SBM4202 IS Strategy Management and Acquisition

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In this assignment students are required to read the case study below, conduct research to support your discussion, use examples, address the following case study questions and find solutions to problems.
Are Farms Becoming Digital Firms?

Ohio farmer mark Bryant raises corn, soybeans, and soft red winner wheat on 12,000 acres. But you will hardly ever see him on a tractor because that isn’t how farms work anymore. Bryant spends most of his time monitoring dashboards full of data gathered from the 20 or so iPhones and five iPads he has supplied to employees who report on his acreage in real time. Using software from a Google-funded start up called granular, Bryant analyses the data along with data gathered from aircraft, self-driving tractors, and other forms of automated and remote sensors for yield, moisture, and soil quality.

Tractors themselves have been morphed into pieces of intelligent equipment and are now much smarter. Many tractors and combines today are guided by Global positioning System (GPS) satellite-based navigation systems. The GPS computer receives signals from earth-orbiting satellites to track each piece of equipment’s location and where it has gone. The system helps steer the equipment, so farmers are able to monitor progress on iPads and other tablet computers in their tractor cabs.

The world’s largest producer of autonomous four wheeled vehicles isn’t Tesla or Google, its john Deere. The cab of one of Deere’s self-driving tractors is now so full of screens and tablets that it looks like cockpit of a jet airplane. John Deere and its competitors aren’t just turning out tractors, combines, and turning out wirelessly connected sensors that map every field as well as planting and spraying machines that can use computerised instructions to apply seed and nutrients to a field.

Deere & Co. has embedded information technology in all of its farming equipment, creating an ecosystem for controlling sprayers, balers, and planters. Deere products include AutoTrac GPS-controlled assisted- steering systems, which allow equipment operators to take their hands off the wheel; JDLink, which enables machinery to automatically upload data about fields to a remote computer centre and farmers to download planting or fertilising instructions; and John Deere machine Sync, which uses GPS data to create maps based on aerial or satellite photos to improve planting, seedling, spraying, and nutrient application.

Deere now ranks among the leading companies offering tools for famers to practice what is known as precision agriculture. Managing fields with this level of computerised precision means famers need to use fewer loads of fertiliser, potentially saving an individual farmer tens of thousands of dollars. Some also see precision agriculture as the solution to feeding the world’s exploding population. By 2050, the world’s population is predicted to be 9.2 billion people, 34% higher than today. More people will havethe means to purchase food that requires more land, water, and other resources to produce. To keep up with rising populations and income growth, global food production must increase by 70% and precision agriculture could make this possible. Famers using fertiliser, water, and energy to run equipment more precisely are less wasteful, and this also promotes the health of the planet.

Other large agricultural companies like Monsanto and DuPoint are big precision agricultural players, providing data analysis and planting recommendations to farmers who use their seeds, fertilisers, and herbicides. Because adjustments implanting depth or the distance between crop rows can make a big difference in crop yields, these companies want their computers to analyse the data generated during computerised planting work to show farmers how further increase their crop output.

The farmer provides data on his or her farm’s field boundaries, historic crop yields, and soil conditions to these companies or another agricultural data analyses company, which analyses the data along with other data it has collected about seed performance and soil types in different areas. The company doing the data analyses is then send a computer file with recommendations back to the farmer, who uploads the data into computerised planting equipment. The famer’s planting equipment follows the recommendations as it plants fields. For example, the recommendations might also receive advice on the exact type of seed to plant in different areas. The data analysis company monitors weather and other factors to advise famers how to manage crops as they grow.

A software application developed by Monsanto called FieldScripts takes into account variables such as the amount of sunlight and shade and variations in soil nitrogen and phosphorous content down to an area as small as a 10 metre grid, Monsanto analyses the data in conjunction with the genetic properties of its seeds, combines all this information with climate predictions, and delivers precise planting instructions or ‘scripts’ to iPads connected to planting equipment in the field. Tools such as FieldScripts would allow farmers to pinpoint areas that need more or less fertiliser, saving them the cost of spreading fertiliser everywhere whole boosting their yields in areas that have performed more poorly and reducing the amount of excess fertiliser that enters the water table- good for the environment.

Prescriptive planting could help raise the average corn harvest to more than 200 bushels an acre from the current 160 bushels, some experts say. On a larger scale, according to Monsanto, the world’s largest seed company, data- driven planting advice to farmers could increase worldwide crop production by about $20 billion a year. So far, output from prescriptive planting systems has not achieved those spectaculars levels.

Is there a downside to all of this? For small famers, the answer may be yes. The costs of investing in the new technology and vendor service fees for some of these tools such as FieldScripts can amount to more than what many small famers can earn in extra yield from their farms. According to Sara Oslson of Lux Research Inc., the problem with precision agricultural is the diminishing returns that come along with costly technologies on smaller farms. That mean that only the really big farms are likely to benefit.

Monsanto estimates that FieldScripts will improve yields by five to 10 bushels per acre. With corn at about $4 per bushel, that’s’ an increase of 420 to $40 per acre. A small fam of about 500 acres could get anywhere from $10,000 to $20,000 in extra revenue. Monsanto charges around $10 per acre for the service, so the farmer will wind up paying about $5,000- in addition to paying tens of thousands of dollars to either retrofit its existing planting equipment or buy more modern tractors that include the electronics gear that syncs the ‘scripts’ provided by the Monsanto online service with the planters’ onboard navigation systems. Monsanto also charges an extra $15 per acre for its local climate prediction service. A small farm will most likely lose money or break even for the first 2 years of using a service like FieldsScripts, according to Olson.

For a large farm of about 5,000 acres, FeildScripts could increase revenues by between $1000,000 and $200,000. With Monsanto’s service costing about $50,000 to $150,000, more than sufficient to offset the cost of updating the farm machinery. Whether a farm is big or small, the impact of FielddScripts would be minimal in good years because yields would be highly regardless. The technology is likely to have a bigger impact in years when conditions aren’t so propitious. A spokesperson for Monsanto stated that the outcome of it prescriptive planting system is less about the size of the farm and more about the famer’s technology know- how. According to Michael cox, codirector of investment research at securities firm piper Jaffray Cos., revenues from FieldScripts and other technology-driven products and services could account for 20% of Monsanto’s projected growth in per share earnings by 2018.

Although some farmers have embraced perspective planting, others are critical. Many farmers are suspicious about what Monsanto and DuPont might do with the data collected about them. Others worry about seed prices risen too much because the big companies that developed prescriptive planting technology are the same ones that sell seeds. There has been a surge in seed prices during the past 15 years as the biggest companies increased their market share.

Monsanto and DuPont now sell about 70% of all corn seed in the U.S. farmers also fear that rivals could use the data to their own advantage. For instance, if nearby famers saw crop yield information, they might rush to rent farmland, pushing land and other costs higher. Other farmers worry that Wall Street traders could use the data to make bets on future contracts. If such bets push future contract prices lower early in the growing season, it might squeeze the profits farmers might lock in for their crops by selling futures.

There are not yet any public known examples, where a famer’s prescriptive planting information has been misused. Monsanto and Dupont officials say the companies have no plans to sell data gathered from farmers. Monsanto has stated that it supports industry wide standards for managing information collected form fields and that it wouldn’t access the data without permission from famers. Deere & Co. which has been working with DuPont and Down chemical Co. to formulate specialised seed-planting recommendations based on data from its tractors, combines, and other machinery, says it obtains consent from customers before sharing any of their data.

Some famers have discussed aggregating planting data on their own so they could decide what information to sell and at what price. Others are working with smaller technology companies that are trying to keep agricultural giants from dominating the prescriptive planting business. Start-ups such as FarmMobile LLC, Granular Inc., and Grower Information Services Cooperative are developing information systems that will enable famers to capture data streaming from their own remote data centres, and market the data to seed, pesticide, and equipment companies or futures traders if they so choose. Such platforms could help famers wring larger profits from precision farming and give them more control over the information generated on their fields.

Exercise

You are a manager of a company which is in need of IS solutions to your company needs- similar to Digital Farming, looking for ways that technology can assist with sales. By reading the above case study, you want to implement digital farming strategy. You are required to read the case study, conduct research to help you address the following questions with supporting evidence.

List and describe the technologies used in this case study.
In what sense are U.S. farms now digital firms? Explain your answer.
How is information technology changing the way farmers run their business?
How do precision agriculture systems support decision making? Identify three different decisions that can be supported.
Do you think digital farming strategy could be effective or non-effective to farming business needs? What other types of businesses and industries might benefit from the use of a digital strategy?
Discuss how IT adds value and providing a competitive advantage to related farming industry. Explain do you think technology is needed in farming industry.
How do the systems described in this case improve farming operations?
How helpful is precision agriculture to individual farmers and the agricultural industry? Explain your answer.
What are the strategic objectives that firms trying to achieve by investing in information systems and technologies? For each strategic objective, give an example of how a firm could use information systems to achieve the objective.

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