Teletron, Co.

Teletron, Inc is a provider of telecommunications expense management services for corporate telecommunications users. Teletron was looking to grow their business from about 10 million dollars in sales to about 100 million in 1999. They were looking to provide this in making use of the information technology realm. Timothy Lybrook is the ceo of Teletron and is being propositioned to develop a new Virtual Analyzer software package. This proposition is being made by Robert Jonas, director of information technology at Teletron and Dennis Kirin, vice president of client services at Teletron. There are many bennifits and risks to this new system and each must be carefully reviewed before coming to a decision on what to do.In 1999, there were around 6000 telecommunications providers in the United States. Only 45 companies accounted for approximately 95% of the dollar value of the telecommunications service provider. Surveys revealed that many companies were dissatisfied with the providers billing practices. Many errors were being found that led to lost revenue and costly charges to the company. Telecommunications spending was forecasted to grow to 175 billion in the year 2000 and continue to expand to 350 million by 2005. With this outlook of potential revenue in this workspace, Teletron sees an opportunity in the area of providing services to handle billings of telecommunications services. This is what Teletron did throughout the early 1990?s. Teletron targeted customers in the United States that spent between 10,000 and 500,000 per month on telecommunications services. They made money by charging the company 50% of the saving that they were credited back. They did not charge the company money if there was no discrepancy found in the billing statement.
One of the major problems with this structure was that new clients had to be solicited continuously. Most clients lasted from 6 months to a year and just cancelled the service due to the cost savings of them just doing the validation themselves. Teletron had a large advantage in market share for they respected industry. They had companies in almost every state and totaled 5,246 clients in 1999. They were very successful from 1992-1998 where they achieved a compounded revenue growth of 200%. By 1998, things began to slow down a customers wanted to perform their own analysis and save the costs that Teletron charged to perform. This is when Lybrook started to wonder how he was going to keep customers longer and how to automate some of the internal processes.
By the end of 1998, Lybrook decided he wanted to grow the business to 100 million by 2006. His vision was that he saw Teletron acting as an intermediary between the providers of telecommunications services and the users of those services. Teletron would help it?s clients solve problems. Teletron would still continue to offer it?s consulting services, but now would provide a software product to it?s clients on a subscription basis.
Lybrook proposed that three major changes needed to occur at Teletron in order for this new vision to come to life. First, the senior management needed to be replaced as there was a need for more experienced managers who have worked for 100 million dollar companies. Second, Tim proposed the creation of a new, complex piece of software called Virtual Analyzer. This software could be delivered from Teletrons server in asp. He did not want a licensed piece of software as he felt that companies would not want to maintain the software. Third, Tim had to change the entire culture that was at Teletron currently.
In 1999, creating the software package became the primary focus of Teletron?s business model. The goals were as follows:
? Expand the range of services that Teletron provided
? Allow the client to manage his telecommunications environment efficiently
? Meet the broad range of needs of the manager in corporations
There were six basic needs that the software should supply to the user:
1. Inventory management
2. Better access to the provider plans and contracts the company is using
3. Expense management
4. Vending invoice processing and payment
5. Moves, Adds and Changes
6. Analytical capability
Apparently, there is a demand for this product as customers just do not have the staff to perform these functions manually and with most people working on Y2K issues at that time, staffing will be very limited for years to come.
Four other competitor companies were looked at to see what they had to offer as far a product software comparison to Virtual Analyzer and none could match the level of services and capabilities. With 6 modules targeted to each of the basic needs outlined above, the customer base gets a fully serviced package of software that others cannot compete with. The packaging will be as such that a customer can purchase pieces if they wish or the entire suit. Pricing will be reflected on what the company size is and what modules are purchased.
The bad news is that the software is truly complex and will require time to develop. The staff will have to be hired by the IT managers as many people are busy with Y2K issues. Designing and testing will have to be done by Teletron. Other investments incurred from this project will be the cost of big servers to maintain the software. Also they will need to transfer the data to a readable format that there system can read. The project will take a year and a half to reach alpha and beta stages. Revenue cannot be seen until at least year 2002, which will be a year after release. They will need to spend over 9 million dollars for this system.

In conclusion, the benefits of the system implementation are vastly distant. This does not mean, however that a decision to drop the project should be made. As the projected revenue for 2006 is targeted at 108,368 million, this signifies that the investment will be paid off in the long term. This will be in 5 years from the time of release. As the market is favoring Teletron here because they can capture much of the market share, I believe that it would be a wise decision to approve the system and immediately begin on the implementation of the system. Much of the business can still function during the development phases for the software application. This will mainly be the consulting services performing the similar services as it always did.

Teletron, Co. 7.6 of 10 on the basis of 3321 Review.