itbi final project - 0021_0194_4034 (1).pdf
TRANSCRIPT
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INFORMATION
TECHNOLOGY AND
BUSINESS
INNOVATION
Group Members
Ajaya Kumar Sahu -
0021/49
Vishal Raut -4034/19
Afzal Hussain - 0194/49
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Asian Paints
Interview: Ashwin Dani, VC & MD, Asian Paint, CIO magazine
Association of Asian Paints with IT started long back ago in 1960, when Paints purchased
main frame computer from International Computers India Manufacturing (ICIM). Initially
stress was meeting internal requirements and stress was on capturing accurate sales data. To
track the performance company defined few CSFs and they wanted to know how 15 of its
main products were doing per salesman, town, dealer, branch and state. Despite a 25 day lag
in generating the reports they managed to arm themselves with sales statistics, which in turn
helped paints focus on problem areas and attack specific issues. So the improvement in sales
strategy was the soul motivator for the use of IT in case of Paints and it helped Paints to gain
competitive advantage. Though IT was helpful to decide strategy, still so far use of IT was
limited to support sales function.
IT enabled Innovation:
As the VC & MD admits Paints has long-standing commitment to technology. Asian paints
put faith in technology ages before their competition had even started to show interest in IT.
After spending 20 lacs in 70s, which was huge amount at that time, Asian Paints installed a
computerized colour matching machine. IT was no longer any support function for the
company. It was one of the core part of company and only because of IT they gained edge
over other competitors. This innovation gave Asian Paints first movers advantage. After this
point competitors also started showing interest in IT but Paints had maintained a clear
advantage over all these years because they had kept innovating with technology.
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These IT based innovation not only help the firm to gain competitive advantage but also
helped to create entry barriers in the industry as huge investments were required to develped
IT based systems at that point of time.
Integration of IT with other functions:
Over the years and with phenomenal growth of market share, Paints realized that their home
built applications had limitations. The algorithms used were not as intricate and as
mathematically advanced as some of the fully dedicated software in the market. So they
purchased a supply chain management solution from i2 Technologies to optimize supply
chain and to reduce working capital. After seeing huge benefits from these applications
decision was made to integrate their applications into ERP system. Now IT became part of
almost all the core operations of the firm. As far as It implementation is concerned Asian
paints has played a role of prospector throughout. Since introduction first main frame
computer they have spent heavily in implementation of IT based applications. With their
forward looking IT expenditure they have set standards for efficient processes through
continuous innovation of processes based on IT applications.
In case of paint industry past sales data has significant insights for predicting future demand
patterns and Asian Paints had all IT based systems in placed for capturing exact sales date
way back in 1960s. Accurate demand forecasting helps them tremendously in targeting the
kind of markets that have specific needs and enables them to avoid situations where they are
either out of stock or wasting resources on inventory.
B2C initiatives:
Asian Paints provides a large range of colours to the customers. With this initiative they have
been able to derive better insights in the choice of customers make specifically what kind of
shades they are choosing. Customer facing initiatives are helping them to capture sort of
information for streamlining products and optimizing them according to the market.
Currently the focus of company is on revamping customer facing processes using various
technologies such as SAP CRM platform.
From the case it is quite apparent that company realized strategic importance of IT well in
advance. Asian paints used IT as a tool for continuous improvement. Mr. Ashwin Dani was
the first person to be trained for using colour matching machine. People like him played
various roles in the innovation process of the organization. Processes developed on successful
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implementation of IT helped the organization to gain first movers advantage as well as
competitive edge and higher efficiency in day to day operations. At present stage though IT
supports almost all the functions of the organization, it also has strategic importance and new
IT applications are developed with that foresight. So the company presently lies somewhere
in between factory and strategic quadrant of the strategic grid. High IT investment through
out can be explained by system audit matrix.
Technological quality of applications
L
L Demand/Sales
forecasting
H
H B2C initiatives
Colour Matching
Supply chain/ERP
So far there is much more scope for B2C initiatives and CRM technologies. Full potential of
these applications is still not realized hence presently company has a plan to revamp these IT
applications.
Business
value of the
applications
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Bombardier Aerospace
SAP customer success story
Bombardier Aerospace is in the Ivy League of aircraft and transportation designers and
manufacturers. An 11.5 billion company headquartered in Canada, Bombardier Aerospace
employs 24,000 people and is at the forefront of aircraft innovation. In the last 15 years, it has
spearheaded 15 aircraft development programs. Company was facing key challenges with
purchasing, logistics and auditing processes reliant on paper, manual intervention and fax
machines. Process costs were higher due to manual handling and collaboration was poor
between stakeholders.
Due to lack of proper flow of information throughout organization Bombardier was facing
inefficient processes. Though as of now IT was not at all of strategic importance to the
company, clear motivation was too support existing system of operations enhance
collaboration with external parties, and access decision-support information. Since benefits
from IT was not so clear in this case Bombardier went for pilot project in the first phase.
Since they were already using SAP applications for few areas they decided to go for SAP
NetWeaver including SAP Enterprise Portal for this integration.
After successful implementation within three and half months instead of having to cope with
the enormous paper trail of the past, Bombardier and its pilot suppliers could conduct end-to-
end purchasing and acknowledgement online. Bombardier sourcing and logistics agents
working on the CRJ700 and CRJ900 aircraft programs now deal with their suppliers through
the portal. In fact, whenever orders are reviewed, transmitted, or acknowledged by
Bombardier or its suppliers, the orders are automatically updated by the back-end SAP
solution.
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In this particular case IT is used to support other core operations such as procurement, supply
chain and logistics. Better flow of information because of IT implementation resulted in
higher operational efficiency. Benefits from IT were not clearly visible so implantation was
partly done. So as far as strategic grid is concerned it started with support quadrant and
gradually wants to move to factory quadrant but still it is in training phase.
Strategic Importance of planned applications
L
L Support
H
T/A
(current state)
H Factory
(Desired)
Strategic
At this stage technological quality of applications is not so advance at the same time true
potential business value of these applications is also not known hence the company is
reluctant to undergo big bang approach for IT implementation.
IT enabled process innovation:
Bombardier has several manufacturing facilities all over the world. IT enabled integration of
standardized processes not just for any one plant but also across all these facilities.
Integration of these processes need reinvention so that they can be standardized. Real
potential benefits can only be realized after successful integration. Through ERP
implementation there will be free flow of information throughout the organization. Aerospace
business is highly information intensive. Bombardier has several facilities across the world,
through which it satisfies demand of customers all over the world. Complex product such as
aircraft is made up of number components supplied by hundreds of different suppliers. In
addition to higher production cycle and continuously evolving aerospace technology give rise
to very high information intensity. So use of IT becomes inevitable. Though IT is just going
to support core operations such as procurement, supply chain and logistics, sufficient
business value will be derived from these applications. Implementation of IT based
applications may not lead to drastic changes in traditional processes but it does demand some
amount of reinventions.
Strategic Importance
of existing
applications
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Effect of IT on culture of organization:
So far various manufacturing facilities were acting as separate entities but with integration of
processes across all these facilities will demand centralize decision making process. Since as
of now each facility had most of the freedom to make decisions for its plant now this has to
change. IT based process innovation will demand change in control structure and decision
making process throughout the organization. As far as procurement process is concerned,
communication with them will be through online instead of traditional paper based.
Maximum benefits of integration can be ripped of only by possible aggregation of orders
across the suppliers. Such type of aggregation may require coordination among facilities
which was absent previously.
Jamcracker Distribution as a Service (DaaS)
Since 1999, Jamcracker has been developing technology, support infrastructure, processes, and
partnerships that enable solution and service providers to deliver on-demand services to
market.
Today, the Jamcracker Services Delivery Network (JSDN) is a global ecosystem that includes
many of the worlds largest telecommunications companies, service providers, and hundreds of
VARs and MSPs that are distributing SaaS and other on demand solutions from ISVs such as
Microsoft, Cisco WebEx, IBM, McAfee, and dozens of other IT services, security, collaboration,
and business application solution providers.
SaaS Distribution as a Service
Jamcracker provides a comprehensive "Distribution as a Service" (DaaS) offering for existing
software ISVs and start-ups to provide a complete SaaS delivery solution that includes hosting
infrastructure and applications management; channel enablement, fulfillment, and support;
outsourced and integrated billing options; level 1 and 2 customer support and help desk
services; a comprehensive portfolio of marketplace and ecommerce channel services,
supporting single-tier resellers to multi-tiered services wholesalers; as well as a wide array of
go-to-market consultation and implementation services to help our solution and service
delivery partners succeed in the market.
Jamcracker operates a complete business process outsourcing solution that wholesales
hundreds of best-of-breed on-demand services, providing tremendous flexibility and rapid
time-to-market for sourcing, bundling, and fulfilling a vast array of value-added services. Service
providers can now rapidly realize enhanced revenues by easily offering new value-added
solutions to their existing customers, or bundle them with their core network and
communications services to gain new customers.
Jamcracker's hosted infrastructure, operations, and end-customer support is a white-labeled
service that provides an end-to-end on-demand services fulfillment solution for your business
customers.
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Customers can easily access and purchase bundled solutions using a branded web-based
administrative console, hosted by Jamcracker, that has rich administrative and support features,
including a single point of provisioning, single sign-on, security and policy enforcement, credit
card billing, and access to level one and two technical support from a 24/7 call center operated
under the service provider's brand.
Jamcracker Partnership
Jamcracker Application Service Delivery
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Analysis of Jamcracker Business model
Application Service Providers (ASPs) provides software services over the Internet. The
customers of the ASPs are not required to install any service software or tool on their systems.
ASP users will have to log on to the service location on the Internet and use the service facility
from a central server. Jamcracker is the platform which provides software services of multiple
ASPs to the customers from an integrated platform. Jamcracker brings together many such
services from different ASPs under a single window. Jamcracker aims to capture the market
segment of small and medium firms which have not been able to invest in IT infrastructure and
services due to high cost but are willing to avail the latest software utilities and services
available on a rental basis. Jamcracker provides them an option of using the software utilities
and services without having to spend large amounts of money on IT infrastructure and
expertise. The business model is viable and efficient due to many advantages that it offers. The
target customers are generally the small and medium firms creating small to medium scale
products and utilities. They have limited ability to market their products. They also dont have
much expertise in direct sales of their products. Using Jamcracker they get an opportunity to
increase their visibility in market, reach out to more and more prospective customers because
of the speedy implementation, cost reduction, support for round the clock business operation,
favourable cash flow profile due to less risk and uncertainity etc. The customers have the
discretion to choose the services that they require and avail them using this platform. The
customers have to pay for only the chosen services alongwith the initial setup cost. There is a
single point billing of all services used from Jamcracker. The model not only saves the time and
effort of the users of having to search for products but also reduces the overhead cost of
maintaining different clients/services.
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The combined ASPs industry is in its nascent stage of evolution. The ASPs industry is still
emerging and is yet to reach its optimum potential and due to this the combined ASPs market
is struggling as it is facing difficulty in convincing the customers of the long term profitability,
viability and sustainability of their businesses. The customers are not willing to be associated
with a company which may have to close down or change their business model half way through
the project cycle. Jamcracker executives will have to convince their prospective customers of
their superior business model and make them understand the advantages of their business
model to overcome this challenges that they are facing. Also since the ASPs are a
relatively new concept therefore the standard benchmarks for Software as a Service interfacing
are not well defined which results in application specific integration issues for Jamcracker for
different ASPs. This in turn creates an engineering overhead cost for Jamcrackers engineers.
With the time Jamcracker has worked hard to establish some industry standards for integration
of ASPs which has resulted in a more streamlined integration process. ASPs have also
recognized the benefits of following the Jamcracker standards. The standards set by Jamcracker
have benefitted both the parties. As a definite action plan Jamcracker must work with the
experts in this field and establish a well-defined standard for Software as a Service interfacing
and then finally try to get that standard approved by the industry. Data portability in
Jamcracker is important and cant be ignored in the cases of complex application. Since data
porting to the platform is not Jamcrackers core expertise they choose to involve consultants
who would help customer port their data into Jamcracker. Further Jamcracker must try to
incorporate data porting as the part of its service provided itself. This will help them to gain
additional revenue and engage the customers more effectively. Jamcracker has been trying to
address the customers concern promptly as the customer dissatisfaction in the cases of new
technology or paradigm can be very critical. For example Jamcracker provides excellent security
service to address any customer concern.
Jamcracker provides an effective platform for Software as a Service provider to promote their
services. This should result in better customer awareness and accessibility and thus a larger
market for them. The service providers must try to present more complex and resourceful
applications using Jamcracker which will enable Jamcracker to increase its market value and
also increase the market share of Software as a Service. Customers will prefer Jamcracker in the
long run because of its features of easy to use and flexibility to pick and discard services as per
choice. These functionalities will enable Jamcracker to broaden the Software as a Service market
to a great extent. Many more players are expected to enter the ASPs aggregator market once the
industry reaches a certain critical stage. The entry of big industry players would enable the ASPs
industry to get greater visibility hence increase its market. Jamcracker should be the one to
garner maximum benefits from this market expansion as it has a first mover advantage.
Challenges at Jamcracker:
1. Technical Challenges
No technical industry standards established
Issues to integrate all ASPs
Include customers legacy systems
must stay at cutting edge of technology
quickly adapt to changes while maintaining high service level and reliability
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2. Customers Concerns and Professional Services
Integration of larger, more complex applications
Customer needs help with system setup and data transfer
Concerns about service level, reliability and data security (JC and ASPs)
3. Timing Issues
ASP and aggregator market still developing
Consider carefully moment of launching
Economic crisis with budget cuts and struggling companies
Potential customers need to be educated
Dell Computers: Redefining Business Strategy
Dell:
Dell Computer has been touted by itself and others as a quintessential Internet company. The
Internet has given Dell a means for extending the reach and scope of its direct sales business
model at a relatively low marginal cost. It has done so in part by automating functions such as
product configuration, order entry, and technical support, enabling the company to grow
revenues without a corresponding increase in customer service costs. Also, it has used the
Internet to coordinate a network of suppliers and business partners who carry out many of the
processes involved in building, distributing and supporting personal computers. Dell refers to
this network of partners as a virtual company linked electronically by the Internet. Another
name for this type of industrial organization is the value web (Kraemer and Dedrick, 2000).
A close analysis of Dells use of the Internet and electronic commerce illustrates the strategic
and organizational challenges that face any company that is serious about embracing the
Internet and trying to tap its potential. It also offers insights into a new form of business
organization that may become more prevalent in the networked economy.
Competitors
Dells major competitors in its core corporate PC market are Compaq, IBM and Hewlett-
Packard. In the consumer and small business market, it faces competition from fellow direct
vendor Gateway, and from Compaq, Hewlett-Packard, Apple, and newcomer eMachines. In the
portable PC business, the key competitors are Toshiba, IBM, and Compaq. In the critical server
and Internet infrastructure markets, Dell competes with Sun, Compaq, HP, and IBM. As Dell
moves into new service businesses such as Internet hosting, it faces new competitors such as
Exodus and Corio, some of whom may also be Dell customers. Outside the U.S., Dell competes
with regional and local vendors in many markets, such as NEC, Fujitsu, and Toshiba in Japan,
Fujitsu-Siemens and Olivetti in Europe, and Legend in China. It also faces strong competition
from Compaq and IBM in Europe, Latin America, and the Asia-Pacific region.
Business Strategy:
Dells business has been built on a direct sales, build-to-order strategy for producing and selling
PCs. While Dell originally sold to hobbyists and experienced individual PC users, by the late
1980s, it was making inroads into the corporate market. Dells direct approach appealed to MIS
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departments in large organizations who often didnt need or want the various services provided
by corporate resellers. Dell concentrated its efforts on working closely with those departments
to simplify their lives and lower the total cost of ownership for PCs. Gradually, Dell developed
its own sales force to deal directly with CIOs and other top executives, helping penetrate
corporate accounts that had long been dominated by established IT vendors such as IBM, HP
and DEC.
Dell offered competitive prices, high levels of support, and a focus on selling and supporting
PCs without the distraction of offering a full line of hardware and services. Dell has capitalized
on the inherent advantages of its business model to grow rapidly and profitably. A key
advantage of direct sales and build-to-order production is that expensive inventory does not
build up in the channel and lose value before it can be sold, and new products can be introduced
without having to clear out old inventory in the channel. Dells inventory turnover rate of 60
times per year compares to 12-15 times for most indirect vendors.
Also, customers often pay for the final product before Dell pays suppliers for the parts that go
into the PC, so that Dell operates on a negative cash conversion cycle. Perhaps most important
are the benefits that Dell gains from the direct customer relationship. Unlike indirect vendors
whose channel partners generally refuse to reveal even who the final customer is, Dell knows
who the end user is, what equipment it has bought from Dell, where it was shipped, and how
much the customer has spent with Dell. Dell uses that information to offer add-on products and
services, to coordinate maintenance and technical support, and to help the customer plan its PC
replacement and upgrade cycle. With many of its customers, Dell has become what it calls a PC
outsourcer, taking responsibility for managing part or all of a customers PC inventory, from
purchase to disposition. Dells manufacturing operations are set up to support this business
model by building PCs to a customers specifications, pre-loading software and a hard drive
image in the factory, and providing an asset tag that can be scanned to keep track of the PC
throughout its lifecycle. The build-to-order process has been carefully honed for years, and
involves the entire production cycle and supply chain. Thus, a Dell PC is designed to minimize
human touches in production, suppliers are selected to ensure high product quality, suppliers
are physically integrated into production, and the entire order fulfillment process is managed by
a sophisticated combination of internal and external information systems.
Redefining the Business Model: Dell as an E-commerce Company
Dell was an early and enthusiastic convert to the Internet, creating its first web site in 1994 and
moving many of its business activities to the Internet ahead of its competitors. The company
saw that its direct model gave it an advantage in selling online. Unlike indirect vendors such as
Apple, IBM, HP and Compaq, Dell did not have to worry about channel conflict with resellers and
distributors when it began selling online. Also its build-to-order manufacturing processes were
already in place, making it easy to offer customers the opportunity to configure products online
just as they already did on the telephone.
By 2000, Dell was doing $50 million a day in web-enabled sales, but this figure was not the
whole story. Dell also used the Internet to link itself more tightly to its large customers by
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developing extranets called Premier Pages (now renamed Premier Dell.com). Dell had
developed over 50,000 Premier Pages for thousands of business customers by mid-2000. These
are used for configuration, ordering, services, and support, all customized to the customers
systems and needs. Smaller companies and consumers could buy PCs, peripherals, software and
other items online from Dell.com, and receive technical support and other services at the Dell
web site.
Equally important was Dells effort to use the Internet to coordinate its entire value network ,
including suppliers, logistics providers, and distributors of third-party products, system
integrators, and service providers. All of this was driven by the tight information linkages
between Dell and its customers.
Dells successful use of the Internet drew the attention of the media and other companies,
including its customers. The company saw an opportunity to capitalize on its growing
reputation as an e-commerce innovator and redefine itself as a knowledgeable provider of e-
commerce infrastructure to its customers. Dells public relations machine, with Michael Dell as
point man, drove home the message that Dell knows the Internet and could help its customers
achieve similar success online. Dell began to market itself as the company that "knows how E
works" and can provide the infrastructure that companies need to make it work for them. Dell
has executed its E-Works strategy through a new Information Infrastructure sales force and
through partnerships with service and software providers, rather than by transforming itself
into a services company. Dell brings its corporate customers to the table and offers itself as a
model for success on the Internet, but lets its partners do the actual labor-intensive consulting
business. Thus Dell taps a high growth market and improves its margins without needing to hire
an army of consultants. Dell also tried to expand its e-commerce business in 2000 by setting up
an online exchange in partnership with Ariba and others, but pulled the plug on the exchange in
2001.
Dell does make money from services, but most of its revenues still come from selling hardware
as part of the e-business solution. This hardware includes high margin items such as large
servers and storage devices needed to support e-commerce, as well as commodity desktops and
laptops. Dell has expanded and revamped its product line to meet the demands of the e-
commerce market. It built Dell.com on Dell servers running Windows NT, and was quick to
adopt Windows 2000 internally and in its server line to take advantage of the capabilities of the
upgraded operating system. It also has designated Linux as one of its three core operating
platforms (along with Windows and Novell), taking advantage of the capabilities and popularity
of Linux with ISPs and e-commerce application providers. Dell has increased its R&D
investments to enhance the capabilities of its server line, while still sticking to the Intel
hardware platform.