Casa del Libro - Which technological platform??

Casadellibro.com is an online venture launched in 2001 by the largest editorial group in Spanish, Planeta. "Casa del Libro is the second bookseller in Spain with the objective to consolidate the firm as the international reference in books published in Spanish. Casa del Libro’s database was the most complete and up-to-date database in the industry, even better than the one edited by the Spanish Ministry of Culture. Casadellibro.com was an initiative to achieve world leadership in the Spanish books market. The group teamed up with AOL, and tried to match the launch of casadellibro.com with the beginning of operations of AOL in the ISP market in Spain, in September 2001."

Previously, casa del libro was working with IBM AS/400 platform, which involved a lot of manual processing. So the group decided to start the new virtual company from scratch and acquired the best and most expensive equipment and software available in the market that guaranteed high performance. In Sep 2001, design issues were identified in the new system and AOL did not achieve the desired results in the slowing down Spanish ISP market. Also with the internet bubble exploding and the terrorist attacks, it became necessary to cut down costs.

At this point, should Casa del libro keep the old platform and redesign it or should it invest in a new system?
-The old platform has a complex architecture with redundant design for high availability with the system considered bestinbreed at that time.
-The new proposed platform used Microsoft technology with much lower maintenance costs and lower development cost.
For some compelling reasons, I think the company should go ahead and invest in the new platform based on Microsoft technology.

Reasons:

•  In 2001, the expectations were high with hyper-growth sales. But after the events in September 2001, the expectations from the market were much lower. In this scenario, it would be better for them to build the new platform that can sustain the current demand. My assumption: The company has done good market research and is correctly anticipating the future growth.
• The new platform has much lower maintenance costs and will cost less for development when compared to design changes in the old platform. It is always said that it is better to build a new system rather than correct the design changes in the old system. At this point in time, investing huge resources (time and money) on the old system in a crisis situation is not justifiable when the demand can be achieved with a new platform at a lower cost.
• One can argue that when the growth increases, the new system could be beneficial in the long term. But this is not true. Technological advances are very fast in this information age. If we invest in the old platform (which takes more time and money), even before the growth of the company increases,  a new technology would be available at a much lower cost providing better performance. Innovation in IT is fast growing and companies have to keep up with new technologies for their competitive advantage. So investing in design changes in the old system is not beneficial in the long term.
• There is also the risk associated with the performance of the UNIX platform after the design changes. Design changes are not difficult to implement and can have a butterfly effect resulting in usage of more resources (time and money) than anticipated. What if the design changes do not resolve the issues after considerable amount of investment. And also, the old one being a sophisticated platform, it may not be easily customizable in the long term. This flexibility of a platform is critical to future success.

So my decision would be to invest in the new platform which can serve the demand in the short term at lower costs and then invest later on new upcoming technologies which would provide not only high performance but also lower costs.

In today's times, the company could take advantage of the new technologies and use cloud computing, just paying for the services it needs.

Tesco - Any IT competitive Advantage?

Tesco opened as a grocery stall in 1919 by Sir Jack Cohen with the motto "Pile it high, sell it cheap". The idea was that customers wanted inexpensive products at convenient locations and that volume would drive profitability. By 1960's, their self-service model offered the possibility to lower prices by offering a wider variety and larger volume of stock with fewer employees establishing Tesco's reputation as a value-for-money retailer of groceries. By the late 1970s, Tesco decided to concentrate on the larger out-of-town superstore format, offering a wider range of goods in a more spacious and lighted environment with emphasis on customer service. Tesco slowly computerized its checkout systems and in future years used IT to gain a huge competitive advantage.

Tesco and IT competitive advantage:

• The Tesco Clubcard was the UK's first supermarket loyalty program introduced in Feb 1995. This program cost Tesco £300 million over the first three years. These costs included an update to the point-of-sale (POS) technology and the supporting computer systems to handle the Clubcard information, and a call center in Dundee to handle the anticipated calls per week. Within six months of the Clubcard introduction, Tesco had increased its share of the retail grocery trade from 15% to 18%. By, 1996, Tesco had  over eight million Clubcard customers who were purchasing 200 million in-store purchases per day. This program coupled with IT provided excellent competitive advantage to Tesco and made it the number one retailer in the UK by 1996.
• The Clubcard gave Tesco a unique insight into the shopping habits of its customers. It could adapt itself and cater better to the different needs of its consumers by analyzing the customer's billing data when they shopped using their clubcard. This is possible only by the use of a sophisticated IT system.
• With the Clubcard, Tesco discovered that about "38% of their customers cared about price, based on 700 products where price was important". The analysis suggested that most of the benefits of the reduced prices were going to customers who only shopped at Tesco during the promotions. They used their own IT systems to conduct market research and to understand consumer buying patterns and invested heavily on price strategies.
• Tesco was able to refine the loyalty program further by knowing what customers were regularly buying. They used the information supplied by the Clubcard to concentrate marketing expenditures on its regular customers rather than on advertising spots on television. That was the range to which IT helped them target their consumers. With the additional information submitted to the Clubcard help line (e.g. diabetic dietary requirements and lifestyle choices), Tesco was able to create 5,000 customer "needs" segments, with each segment receiving personalized vouchers and 24 different varieties of the Tesco magazine providing specific offerings for Clubcard customers.
• By 1998, Tesco provided its 8 million consumers with personalized letters with points-based vouchers and a Clubcard magazine designed and produced to fit their stage in life with 80,000 variations. To better handle the volume of Clubcard information, Tesco invested in the NCR Teradata data warehouse to provide a 360º-view of its customers.
• In 1996, Tesco launched the Clubcard Plus telephone account which allowed members to make monthly direct debit payments to Tesco for groceries. A new joint venture company, TPF was started in alliance with Royal Bank of Scotland which provides savings accounts, motor insurance, life assurance, loans, pay-at-the-till travel insurance, credit card services, and tax free savings and investments. TPF has 2 million customers (400,000 savings accounts and 900,000 credit cards) who make 80% of their transactions through the stores.
• During 1996, Tesco made a modest investment in a few Dell servers and Microsoft BackOffice and brought retail shopping to the Web with its Tesco Direct service. Tesco provided different online services like price check,  and also included financial services, where customers could trade shares and interact with their Clubcard Plus account; a shopping service that remembers a customer's last shopping list; and many online features all supported by an extensive help facility that thoroughly answered all customers' questions. By 2001, Tesco.com had successfully proved its model and added the number one e-grocer on the Web title to its UK title.

By investing in IT from an early stage, Tesco gained huge competitive advantage. It became the number one retailer by 1996 and the number one e-grocer by 2001. I believe, these successes are a result of keeping pace with the IT development.

Should companies adapt to ERP's ?

What is enterprise resource planning (ERP) ???

ERP is a software architecture that "attempts to integrate all departments and functions across a company onto a single computer system that can serve all those different departments’ particular needs. Each of those departments typically had its own computer system optimized for the particular ways that the department does its work. But ERP combines them all together into a single, integrated software program that runs off a single database so that the various departments can more easily share information and communicate with each other." Source

Why ERP? 

"ERP systems are cross-functional and enterprise-wide. All functional departments that are involved in operations or production are integrated in one system. In addition to areas such as manufacturing, warehousing, logistics, and information technology, this typically includes accounting, human resources, marketing and strategic management." Source For example, if you call customer service to buy a computer, the customer service reps use their ERP system to see if inventory is available which was previously updated by people in the manufacturing units. Depending on the level of inventory, they can respond immediately thereby speeding up the process. By integrating these two different departments, the company can provide better and faster service to its consumers, thereby saving a lot of costs involved previously.
When used effectively, ERP can be very useful within a large company. Different departments share information on a regular basis. Without ERP, every department is standalone and lot of resources are wasted on storing the same redundant data in multiple servers. For example with ERP, the employee appraisal can be directly linked to payroll.

Some more advantages (Source):

• "Eliminates the problem of synchronizing changes between multiple systems - consolidation of finance, marketing and sales, human resource, and manufacturing applications.
• Permits control of business processes that cross functional boundaries.
• Provides top-down view of the enterprise (no "islands of information"), real time information is available to management anywhere, anytime to make proper decisions.
• Reduces the risk of loss of sensitive data by consolidating multiple permissions and security models into a single structure.
• Shorten production leadtime and delivery time
• Facilitating business learning, empowering, and building common visions.
• Some security features are included within an ERP system to protect against both outsider crime, such as industrial espionage, and insider crime, such as embezzlement. "

Some possible disadvantages:
But the grass is greener on the other side. Not everything is so great about ERP.

• Implementing ERP for a small company can take from 3-9 months, while for a large organization it can take years.  
• It could be very expensive and is limited in customization.
• Also, technology changes are so fast that while you keep updating, there is another new technology available in the market. 

Lets consider the previous example of calling the customer service to buy a computer. "With ERP, the customer service representatives are no longer just typists entering someone’s name into a computer and hitting the return key. The ERP screen makes them businesspeople. It flickers with the customer’s credit rating from the finance department and the product inventory levels from the warehouse. Will the customer pay on time? Will we be able to ship the order on time? These are decisions that customer service representatives have never had to make before, and the answers affect the customer and every other department in the company. But it’s not just the customer service representatives who have to wake up. People in the warehouse who used to keep inventory in their heads or on scraps of paper now need to put that information online. If they don’t, customer service reps will see low inventory levels on their screens and tell customers that their requested item is not in stock. Accountability, responsibility and communication have never been tested like this before. People don’t like to change, and ERP asks them to change how they do their jobs. If you simply install the software without changing the ways people do their jobs, you may not see any value at all—indeed, the new software could slow you down by simply replacing the old software that everyone knew with new software that no one does." Source


So should companies adapt to ERP?
This decision lies with the management of the company. If the usage of ERP is meaningful to the operations of that specific company, if its benefits can be reaped and employees can switch to it easily, then it should be implemented. It is powerful tool which can be used to the benefit of a few companies but it can also slow down a few businesses if its disadvantages outweigh its benefits.

DELL HELL!!! What should Dell have done differently???

What is Dell Hell?? This was a new phrase coined by the blogger, Jeff Jarvis when he bought a new Dell computer with a four-year in-home service and received bad customer service from Dell. He blogged in his site, buzzmachine about the poor quality and customer service of Dell and received huge momentum with many similar complaints from other users. In his own words,
"I just got a new Dell laptop and paid a fortune for the four-year, in-home service. The machine is a lemon and the service is a lie. I'm having all kinds of trouble with the hardware: overheats, network doesn't work, maxes out on CPU usage. It's a lemon."

Even after repeated complaints, Dell did not resolve the issue and Jeff Jarvis continued blogging about his experiences. The result was "With Jeff Jarvis' use of a catchy phrase "Dell Hell" in his blog, The Buzz Machine in June 2005, Dell's customer issues were publicized by The New York Times within two days of the blog post, and in discussed in the next issue of Business Week." Source


How could a single blogger get such momentum?? If Dell was providing good service, and this was a random accusation, it would not have received such popularity. The main reason was that Dell was providing poor customer service long before this blog. Many customers were pissed off but did not have a proper channel to talk about it.

" Dwight Silverman, tech guru of the Houston Chronicle, writes about the saga here: For at least the last three years, I've heard a growing number of complaints from consumers about Dell's customer service. The gripes run from the basic -- confusing phone menus, ridiculous hold times, clueless tech support relying too much on scripts, outsourced call centers with poor English-language skills -- to the more complex, including accusations of not honoring the specifics of premium warranties and using loopholes to avoid fixing or replacing defective parts." Source (This was in July 2005)

I think Dell did not think that a single blogger could destroy their reputation so badly that their stock prices would plummet. In the beginning, they should have thought that by ignoring the whole issue, it would settle down on its own. But this was a serious wrong move by them. (Look at the stock price of Dell between Jun 10, 2005 and Jul 21, 2006).

What should Dell have done?

• They should have addressed the issue immediately once they observed the momentum building. By immediate response to Jeff Jarvis' problem, they would maybe have received appreciation from him which would have worked in Dell's favor.
• They being one of the biggest producers of computers should have realized the importance of customer service and PR. Once they resolved this issue with Jeff Jarvis, they should have set up a taskforce which monitors the online image of Dell. Any new customer, buying a new computer would always look online for reviews and recommendations. Having a bad online image is never healthy for any computers selling company. This taskforce could then resolve the new PR issues that propped up. (Read blogs :))
• They should have addressed the issue directly and should have paved way for an open dialogue. They should have addressed any criticism head-on, instead of ignoring it.
• Though every blog need not be taken seriously, some relevant issues are to be dealt with. "Size doesn't matter—relevance does. Just as one journalist can trigger a newscycle, one blogger can do the same."
• They should have improved their customer service platform where all dissatisfied people could complain and Dell could resolve their issues, instead of all their dissatisfied customers blogging and complaining in multiple other sites. Also, an open apology should have worked. Companies should learn to apologize when mistaken which works in their favor. An excerpt from buzzmachine "One of the great lessons of the cluetrain era is that your customers are your best customer support agents and marketers if only you allow them ... and respect them enough to listen to them. Dell does't. As we reported the other day, Dell shut its general customer forums... which should be the place for customers to help each other. Dwight Silverman found Dell's company line:
  

  As for the Customer Care board, many of the non-technical issues posted there can only be addressed by authorized Dell representatives with access to customer information - not by peers as the Forum is designed to facilitate. That said, these questions are best handled through other secure online tools.

  Or, clueless Dell, your customers can just blog their questions and answers without you. Or should I say, former customers."

Facebook - near future

For the last few months, I have become very interested in the topic of online advertising. This has been the main topic in most of my previous blogs. But why???
I always thought that online ads were misplaced and that no users or businesses would actually be interested in them. Its still true that people do not want to be disturbed by online ads, but what if they are tailor made and targeted specifically for the user.
From the user's point of view, I have always been targeted by irrelevant ads and now when I see an online ad, I just ignore it. This has just become a habit. But if online ads were always tailor made to my interests and were specifically targeted at me, maybe I wouldn't have ignored them as irrelevant. This is the point that Google, Facebook or Foursquare want to leverage to generate huge profits in the future.

I had previously discussed how Foursquare and Google wish to generate income from online advertising. Now lets see how Facebook is doing the same. The arena of online advertising does not yet have any big players. We are in a phase, where most companies are still experimenting on how to improve their online advertising. Once we cross the experimenting stage, some players could have exponential growth as in any other market. This gives players like Facebook, a big chance to become the market leaders thereby making huge profits. Why does Facebook have a big chance???

"Facebook has more than 400 million active users where 50% of the active users log on to Facebook in any given day. People spend over 500 billion minutes per month on Facebook. Also, there are more than 100 million active users currently accessing Facebook through their mobile devices. " Source: Facebook statistics. Facebook not only has access to this huge database, but also knows about the activities, interests, passions, hobbies, demographic and geographic details of many of its users. This will allow facebook to target its users with customized online ads. As of today, one can run an online ad on facebook by targetting their customers by location, age, likes and interests, education and also connections.

In fact, it is very interesting to look at the following success story.
"Over 12 months, CM Photographics generated nearly $40,000 in revenue directly from a $600 advertising investment on Facebook. Of the Facebook users who were directed to CM Photographics' website from the ads, 60% became qualified leads and actively expressed interest in more information." Source: Facebook case studies

This success story reveals that more and more companies will become interested in online advertising through Facebook. There was a time when I said, "Today, online advertising is a joke". But maybe, in a few years, it would become meaningful with more companies concentrating on targeted online advertising. In my opinion, in the next two or three years, Facebook will concentrate more and more on increasing its market share in online advertising.

One of the other important concern for many users of Facebook is privacy. Most of my friends have spoken a lot about this issue. But yet, I would like to share some facts that reflect the concerns of many from the Latin American countries.
"Facebook's privacy settings, combined with the sheer volume of personal information individuals put on their profiles, have also led to claims that Facebook could encourage cyberstalking. One particular aspect of cyberstalking that is of concern to insurance companies is the use of Facebook as a research tool for burglars. A report published in 2009 by Legal and General called "The Digital Criminal" revealed that 38% of social network users post status updates with details of their holiday plans, which can be an "open invitation to burglars" as many users also posted their home address on their profile. In August 2009, a burglar in Hove accessed his victim's Facebook profile to taunt her over the theft of her laptop by posting comments on her profile. A spokesperson for Sussex Police said: "Being burgled is traumatic enough for any family but for the culprit to apparently use their stolen possessions to publicly gloat over the crime is a sinister twist."" Source: Criticism

This incident is one of the many issues faced by Facebook. Look here for more info. If Facebook wants to increase or retain its users, it is important for them to work on these relevant criticisms they are facing. So, in my opinion, Facebook will concentrate in the next two or three years, on working around its privacy issues to increase its user database.