This blog will include different interesting topics discussed in the Information Systems Course along with valuable contributions of students. The main intention is that it will help all of us explore those topics in more detail and will also serve as my online notes for preparing for this course. Also, I would put in any interesting topics I find related to technology and innovation.

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Tuesday, June 22, 2010

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.

1 comment:

  1. Dear classmates,

    Please ignore the first two paragraphs as you already know the case. In these paragraphs, I am providing context for my other readers who do not know the case.

    ReplyDelete