Casadellibro dilemma

As probably most of the companies Casa del Libro decided to catch the Internet wave since 1995. Having aggressive expectations they bought the most expensive technology available in the market. However, things turned out not as much sunny as expected and the CEO of Casa del Libro is facing a dilemma now: stay with the UNIX or change to Windows NT?

My decision would be to stay with the UNIX system and avoid developing a new one. Although redesigning the previous system would cost time and money, I think that starting from scratch involves more time and effort, especially from the senior management level. I assume that Casa del Libro can afford costs associated with UNIX and staying with UNIX will not lead them into huge losses/debts. I also assume that Casa del Libro is striving for excellence based on their aggressive projections, buying the "bestinbreed" technology and hiring prestigious consultants.

My decision is based on the following criteria:

1. UNIX is robust and can sustain a huge number of transactions. Of course this is not relevant at the time of the decision as the market declined, but it will enable the firm to avoid future problems when the market starts growing again. It's always ups and downs and definitely this was not a market that had matured and close to an end.

2. Designing a new platform from scratch, even if it's relatively cheaper and simpler, would still involve high costs unless they could use at least the technical specifications for the UNIX to design the Windows NT.

3. UNIX is more stable and in online shopping you wouldn't want any downtime.

4. Microsoft might seem to be cheap but most probably they'll keep selling you updates every month or so.

TESCO adventure

TESCO started in 1919 as a grocery stall in the East End of London and turned to be one of the market leaders in UK. How did they achieve that? Of course, the mission statement helps if you stick to it. "To create value for customers to earn their lifetime loyalty". Now how do you actually create value for customers throughout decades. Obviously you have to be aware of the changing customer needs throughout change in generations. You have to not give them what you think is best but what they think is best for them. Honestly, a lot of companies can do that, sometimes even better than TESCO. That's probably why they couldn't outbeat Sainsbury's for a long time. The real challenge is to be ahead of time and to predict the customer needs. To predict the changes in behaviour and customer habits and to offer them something they really wanted without recognising that yet. In my opinion that's what TESCO did with first starting the Clubcard and then moving into the online world. They always had the first mover advantage. They involved technologies as and when needed in order to create and sustain their competitive advantage and the results confirmed their position.

In 1996 TESCO opened an online shop where customers could buy not only groceries but many other products from TESCO's warehouses. It was a huge success and shortly TESCO received the number one e-grocer on the Web title. In a short period of time their online sales increased 77% to 176 million UK pounds. I believe the move to the online arena and all the online features provided actually not only helped their online sales but also sales in their retail stores. With all the database of individual shopping histories they received extensive information about customer buying behaviour which they had no access to before.

However, there's still a challenge there for TESCO as online sales, while being profitable and providing more than 50% of the UK online market, only represent 1.5% of their sales. They obviously need to increase this number without hugely harming their sales in retail stores. I believe in order to do that they should be again thinking ahead of time. Although they had almost all features of modern online shops back in 1996, such as remembering the customer, offering products, price check etc, which I was amazed at, there's always room for innovation and improvement. They entered into the segment of handicapped customers which was innovative, however represented a very small niche market. Now they also expanded to US and have to adapt to US buying habits, but how could they succeed?

I believe, thinking ahead again and creating competitive advantage would be somehow to show the actual goods before they get delivered, offer a possibility to smell or touch.......I know the technologies are not there yet or are too costly to be profitable, but in my opinion this will come in some time. The world is moving towards less and less friction and I probably don't buy from online groceries just because I cannot see or smell or touch the product. To keep the sales in retail stores on the other hand, I would convert them into something more than a store, probably involve technologies there as well, e.g. a simple touch to a product could show who of your friends bought or liked the product. I'm thinking of my preferences, trying to think our of the box and be creative, but generation Y may think even more ahead...

ERP - to be adapted or not?

Enterprise Resource Planning (ERP) is principally a software which integrates core business processes of a company providing the executives with a large database of information enabling them to make wise business decisions. ERP incorporates such functions as Human Resources, Supply Chain Management, Customer Relationship Management, Finance, Manufacturing Warehouse Management and Logistics which were previously stand-alone applications. Integration of those business functions into one depository is the main benefit of ERP improving productivity, speed and performance.

On one hand ERP is flexible and allows for customisation but on the other hand the functional customisation may be limited thus forcing the companies to change their business processes in order to adopt ERP. So what's best?

There are advantages and disadvantages on both sides:

Off-the-shelf - No customisation allows for less risks, easy updates, faster implementation, great use of the "best practices" incorporated in the development of the ERP packages, however, it may require rethinking of the business processes themselves to fit the package.

Adaptation - Functional customisation avoids redesign of business processes, therefore reducing the potential negative impact on the company and its employees, it also may lead to competitive advantage for the company, however, it involves more risks in the implementation and operation, makes it difficult to update and obviously, involves higher costs.

According to Panorama Consulting Group's 2008 ERP report, only 23% of organisations implemented ERP as off-the-shelf package, with 34% out of the remained having made significant changes to the package. Large companies with over $500 million in annual revenue, specifically companies in the aerospace, defense, and government industry verticals are more likely to make heavy changes to the ERP package.

I believe there is no single answer that suits all. Each company should think well before deciding whether to customise or not. That decision should be based on the size and structure of the company, sophistication of business processes, time and costs allowed for implementation, need for competitive advantage through the use of ERP.

Largely generalising I would say that small and medium sized companies with weakly defined business processes would largely benefit from adopting the "best practices" incorporated in the ERP packages and changing their business processes accordingly to match the "standard". Also, a change would be easier to manage in smaller organisations. In larger organisations, on the contrary, customisation of ERP packages will be a better solution if they have strongly defined and long operating effective business processes which give them a competitive advantage. Larger organisations may afford paying more and waiting longer for the package to be implemented. Moreover, for unique industries such as airospace and defense, the "best practices" might be simply not relevant.

Dell Hell

Ok, so what happened here. A famous blogger Jeff Jarvis starts criticising a Dell product on his blog and within a short period of time Dell finds itself in a trouble. Worst PR ever, declining sales and consequently profits.

Now how would I react if I was the CEO of Dell? Obviously I would be frustrated in the beginning and would want to find the blogger and make him pay for what he's done! After all this was just one computer which turned out to be a "lemon"! But that would be the initial reaction. Coming to my mind would also be denying all that was said, making Jeff Jarvis deny what he said........I should be smarter than that.

After all, even the worst PR in the world is still PR! So the best decision should be to capitalise on that.

First of all, what Jeff Jarvis was saying was obviously true and I should know that. So I would increase customer service and would ensure there's a platform where customers can leave their complaints which will be handled in due course. Now that everyone knows about Dell Hell, I would start a new campaign, a change in the quality of customer service under the name "Dell Hell", or something like "Dell Hell to Dell Heaven", and would hire Jeff Jarvis to manage the change in focus on customer. He would take care of the change management and would use his blog to give publicity to the important change.

Turning a bad publicity into a good one is a challenge but is feasible!