Organization Prepared

Pay Zone Consulting A Global Virtual Organization Prepared by: Team 1 Jouwaria Daayf, Kimberly Gretschmann, Connie Leong, Vinh Pham, Jason Wall

AGENDA. COM o o o o o Introduction Brief synopsis of the case Defining the Virtual Organization Knowledge Management through IT Alternatives and their pros and cons Class Vote Our Action Plan Class Exercise Q&A

Pay Zone Consulting Small, specialized, global consulting group Provides information systems and management solutions › Exploration › Production Consultants and software developers around the world Pay Zone is a virtual organization

Brief Synopsis The principals are considering growth options but are intent on preserving the quality of life benefits provided by their virtual business model. The case examines the communication technologies employed by the principals in support of their virtual teamwork and describes the administrative information

Brief Synopsis IT infrastructure enables the firm to operate with no administrative staff or office organizational and personal lifestyle drivers underlying the company’s ability to operate successfully in a virtual world

Market Drivers Worldwide market for increasingly scarce commodity [oil and gas] Changing employment patterns: contracting vs permanent employees Businesses increasingly transcending international boundaries Remote sites for oil and gas exploration necessitated new information and communication technologies.

Alternatives 1. Expand company by: › 1. 1 Adding young partners › 1. 2 Contracting to consultants 2. Sell the company 3. Sell the software division

The Virtual Organization

What is a Virtual Organization? Time and space no longer define the organization Exists whenever and wherever the participants want Visionary in its design and management Information Systems in its purest form Communications Software Simply could not exist without www and telecommunications (3. 7 M hits on Google)

IS and the Business Model Significance of Business Model to the case: › IS design and development Internal systems › IS management Visionary › IS usage Creates efficiencies and decreases costs through tools

Issues that can become Challenges Dynamics of social and cultural factors › › Trust and accountability Collaboration and co-operation Self governance Knowledge of other’s core competencies Leadership may be fragmented VO’s defy traditional org behaviour and structure › Mgmt theory does not always apply Consider HR policies, Org theory group norms

Candidates for a VO Structure Brokerage (buy and sell) Software Developers and IT Consulting Services Essentially Knowledge Management is the prime candidate and the mainstay in the Pay Zone case

Knowledge Management through IT Knowledge absorption and reuse Customer Capital Knowledge creation and capture Human Capital Structural Capital Knowledge distribution and access Knowledge organization and categorization

The Alternatives

Alternatives 1. Expand company by: › 1. 1 Adding young partners › 1. 2 Contracting to consultants 2. Sell the company 3. Sell the software division

Alternative I Expand the company 1. 1. Add new partners Pros: › Continue current lifestyle › Significant increase in income › Fend off competition by reinforcing competitiveness › Expand software development and consulting services › Increased capacity for new clients › Expand knowledge base

Alternative I Expand the company 1. 1. Add new partners cont…: Cons: › › › Need to buy in and cultural & social integration Management collaboration Corporate governance Partnership agreements Potential debt

Alternative I Expand the company 1. 2. Contract consultants Pros: › Expand knowledge base › Corporate control still resides with principals › Not fully required to find a partner who fits with PZ culture and business mode.

Alternative I Expand the company 1. 2. Contract consultants Cons: › Less stability for long-term growth – low commitment › Costs to find and hire consultants – higher than an equally qualified permanent partner

Alternative II Sell the company Pros: › Large payout – extract full value of firm while company is unique and no competition › Don’t have to worry about future (competition and other risks) › Can continue to offer consultant services with no ownership rights

Alternative II Sell the company Cons: › Relinquish control of company, lifestyle › Loss of future perpetual revenue stream (clients, contracts, potential partnerships, agreements, licensing)

Alternative III Sell the software division Pros: › Payout from sale › Linking consulting services from software which would contribute to permanent earnings

Alternative III Sell the software division Cons: › Loss of control › Loss of growth › Loss of revenue from services provided for sale of software

Class Vote

Recommendation What do you think? Expand the firm via recruitment of new partners? Expand the firm via contracting full-time consultants? Sell the firm outright? Sell the software side of the business and remain active in consulting?

Recommendation Group chose option #1, via adding new partners. Feel as though the new blood may bring increased capacity to draw clients and revenues going forward. Allows the group to maintain the firm under it’s control which is a big factor of contention and consideration. Addresses the goals of increasing the income of the partners as well as a stronger ability to compete in the future.

Recommendation Ultimately the strategy allows the partners to continue with their current lifestyle, a very important factor to their group. It allows them to keep their business, as opposed to selling it outright and still achieve a higher income. They now have the choice of retiring at an early age with the new partners coming on board. However they have the option of remaining in some form of control by becoming silent partners.

Recommendation Industry Drivers By remaining in the business they are able to continue to take advantage of their niche market and high demand services. The business of Pay Zone will only continue to increase in demand since the industry is clearly leaning towards consulting firms rather than permanent, in-house specialists. The Pay Zone model addresses the future now by creating a viable system of doing business globally and by taking advantage of technologies. By staying in the business they have the potential to increase income exponentially.

Recommendation Potential Fallout No solution was without some negative connotation. First off the group runs the risk of compromising their organizational culture. The new partners may not be completely on-board with the style of life, and business, that the current group supports. Secondly, future issues in the vision of how the firm should be led and what the values should be may be argued by those not in the original group. There is the potential for dissention with new partners and this may be a cause of political problems.

Recommendation Potential Fallout Third, the group will need to come to a consensus as to how it plans to move forward and claim more of their desired market share. This will not be an easy decision to make as there are new opinions that will hold sway. Finally, the current partners may need to be reimbursed for their initial investment in the knowledge capital that make up most of the assets of Pay Zone.

Recommendation Final Thoughts The only way that Pay Zone was able to be successful in its model, we believe, is that they began with these values and never fell back, they only strengthened them. If they had attempted to implement this business and IS model post-hoc they may not have had the success they were able to achieve. We see that the opposite is true also though, in that going from a virtual organization model like Pay. Zone to more standard model would be just as difficult to undertake.

Class Exercise

Welcome to Pay Zone Jeopardy

THIS IS

With Your Host. . .

Business Models Tools of Globalization Market Drivers 100 100 200 200

These type of business models are not defined by time and space and can exist whenever and wherever the participants want. It’s design is visionary and at the forefront of innovation. A 100

What are virtual organizations? A 100

This type of Knowledge Management resource includes Knowledge distribution and access, and Knowledge organization and categorization. A 200

What is structural capital? A 200

This software allowed Pay Zone to use multi-point video conferencing and voice over IP (Vo. IP). B 100

What is Net. Meeting? B 100

DAILYthe Win two prizes for correct response DOUBLE B 200

This hardware provided Pay Zone with auto-replication and 128 -bit encryption abilities to guarantee reliability, integrity, and to prevent possible data loss. B 200

What is a “mirrored” server? B 200

Worldwide competition for these scarce commodities are increasing and new discoveries are occurring at a rate less than that of global consumption. C 100

What are oil and natural gas? C 100

These staff are highly qualified in-house experts. Many oil companies are shifting away from hiring and keeping these type of human capital. C 200

What are long-term or permanent employees? C 200

Thank you for playing!

Questions?