1. For Companies Both Big and Small: Running a Business on Smartphones
In early 2006, San Antonio, Texas-based CPS Energy, the nation's largest municipally owned energy provider, was by all accounts riding the road to riches. The company had the highest bond ratings of any such utility provider. Its workforce and customer base in general expressed satisfaction. And most important, it was profitable. In other words, there were no external signs that the company was about to launch a technology program that would redefine the way it did business and reshape its workforce of roughly 4,000. There weren't external signs, but for those in the know, including Christopher Barron, CPS Energy's VP and CIO, it couldn't have been more clear that a change was imminent and that the future of the company might depend on it.
"We had a much larger workforce than a business our size maybe should have," Barron says. Barron looked at other companies with large mobile workforces like its own, companies like UPS and FedEx, and he saw a huge disparity in the way his business was operating. For instance, specific CPS workers had little or no access to IT systems and resources while they were away from the office or warehouse. They were often required to visit work sites or customer locations to diagnose issues or suggest fixes before reporting to the appropriate departments or parties, which would then initiate the next step of the resolution process. That could mean dispatching additional workers, and the whole ordeal could take days.
"If we kept with the amount of manual labor that it took for us to accomplish that work, we would not be in the position to be competitive in the future," Barron says. From this realization, the company's Magellan Program was born. The Magellan Program was envisioned by Barron and his colleagues as a better way to mobilize and connect its traditionally siloed workforce to the people and systems they needed to do their jobs. The goals of the program were to extend CPS's networking infrastructure, build its own secure Wi-Fi networks in offices and warehouses, and deploy smartphones and custom mobile applications to all CPS staffers who didn't currently have a laptop or other mobile device. For Barron, the first and most significant challenge in deploying smartphones to such a large user base was getting executive buy-in. "One of our biggest headaches has been, and continues to be, the perception that the technology brings little to the table other than e-mail, and it costs a lot," Barron says. "For a CIO to try to eliminate all the resistance from a senior executive might take forever," Barron says.
"So rather than try to get to the execs and mollify all their fears about cost, usage and safety, we've gone to specific groups, engineers, line workers, office workers, and because it's so cheap we've been able to give the devices out on ‘experimental basis.' There are so much value in these handheld devices and two or three applications that they prove themselves," he says. "You just have to get them into the hands of the people that actually need to use them in order to demonstrate that." Three innovative ways CPS staffers use their smartphones are as digital cameras at work sites, as GPS tracking mechanisms, and as emergency notification receivers. In the past, CPS might have had to dispatch a small group of "generalist" workers to a service call to make sure the correct person was there. Today, a single worker can visit a site, take a photo of a damaged piece of equipment or infrastructure, and then send it back to headquarters or the office. Then an expert diagnoses the issue and sends along instructions to fix the problem or dispatches the appropriate worker, who is available immediately via voice e-mail and SMS text via smartphone.
"The Magellan Program, through the use of smartphones and other technology, has or will empower all employees, no matter what work they perform, to become part of the greater company's ‘thought network,'" Barron says. "Each person is now like a node in our network." The company is also seeing significant gains in supply chain efficiency related to Magellan and the smartphone deployment, he says. For instance, smartphones help speed up the purchase order process, because in the past a specific person or group of people needed to be on-site to approve orders. Now the approvers can be practically anywhere with cellular coverage.
The company's supply chain buyers can also visit warehouses to work with the people who actually order parts, leading to faster order times and more proactive supply chain management overall. In just one year, the time it took to close purchasing and procurement deals decreased by more than 65 percent. Also, inventory levels were reduced by more than $8 million since the Magellan Program began. In addition, both employee and customer satisfaction levels are up, Barron notes, because staffers now have more access to corporate systems and information, and they feel closer to the business. Because CPS can now resolve more customer issues with fewer processes, they've reduced the time it takes to complete most service calls, leading to happier customers. In fact, the company received the highest score in J.D. Power and Associates' 2007 Gas Utility Residential Customer Satisfaction Survey.
The technology, however, is no longer the exclusive purview of large companies with significant IT budgets, at least not anymore. Lloyd's Construction in Eagan, Minnesota, might not seem as if it needs flashy phone software. The $9-million-a-year demolition and carting company has been run by the same family for the past 24 years. Lloyd's takes down commercial and residential buildings and then hauls them away. What could be simpler? That is, if wrangling 100 employees, 30 trucks, and more than 400 dumpsters can be called simple.
Coordinating those moving parts is crucial to growing the business-and to saving the sanity of Stephanie Lloyd, 41, who has run the company for the past four years. Until recently, Lloyd's used a hodgepodge of spreadsheets, paper ledgers, and accounting software on company PCs to keep track of its workers and equipment. To make matters worse, the company used radios to coordinate with its workers on the job. The more cell phone towers that came online in Minnesota, the worse Lloyd's radio reception got. It was time, the Lloyds decided, to drag their company into the 21st-century world of smartphones.
Lloyd's considered half-dozen mobile-productivity software suites before settling on eTrace, which happened to come from a company called GearWorks based just across town. Not only was GearWorks local, but its software worked on Sprint Nextel's i560 and i850 phones, which are aimed at the construction industry. Lloyd's had already started buying these push-to-talk phones to wean workers from their dying radios. Immediately, technophobic staff had trouble. Employees had to be guided up a steep learning curve in order to master even basic features on their new phones.
For 18 months, the two systems ran side by side: eTrace as it was phased in, and the old paper-and pencil system as it was phased out. Accounting inconsistencies quickly crept in. And eTrace gave rise to a delicate labor problem. The software featured integrated mapping and travel data that showed the real- time locations of all company assets. To their chagrin, the Lloyds discovered that those assets were spending too much time parked outside the same lunch spots-ones that were not on prescribed routes. Lloyd was sympathetic to workers' needs for breaks-"we've all worked demolition here," she says-but quickly clamped down on unauthorized ones.
GearWorks' CEO says the challenges Lloyd's faced are to be expected. "All these products operate under the ominous pendulum of challenge and opportunity," says Todd Krautkremer, 47. "But our software does a good job of letting the customer control that rate of change in the business." Once the deployment dust had settled, the savings became clear. The company employs 12 drivers, 22 foremen, and 7 office workers who use 41 phones running eTrace. The company buys an unlimited data package for each phone, which totals about $4,000 a month. Add other networking charges, and Lloyd's spends about $50,000 a year for a complete business, accounting, and communications solution. Before eTrace, the company paid an accountant 40 hours a week to do the books. Now that person comes in one day a week for 6 hours, saving roughly $1,000 a week. Data entry and job logging by the dispatcher and foremen, Lloyd says, is roughly 1½ times faster than paper and radio. More efficient routing has cut fuel costs by about 30 percent. And employees have stopped making unauthorized stops. Lloyd estimates a net improvement in performance of 10-12 percent, or roughly $1 million for 2007-not a bad return on
$50,000. "It really does work," she says.
CASE STUDY QUESTIONS
1. The world economy is passing through recession where economics of the world has changed drastically as sales are going down, profits are shrinking, companies going bankrupt etc. The business organizations are finding new ways of communication, competitive edge, reducing cost etc. Identify the ways smartphones can be used to reduce recession effects, improve performance and productivity in business organizations worldwide. Illustrate your answer with appropriate examples.
2. Explain how business organizations can be managed better by using smartphones. Illustrate your answer with proper points.
3. The business strategy deals with the goals the organization wants to achieve and the process which are employed in the strategy. Identify how smartphones can bring changes in strategic goals and related business processes of any organization.
4. Some experts say that smartphones are a reliable tool of communication in business organizations, while other experts don't consider smartphones a tool of reliable and secure communication. Describe your own opinion whether you agree or disagree with one of the above mentioned opinions. Illustrate the answer with valid points.
5. Go to internet and find out the latest technologies which are being developments for smartphone users working for multinational organizations. Identify how such applications can be used in near future to hand over real time value delivery to the customers, provide better communication among employees and contribute to achieve the goals set up by the management.
2. Brain Saving Technologies, Inc. and the T-Health Institute: Medicine through Videoconferencing.
The first three hours after a stroke are critical to a patient's survival and recovery. For instance, depending on the type of stroke suffered by a patient, certain drugs can vastly improve the patient's survival and chances for full rehabilitation. Those same drugs, however, can be deadly if given to a patient suffering another type of stroke. Due in part to a shortage of specialty physicians trained to accurately diagnose and treat stroke victims, not all U.S. hospitals have the expertise and equipment to optimally care for stroke patients, particularly in the critical early hours. The new Neuro Critical Care Center, operated by Brain Saving Technologies Inc. in Wellesley Hills, Massachusetts, will begin to connect emergency-room doctors at a number of suburban hospitals in the state with a remote university hospital that will act as a ‘hub' with on-call critical-care neurologists who can assist in making remote diagnoses and treatment recommendations for suspected stroke patients, says Stuart Bernstein, CEO and chief operating officer at Brain Saving Technologies. The connection occurs through a visual-communication workstation that can connect via IP, high-bandwidth communications, or private leased line. The workstation allows the remote specialists to examine and talk to patients, and collaborate with on-site doctors to improve timely diagnosis of strokes and optimize treatment options,
Our purpose is to provide member hospitals with a major hospital stroke center, 24 by 7," Bernstein says. CT scans-digital images of patient's brains-can also be transmitted from the member hospitals to the Neuro Critical Care Center specialists to improve diagnosis of the patients, he says. The images are seen simultaneously by doctors at both locations so that they can collaborate. The technology can also help train emergency-room doctors about what characteristics to look for on the CT scans of stroke patients. A key component of the Neuro Critical Care Center's offering is the Intern Tele-HealthCare Solution from Tandberg, which provides simultaneous audio and video transmission and bidirectional videoconferencing and image-display capabilities to hub and member hospital doctors. Emergency- room doctors can wheel the mobile Tandberg system to patients' bed-sides, Bernstein says. Tandberg's medical video-communication products are also used in other telehealth applications, including situations where doctors need an expert in sign language or a foreign language to communicate with patients or their family members, says Joe D'Iorio, Tandberg's manager of telehealth. "The technology provides real-time visibility and collaboration to help assess patients' well- being and facilitate real-time interaction," he notes.
Doctors have long had a tradition of holding "grand rounds" to discuss patient cases and educate aspiring physicians. The centuries-old practice certainly has its merits, but medical leaders in Arizona want to improve, update, and broaden it to include a larger list of health care practitioners, such as nurses and social workers, regardless of their locations. So the Arizona Telemedicine Program (ATP) drew on its extensive use of videoconferencing equipment to develop the Institute for Advanced Telemedicine and Telehealth, or the T-Health Institute, to facilitate a 21st-century way of teaching and collaborating across disciplines and professions. "Its specific mission is to use technology to permit interdisciplinary team training," explains Dr. Ronald Weinstein, cofounder and director of the ATP. "Now we're opening it up to a far broader range of participants and patients." The T-Health Institute is a division of the ATP, which Arizona law-makers established in 1996 as a semiautonomous entity. The ATP operates the Arizona Telemedicine Network, a state wide broadband health-care telecommunications network that links 55 independent health care organizations in 71 communities.
Through this network, telemedicine services are provided in 60 subspecialties, including internal medicine, surgery, psychiatry, radiology, and pathology, by dozens of service providers. More than 600,000 patients have received services over the network. Project leaders say the goal is to create much- needed discussion and collaboration among professionals in multiple health care disciplines so that they can deliver the best care to patients. "It's the effort to be inclusive," Weinstein says. "Medicine is quite closed and quite limited, but we're counting on telecommunications to bridge some of those communication gaps". The institute is essentially a teleconferencing hub that enables students, professors, and working professionals to participate in live meetings. Its technology also allows them to switch nearly instantly between different discussion groups as easily as they could if they were meeting in person and merely switching chairs. Gail Barker has noticed that participants who don't speak up during in-person meetings often become much more active in discussions held via videoconferencing. Perhaps it's because they feel less intimidated when they're not physically surrounded by others or because the videoconferencing screen provides a buffer against criticism, says Barker, who is director of the T-Health Institute and a teacher at the University of Arizona's College of Public Health. When used poorly, videoconferencing can be stiff and dull, just a talking head beaming out across cyberspace without any chance to engage the audience. But Barker and others are finding that when the technology is used in a thoughtful and deliberate manner, it has some advantages over real-life sessions because of its ability to draw more participants into the fray.
"It's literally a new method of teaching medical students. It's a novel approach," says Jim Mauger, director of engineering at Audio Video Resources Inc., a Phoenix-based company hired to design and install the videoconferencing equipment for the T-Health Institute. The T-Health Institute uses a Tandberg 1500 videoconferencing system, and its video wall has 12 50-inch Toshiba P503DL DLP Datawall RPU Video Cubes. The video wall itself is controlled by a Jupiter Fusion 960 Display Wall Processor utilizing dual Intel Xeon processors. The Fusion 960 allows the wall to display fully movable and scalable images from multiple PC, video, and network sources.
Al though Weinstein was able to articulate this vision of inter-professional interaction-that is, he could clearly layout the user requirements-implementing the technology to support it brought challenges. Mauger says creating a videoconferencing system that linked multiple sites in one video wall wasn't the challenging part. The real challenge was developing the technology that allows facilitators to move participants into separate virtual groups and then seamlessly switch them around. Barker, who teaches in the College of Public Health at the University of Arizona and is a user of the system, led a trial-run training session at the T-Health amphitheater. She met with 13 people, including a clinical pharmacist, two family nurse practitioners, a senior business developer, two program coordinators, a diabetes program case manager, and an A/V telemedicine specialist. For that event, Barker says the biggest benefit was the time saved by having the facility in place; without the T-Health Institute, some participants would have had to make a four-hour round trip to attend in person.
Now the system is opening up to others in Arizona's health care and medical education communities. T- Health Institute officials say they see this as the first step toward a health care system that truly teaches its practitioners to work together across professional disciplines so that they can deliver the best, most efficient care possible. "We think," Weinstein says, "that this is the only way you're going to create coordinated health care."
CASE STUDY QUESTIONS
1. The videoconferencing can be used for telemedicine where a doctor can diagnose a patient who could be in thousands of miles away. Describe how videoconferencing can be used to control epidemics in developing countries. Support your answer with real life examples.
2. Identify the other areas of life where business organizations can use videoconferencing to derive business value. Support your answer with real life examples.
3. Videoconferencing is a great tool where executives around the world can have face-to-face meetings to share sensitive knowledge, information, data etc. Therefore, it becomes prime responsibility of information managers to ensure security to videoconferencing. Identify the methods which can be used to secure videoconferencing. Support your answer with reference to the most widely used standards used by financial organizations, hospitals etc. to secure electronic data related to the patients and customers.
4. By deploying videoconferencing in health sector, number of specialists can be increased in institutions which serve thousands of patients. Identify the advantages and disadvantages of this approach. Support your answer with valid points.
5. Despite having great benefits, the adoption of technology in health sector is still very slow. Identify the reasons behind slow adoption. Support your answer with real life examples.
3. Cisco Systems, Black & Decker, and O'Reilly Auto Parts: Adapting Supply Chains to Tough Times
Whether it's a truck, a tsunami, or an economic downturn, the same general rule applies: You're better off if you can see it coming from a safe distance. There aren't many companies that understand this notion better than Cisco Systems Inc. White-hot during the 1990s, the company was pummeled after its vaunted inventory forecasting system could not-or did not-predict the dot-com bubble's collapse. The result of this miscalculation was that sales were halved, the company lost 25 percent of its customers in a matter of weeks, and it ultimately wrote off more than $2 billion in inventory. After that experience, Cisco's supply chain team vowed that it would never get blindsided again. "There is a huge difference cutting head count between now and 2001," says Karl Braitberg, Cisco's vice president of customer value chain management. Back then, Cisco's supply chain model was built on a "push" system, where products were made and inventory was built up in anticipation of market demand based on best-guess forecasts. "Then, when demand dropped, the supply chain froze. Nothing happened," Braitberg says. "We knew we had to build a new system that reacts better than just ‘push.'" Every company is tasked with matching its supply to consumer demand. In a normal business cycle, how well that job is accomplished determines whether the company is profitable. But this current economic downturn is anything but normal, and businesses are struggling to simply stay liquid. There are various strategies to help preserve working capital, including cutting head count, outlets, and manufacturing lines. But for most companies, the key to capital preservation will be how well they can reduce their inventory levels.
Largely, companies are in survival mode, and they're looking to their supply chain management team to free up precious capital to help them do that. While it may not fall directly on IT executives to make that happen, their role in the equation is very strategic. With globalization, outsourcing, and increased compliance and security concerns, managing supply chain operations becomes increasingly complex. And shorter, more frequent product cycles argeting more-sophisticated markets create a need to manage more products and parts from remote locations. Add the pressure of shorter cash-to- cash cycles-the time from when a business extends credit to build inventory until the time it gets paid- into the equation, and the need for an intelligent, nimble, and timely flow of information becomes critical. To have visibility as well as command and control, supply chain operations must be tightly integrated with the IT infrastructure. That isn't the case at many companies, and yet it may be the factor that determines success or failure as they endure and emerge from this downturn. Like bloodletting, reducing inventory is a delicate matter that most people would prefer to avoid. Inventory can range from materials, to parts, to fully assembled products.
Nobody wants to run out. If there's too little, customers won't get orders in a timely manner and market opportunities will be missed. Yet if a company carries too much and demand drops, then the inventory must be "bled down," or reduced in price, until it has a buyer. During a strong economy and when cash flow is loosened, many companies can get by without rigorous inventory management practices, says Larry Lapide, director of demand management at the MIT Center for Transportation & Logistics in Cambridge, Massachusetts. But during a recession, he adds, "companies had better bleed down inventory to reflect the downturn in sales. If they don't, it just sits there."
Inventory optimization is so critical now because of its impact on available cash, Lapide says. In accounting terms, inventory is an asset. So inventory that is on the books through manufacturing, assembly, and distribution represents credit-funded inventory. With credit at a premium, it's in a company's best interest not only to keep inventory levels tight, but also to sell goods as soon as possible. Reducing costs and squeezing maximum utility out of fixed assets is nothing new to Black & Decker Corp.'s Hardware and Home Improvement Group in Lake Forest, California. The unit supplies hardware to big-box retailers that have responded to the economic downturn with new low-price strategies. It now falls on Scott Strickland, vice president of IS, to help the group squeeze down its own costs and maintain profit margins. "We had been loath to drive inventory down to this level," Strickland says. However, the company had gained invaluable experience by deploying an integrated inventory management system prior to the downturn. The result was that the key decision makers throughout its supply chain were operating with the same information, planners focused only on exceptions, and supplier and material issues were quickly resolved. The system, Strickland says, does the heavy lifting, and as a result, the unit has cut planning cycles from weeks to days and improved forecast accuracy by 10.4 percent. "If someone had told us nine months ago that we could lower inventory as fast as we could to address a sales decline, we would not have believed it was possible," Strickland says.
However, "because of the impetus on freeing up working capital, we have been focused on lowering our inventory and levels. We figured we could do this, and it turned out to not be the bad experience we had imagined." The effort to lower inventory levels to free up working capital has proved so effective that the Black & Decker unit and its partners are jointly considering making it standard practice even after the economy recovers, Strickland says. O'Reilly Auto Parts Inc. in Springfield, Missouri, uses inventory as a competitive differentiator, says Greg Beck, vice president of purchasing. One of the largest specialty retailers of automotive aftermarket parts, tools, supplies, and accessories in the United States, O'Reilly is responding to the recession differently than many other companies. "Business is increasing because of the downturn," Beck says. "People aren't buying new cars but instead are putting more money into fixing old cars." This isn't to say that O'Reilly lacks supply chain challenges or that it can let down its guard. As the result of an acquisition last year, the company increased its total store count to more than 3,300 and now operates in 38 states. To bolster its competitive advantage, O'Reilly's strategy is to increase customer service levels and replenish inventory on a nightly basis, while at the same time managing an increasing number of products. The partnership between the supply chain operation and IT was critical to O'Reilly's strategy. The company is using Manhattan Associates Inc.'s replenishment software to collect product data information on the half-hour, while updates from the distribution centers are transmitted nightly. The replenishment system uses this data to determine the forecast for these products. As a result, O'Reilly has increased inventory turns by 44 percent, and it still manages to fulfill 97 percent of customer requests immediately, with 3 percent handled through separate channels. At the same time, the company reduced its inventory levels, freeing up $60 million.
Companies say that driving costs out of the supply chain is an important goal, but the big question is whether-especially during a recession-they can afford to invest in their supply chain IT infrastructures to help make that happen. Dwight Klappich, an analyst at Gartner Inc., calls that a short-sighted and, in the long term, costly approach. "If this trend continues," Klappich stated in a report, "this myopic focus on short-term tactical issues, while necessary for many businesses, could widen the gap between the best-performing organizations and lower-performing organizations." Cisco understands this. After the 2001 downturn, it made major system investments to transform its "push- driven," siloed supply chain model into an integrated "pull system" that can extract timely data from suppliers and downstream partners. This reorder data is sent to Cisco after being triggered by specified parameters and algorithms, to shape "demand signals." The system doesn't operate in a vacuum. Cisco has optimized its forecasting algorithms by bringing together representatives from its marketing, finance, sales, supply chain, and IT departments, and from key customers. As part of its sales and operations planning process, this group collaborates to create a common view of demand signals. This input drives an agreed-upon plan of action to align manufacturing capacity and inventory deployment and meet customer service levels. In short, they work together with the same data to optimally match supply and demand. "Now, if there are no pull signals, nothing gets brought into the system," says Cisco's Braitberg.
Manufacturers don't continue to source and build inventory that may sit in some warehouse waiting for customers who may never buy it. Cash is freed up for other purposes. While Braitberg acknowledges that even past history can't be used as a template for this downturn, Cisco is confident that it has better visibility into market demand when it goes down, and that it will be ready when the green shoots emerge. "We now have the techniques in place to be hypersensitive to demand changes," Braitberg says, "and we can manage our way through a downturn.
CASE STUDY QUESTIONS
1. The supply chain management consists of all activities undertaken to finish a quality product on time to provide to the customer. Identify the guidelines which can be used by business organizations to achieve favorable levels of supply chains.
2. The multinational companies invest to achieve their strategic goals. In an era of economic downturn, do you think the business organizations should keep on investing in their IT infrastructure so that they can get optimum levels of sales, customer service etc. Support your answer with few real examples where information system might have played a pivotal role in this regard.
3. Describe different approaches for inventory management taken by business organizations these days. Your answer must cover at least two most popular approaches. Compare both of them and identify which one you will prefer and why. Support your answer with real life examples from industry.
4. The political unrest, civil war, natural disaster etc. can damage supply lines for multinational companies which will result in loss of growth, jobs, higher demand etc. Describe the guidelines which can be used by Cisco Systems, Starbucks Coffee etc. to maintain their optimum levels of supply chains.
5. Describe the role of supply chain management professionals, how they can prioritize, plan and organize their responsibilities under pressure and competitive customers who demands quick and speedy solution in global business environment. [15]
4. Sony, 1-800-Flowers, Starbucks, and Others: Social Networks, Mobile Phones, and the Future of Shopping
A number of major retailers have been driven into bankruptcy protection during this recession, including RedEnvelope and Eddie Bauer, or gone out of business altogether, like Circuit City. Blockbuster, Virgin Megastores, and many more have closed stores. Survivors, suffering deflated profits and slow sales, warn of a bleak future.
But smart retailers are going where it's warm: the hot little hands of cellphone- and laptop- toting consumers who want to shop right now, wherever they happen to be sipping their lattes or watching their kids' soccer games. Technology-backed projects to increase revenue include mobile e- commerce, coupons by text message, and even storefronts on social networks. As enablers of these projects, CIOs are moving ever closer to the customer. "Out of recession develops one picture- finally-of what true business-IT alignment looks like," says Drew Martin, CIO of Sony Electronics. "IT is becoming part of the product offerings." Whether that's hotel kiosks, mobile banking, hospital patient portals, or retail, CIOs are getting their IT groups to the front line in the competition for consumer dollars. When a customer logs on to his new Sony e-book reader, for example, the device automatically connects him to his existing customer profile, from which he can start buying e-books. This feature is available thanks to Martin's efforts to connect product development with Sony's internal customer relationship management system.
As exciting as it is to live on the progressive edge of the CIO profession, though, it's a new world to navigate at a time when wrong moves can severely hurt a company. "The challenge is that now you're entering into the revenue space," Martin says. "You need to commit to delivering your part of what needs to be delivered." "Web sites and e-mail-that's just too many steps now," says Brett Michalak, CIO with Tickets.com, which sells tickets to games, concerts, and other events, as well as having its own ticketing technology. Social media such as Twitter, Facebook, and YouTube take e-mail out of the equation, putting offers in front of customers on sites they already visit. Dell, JetBlue, Whole Foods, and other big brands have pounced on Twitter as marketing and promotion tool, tweeting special deals to followers. Dell, for example, attributes more than $2 million in sales to its 14 Twitter accounts that promote offers to 1.4 million followers. ("15 percent off any Dell Outlet Inspiron laptop. Enter code at checkout . . .")
Sony is using Twitter, among other social networking sites, to hype the SonyReader. A recent tweet included a link to a page at Sony's site comparing the product favorably to Amazon's Kindle. "You can't build a site and expect people to come. We are on YouTube, Facebook, and Twitter to go out and get them," Martin says. 1-800-Flowers intends to find out whether social networkers are also social shoppers. In July 2009, the $714-million flower delivery company launched the first Facebook storefront. Collectively, Facebook's 300 million active members spend eight billion minutes per day on the site, according to the company. An Experian survey found that dwell time for an adult visiting a social network is 19 minutes and 32 seconds. Meanwhile, 35 percent of adults who had been on a social network in the past month had also bought something online in that time period, the survey found-a ripe demographic.
"Still, there's a lot to do on Facebook, so any shopping has to be fast," says Vibhav Prasad, vice president of Web marketing and merchandising at 1-800-Flowers. The company's Facebook store, therefore, offers only 10 percent to 15 percent of the several hundred bouquets available from the main 1-800-Flowers Web site, and the checkout process has been pared down. No suggestions to buy related products pop up, for example, and four special-occasion tabs span the top of the page, instead of the eight on the main site. "It's a fairly impulsive purchase in this channel," Prasad says. "As simple and as quick as we can make it, the more effective we'll be." Impulsiveness is key. Every time Facebook members log in, they see updates about who among their friends is having a birthday.
Prasad wants those regular reminders to spark flower buys. Going social was "a logical extension" for 1- 800-Flowers, which was one of the first retailers to put up an e-commerce site in the early 1990s, notes Kevin Ranford, director of Web marketing. "It comes from listening to customers and responding to the channels in which they're interacting," Ranford says. Facebook users spend most of their time looking at their own home pages. They read their news feed-a display of their friends' status updates, quizzes taken, notes posted, and games played. So, 1-800-Flowers is planning a way into the news feed. When a fan fills out a wish list to indicate which flowers she'd like to receive, notification goes into the feeds of her friends. Carol logs on to Facebook, sees that Alice has a birthday on Thursday and wishes for the "Pleasantly Pink" bouquet. Ding! Carol clicks over to the 1-800-Flowers store and $29.99-plus-shipping later, takes care of that gift without ever leaving Facebook. "We think people will do it because social networking is all about you expressing your interests and your friends responding," says Wade Gerten, CEO of Alvenda, the Minneapolis software developer that built the Facebook store for 1-800-Flowers. "Shopping online can be social again, as it was in person." People lose their credit cards and forget their wallets. But cell phones? There is perhaps no combination of vices so bursting with commercial promise than that of cell phone-pluscaffeine.
Starbucks is there. In September 2009, the $9.8 billion coffee chain began testing a system to let customers pay using their iPhones or iTouch devices. They download the Starbucks Card Mobile App and type in the number of their Starbucks loyalty card, preloaded with spending money. A 2-D bar code appears that cashiers can scan. Royal Oak Music Theatre, a Michigan music and comedy venue that has featured such acts as Train and Bob Saget, started mobile ticketing three years ago and has adjusted its marketing to cover for finicky technology.
Anyone who's done self-checkout at the supermarket knows that scanning takes a special, knowing touch. Still, scanning bar codes on the screens of mobile devices often requires extra wiggling of the phone and slanting it at different angles. It's slower than scanning paper tickets. To avoid ticking off patrons lined up to run in and grab general-admission floor spots, Royal Oak created a separate VIP entrance for the mobile customers. There, staff uses the newer model scanners required for reading mobile barcodes and it's not so apparent that the scanning takes longer, says Diana Williams, box office manager. Mobile customers are also allowed to get into the theater a few minutes before traditional customers, which encourages more people to buy their tickets by cell phone, she says.
That's cheaper for the theater than handling paper tickets; saving money and hassle time is Williams' goal. But it also positions the theater well for collecting future revenue. "Mobile ticketing skews young," Williams observes. The theater does shows for all ages, and for a typical adult event, 16 percent of tickets sold are through the mobile channel. But for a recent show by the boy-band Hansen, popular with tween girls, mobile accounted for nearly 40 percent of tickets. "There's an age-around 22 or younger-where it would never occur to patrons that you couldn't buy a ticket from your phone," Williams says. Mobile and social commerce projects will change the business of any company that invests in it, says Russ Stanley, managing vice president of ticket services and client relations for the San Francisco Giants. For example, instead of being a long-planned activity, a Major League Baseball game can become an impulse buy, Stanley says, bringing in more sales for the organization. Every game day, the Giants have 40,000 seats to sell.
If they've sold only 30,000, 10,000 spoil every bit as badly as old pears. Last year, the team changed prices daily on about 2,000 seats. Stanley imagines the day when he'll have a database of fans who say, live within a mile of the ballpark to whom he can text last-minute offers. "Hey, the Giants have $5 tickets left for tonight. For $5, I'll walk down there," he says. "As they're walking up to the entrance, they're buying on the mobile." The Giants started to offer mobile tickets midway through the 2008 season, when they sold about 100 tickets that way per game. In 2009, it was about 200 and Stanley expects to do about 400 per game in the coming years. "Fans who use it love it. It's getting the people to use it," he says. Like hot dogs and cold beer, holding a ticket is part of the rite of baseball, he says. Plus, there's the souvenir value. When pitcher Jonathan Sanchez threw a no-hitter against the San Diego Padres in July 2009, about 50 mobile fans, as well as people who had bought tickets online and printed them on plain paper at home, later requested the team print "real" tickets for them to commemorate the event. "We did that for them. It's good relations," says Stanley. And, he adds, it could turn into a money-making service in the future.
CASE STUDY QUESTIONS
1. With the development of new technologies, peoples around the world prefer buying online. The online shopping will grow to $370 billion in 2017. Explain how online shopping will help companies, discussed in case study, achieve their strategic objectives. Explain your answer with examples.
2. Online payment is getting popularity among peoples because they can pay by using smartphones or iTouch devices. Identify security measures which must be taken for online payment. Explain your answer with examples.
3. The mobile payment technology the future of online business because customers can make simple, secure and fast transactions. Explain how you see the future of online payment. Support your answer with examples.
4. The social networks are a popular tool of advertising for companies. Explain, how social networks discussed in case study, can be used to diminish the effects of slow growth for these companies. Explain your answer with examples.
5. The brand managers and marketing managers are asked one question everyday whether social networks can pay off for the companies or not. The effectiveness of social media cannot be measured as it is still growing. Explain your answer with examples where social media played a pivotal role for return on investment drive.
5. CAN BUSINESS PROCESS MANAGEMENT MAKE A DIFFERENCE?
If you're a large successful company, business process management might be just what you're looking for. AmerisourceBergen and Diebold Inc. are two examples. AmerisourceBergen is one of the world's largest pharmaceutical services companies and a member of the Fortune 25, with $70 billion in revenue in 2009. It provides drug distribution and related services designed to reduce costs and improve patient outcomes, servicing both pharmaceutical manufacturers and healthcare providers. Because it is so large, AmerisourceBergen has numerous and complicated relationships with manufacturers, pharmacies, and hospitals.
Frequently changing business conditions cause contract prices to fluctuate. When they do, both the distributor and manufacturer need to analyze these changes and make sure they comply with their business rules and federal regulations. Managing these contracts and pricing details associated with each of these relationships had been very time-consuming and paper-intensive, relying heavily on e- mail, telephone, fax, and postal mail. Many of these processes were redundant. AmerisourceBergen's management believed the company had many old and inefficient business processes. After an extensive BPM vendor analysis, the company selected Metastorm BPM software. Metastorm BPM provides a complete set of tools for analyzing, managing, and redesigning business processes. Business professionals, managers, and information systems specialists are able to create rich graphical models of business processes as well as new user interfaces and business rules. Metastorm has an engine for deploying redesigned processes along with capabilities for integrating the processes it manages with external systems. For its first BPM project, AmerisourceBergen decided to automate and implement an online collaborative contract and chargeback process, which is responsible for a $10 billion annual cash flow. This process drives the establishment of pricing and terms with each of the company's manufacturers and also controls compliance with pricing terms and the payment of rebates from the manufacturer if the company is forced to sell at a lower price to compete. Any disputes or inaccurate pricing data create costly delays in obtaining the refunds the company is owed.
Metasource BPM makes it possible for all contract changes to be recorded into the system and validated against internal business rules, and also enables AmerisourceBergen to link with its trading partners for collaborative BPM. All contract information is housed in a single repository, making it much easier to investigate chargebacks and communicate contract and pricing information with trading partners and among internal departments. The BPM project was successful and resulted in lower headcount, fewer disputes, more accurate pricing information, and a high return on investment. This early success encouraged the company to expand BPM to other areas of the business and use it to support a broader business transformation program. AmerisourceBergen used Metastorm BPM to create six new specialized processes for managing and automating high-volume, highly specialized supplier credits which interface with its SAP enterprise system.
To meet federal and industry-specific regulations, AmerisourceBergen must carefully track and match all direct, indirect, and third-party credits with the appropriate product inflows and outflows. The company used Metastorm BPM to create specialized processes that interface with SAP, including the ability to receive, track, reconcile, and expedite all credit variances, such as discrepancies in invoices and purchase orders. After the SAP system identifies the variances, it passes credits to Metastorm BPM for exception
handling, resolution, and reconciliation with master credit data. Reconciled credits are then returned to the SAP system. More than 1.2 million credit/debit adjustment documents and paper-based credits are seamlessly passed between Metastorm and SAP this way. To date, AmerisourceBergen has automated nearly 300 processes, benefiting from more efficient and accurate record tracking, faster turnaround times, greater management into key performance indicators, and an online audit trail of all activities. AmerisourceBergen's BPM projects had such positive outcomes that the company won a Global Excellence in BPM and Workflow award in 2009. Diebold, Inc. is another recent convert to business process management. Diebold is a global leader in integrated self-service delivery and security systems and services, with 17,000 associates across 90 countries. The company makes, installs, and services ATMs, vaults, currency-processing systems, and other security equipment used in financial, retail, and government markets. Diebold hoped to use business process management to understand and improve its order fulfillment process.
The company selected Progress Savvion's BusinessManager BPM solution for this task. BusinessManager provides a platform for defining an organization's business processes and deploying those processes as Web-accessible applications. The platform gives managers real-time visibility to monitor, analyze, control, and improve the execution of those processes and can integrate these processes with existing operational systems. BusinessManager receives and organizes data from multiple sources to real time at any step in the process and also predict future performance based on past data. Since the tool enables managers to learn how long each step of the process usually takes, they can forecast where orders ought to be and compare that with where the system says the orders actually are. BusinessManager can detect whether production of an item is complete and where specific items are located. Pleased with these capabilities, Diebold immediately used BusinessManager for other processes, such as issue resolution. The system aggregates input from various sources, such as workers in the field and in factories. Diebold is now able to quickly identify issues raised by employees and customers and determine how long it takes to resolve them.
CASE STUDY QUESTIONS
1. Current business process management methodologies rarely give importance to security issues in business process management. Due to increase in business integration and legal requirements, companies must find out the ways to make their business processes secure. Identify the guidelines which can be used to secure business processes for multinational companies.
2. The business process management not only ensures efficiency in any organization but also increase in profit and growth. Identify how business process management can improve efficiency of business organizations in terms of growth and profit.
3. Describe how information systems can be utilized to enhance external environment in any business process to effect long term strategic goals of business organizations.
4. New challenges arise in business organizations due to changing goals. Therefore, they have to adapt to new processes to get competitive edge over their competitors. Describe the typical steps taken for organizations to introduce new processes. Discuss your answer with reference to AmerisourceBergen and Diebold.
5. Identify the steps required to change from one business process to another one. Discuss your answer with reference to AmerisourceBergen and Diebold. Support your answer with valid points.