Investing in IT

As we saw in the Zara and Schwab cases, there comes a time in almost every organization's life cycle when it must make a decision as to whether or not to invest in or upgrade it's information technology.  When that time comes, it is important for the company make a multi-factor assessment which should include itself, its customers, competitors and partners.

The company must assess itself to determine whether its employees and management are capable of implementing and utilizing the new system.  It must also consider what its strategic advantages are and whether the new system will further those advantages or hinder them.  As the article Putting the Enterprise into the Enterprise System explains, an IS must be customized to fit the business rather than the business process being altered to fit the IS.

Secondly, the company must consider what its current customers value most about the goods/services it provides.  Will the IS further promote these factors or detract from them?  Furthermore, will the new system allow the company to attract new customers by offering different or better products/services?  What about current customers?  Will they be continue their relationship with the company or will the new system alienate some of the them?  We saw in Zara that their customers value contemporary fashions, reasonable prices and ever changing selections.  If the implementation of a new IS would require the company to raise prices, how many customers would that drive away?  Would the company realize other benefits to make up for the loss of customers?  That was likely a very key consideration in Zara's decision.

It's also important to look at what the company's competitors are doing with their IS.  Are they gaining a strategic advantage as Schwab's competitors were by offering low cost brokerage accounts?  It only takes one competitor to change the face of an industry and drive its competitors into bankruptcy.  This phenomenon is mostly readily evident in the retail book sales where Amazon has become the dominant player and is driving Barnes & Noble into bankruptcy.

Finally, companies need IS that are compatible with their vendors and distributors.  Today, many business processes are automated and so all players in the supply chain must be have IS that can "talk" to one another. Failure to implement such systems will make it more difficult for a company to work with its supply chain partners and may mean that the company will be cut out of the chain and be forced to find other partners, or simply shut its doors.

Social Networking: Best Suited for the Little Guys?

Much has been said about how social networks are revolutionizing the way businesses interact with their customers.  Certainly large companies were the first to jump on the bandwagon, setting up Facebook accounts and Twitter feeds.  Now we're seeing small businesses, and many part-time businesses, joining the revolution and setting up their own pages.  Not only that, but many of these mom and pop operations exist solely on social networks.  They use their pages as their virtual storefront and oftentimes their only storefront.  And why not?  These pages are free to create and maintain, while traditional websites designed by professionals can easily cost several thousand dollars and don't provide the same level social interaction with customers.

Personally, I only interact with small local companies on Facebook and Twitter.  For example, I follow (or "like") Red Zeppelin Pizza here in town.  I often check for their daily specials and will sometimes eat there based on that.  However, I'd never follow Pizza Hut or Papa John's on a social network.  And it's not because I'm a pizza snob.  I do, in fact, eat at those places but there just something about a large company trying to go downstream on a social networking site that seems contrived.  When I visit these places, I don't feel especially appreciated as a customer, so why should I believe they care about me on Facebook?  With local places it's different.  When the owner is there and talking to customers, you feel appreciated and when I see their post on a social networking site I can attach a friendly face to the post.  What this shows is that a company can't separate its virtual communications from its live interactions with customers.

And speaking of mixing food with a dash of social media, I'm sure many are aware of the food truck revolution that is sweeping the country.  This new cottage industry owes its popularity largely to Facebook and Twitter.  Because a food truck's location largely depends on where they can find a parking spot, these businesses must be able to quickly and effectively broadcast their daily location to their customers.  They do this by tweeting and posting status updates every morning, which often leads to long lines of customers by lunchtime.  This business model would simply not work without social media and so it is a great example of how technology can be the primary enabler of new business ventures.

Click here for an article on Baton Rouge's food trucks!

Surviving in the Mobile Space

As Prof. Schwarz posted on his blog this week, the world of mobile devices is in a period of rapid change and innovation.  It appears that both Microsoft and RIM are at inflection points with their mobile platforms, and their actions in the next year or so (possibly less) will determine their viability in this increasingly competitive market.  Point in case, Palm would have been forced to declare bankruptcy had HP not come in and acquire them at the last minute.  While their WebOS operating system was widely considered to be one of the best, if not the best, on the market, they made poor decisions when it came to hardware design and their selection of carriers. 

Although Microsoft and RIM have much healthier balance sheets than Palm did, they both risk being squeezed out of the market if they don't innovate.  The article Prof. Schwarz linked from cio.com talks about how companies are increasingly giving their employees choice when it comes to their mobile device.  If this trend continues, I can't help but believe that this will spell disaster for RIM.  As someone who suffered for three years with a company-issued Blackberry, I must say that there's no chance I'd ever purchase such a device for myself if given the choice.  The OS is clunky, outdated and sometimes downright unpleasant to use.  There were high hopes that the revised OS on the BB Torch was going to change all that, but alas it didn't.  Furthermore, if a mobile device company wants to survive in today's world, it needs not only an attractive and intuitive operating system but also an ecosystem built around that operating system. 

Apple does a good job of this by integrating iTunes and iBooks into iOS.  Tomorrow Apple will be announcing a new Apple TV tomorrow and I'd be shocked if that isn't integrated as well.  Because I'm a Google fan, my device of choice is, of course, an Android device.  When I purchase the device I was amazed at just how easy it was to get up and running.  Upon first turning on the device, it asked for my gmail login and I was off and running.  It had imported all my gmail contacts, google calendar, gchat friends and emails into my phone without me having to do a thing.  And of course, all these things are continuously synced between the phone and desktop applications.  I just can't envision how RIM can compete with such ecosystems when all they do is produce the Blackberry.  Microsoft, on the other hand, is better positioned and may have a fighting chance given the opportunity for Office and XBOX integration.  Not to mention its experience with enterprise systems and ability to throw mountains of cash at the effort.  Now it only has to overcome the stigma of its products being "uncool" (props to Apple for that).