Founded in 1923, Casa del Libro is the only large bookshop chain in the Spanish market, with 12 bookshops in the most important cities at the end of 2003. The main competitors of Casa del Libro are general stores, commercializing other products and considering books as just an additional line. With more than 50 million euros sold at the end of 2003, Casa del Libro is the second bookseller in Spain, far from the leader, El Corte Inglês. Casa del Libro achieved the second position trough an expansive plan designed to grow in a mature market, growing at rates closed to inflation rates. Casa de Libro has more than than 1600 suppliers, the double of its main competitions in Spanish market.Casa del Libro’s database was the most complete and up-to-date database in industry. Casa del Libro leveraged on their huge stock of books to build a reputation of “the cult place” for readers and bibliophiles.
Casa del Libro started to sell books on internet in 1995. At that time Casa del Libro worked with a webside not integrated with the back office and this way not getting advantage of Casa del Libro’s huge database. The limitations of the platform used could not stand the growth expected. Casa del Libro decided to create a new company from the scratch. At this point in time was a strong motivation to launch online initiatives (market analysts were severely punishing all the firms with no presence in the web). Casa del Libro started the development (in 2000) of the initiative followed the typical pattern of the time, acquisition of the best and most expensive equipment and software available in the market. Due to all of this the expectations were too high.
In September to 2001, the CEO found out that the ambitious platform designed couldn’t be integrated, despite the huge amount of money already spent on this, due to design errors. At the same time the known Internet bubble exploded and stock markets fell down abruptly. Definitely September 2001 was not a good month for Casa del Libro. Due to this the strategy of Casa del Libro had to change radically. The high growth sales rates expended take into account during the platform design were not valid anymore. Casa del Libro found itself in a point where it had to decide new objectives for the development of this new platform, shifting from “spectacular investments to brutal austerity and abruptly projects closure. To decide about the new dimension of Casa de Libro the first decision that had to be made was, should Casa del Libro keep the platform or redesign it? Or adopt a new platform?
In my opinion the platform being developed was designed for growth perspectives that don’t exist anymore, is a complicate platform with integration issues. This platform will probably involve high costs of maintenance and high costs associated with future developments. The platform adopted by the company should be a simple one allowing at the same time the company to provide is service with max reliability (probably this won't happen with the actual platform). As a conclusion I would suggest the company to adapt another platform, more adapted to the new growth reality and more simple. By being simpler this platform will be easily to integrate, more reliable and the costs of maintenance and costs of future development will be lower.
6/22/10
IT Competitive Advantage: Tesco case.
“Customer loyalty is not about how customers demonstrate their loyalty to us, it is about how we demonstrate our loyalty to them”
Lord MacLaurin, Chairman of Tesco
In 1995 Tesco launched the Tesco Clubcard the UK’s first supermarket loyalty program. Tesco introduced the Clubcard as a mean of giving something back to the customer, especially the customers who shopped frequently and purchased more. Points were accumulated for every purchase of £5 spent after a minimum of £10, and converted later into Clubcard vouchers, which could be redeemed in any Tesco store. So far this looks like any other loyalty program and this was the consensus in the British media and the opinion of Sainsbury (Tesco number 1 competitor and market leader) Chairman that considered the Clubcard no more than an “electronic version of Green Shield stamps (a previews loyalty program launched by Tesco in the 60’s)”. They were wrong.
The Clubcard loyalty program cost £300 million over the first three years and about 4,5% Tesco profits. But 6 months after the introduction of Clubcard, Tesco has increased its share of the retail grocery trade from 15% to 18%. This increase included not only the pull of competitor clients but also a large increase in purchases of products that usually customers didn’t get from Tesco (e.g. alcohol). Tesco attracted about 20 million members, of which over ten million are active users. By 1996, Tesco achieved finally is objective of becoming number one retailer in UK.
But how Clubcard contributed to this? Simple, through Clubcard Tesco was able to get a high amount of information related to Tesco Customers consumer behaviors (the consumers used their Clubcards in each purchase they did). Tesco was able to segment his market by costumer and this way Tesco was able to better promote his products and better target and satisfy the needs of each customer. To better handle the volume of information, Tesco invested in the NCR Teradata data warehouse to provide a 360-view of its customers. As results of this information managements Tesco was able to decide better what products to offer promotions, to create a Clubcard magazine with 80,000 variations... Tesco also updated the loyalty program to allow customers to collect points on holiday promotions with some of the most popular travel agents in the UK and today Clubcard members can also collect points towards vouchers when they spent money on sport goods, sporting events, gas, electricity with any of the Tesco’s several partners. To understand customer online behavior Tesco launched the ”Net Perception” (to provide a more personalized online experience). By being the first mover (first to know customers) and expanding Clubcard network (through Tesco’ partners), Tesco got a strong competitive advantage in understanding the customers behaviors, and this way get new costumers and in maintaining their fidelity to Tesco.
Lord MacLaurin, Chairman of Tesco
In 1995 Tesco launched the Tesco Clubcard the UK’s first supermarket loyalty program. Tesco introduced the Clubcard as a mean of giving something back to the customer, especially the customers who shopped frequently and purchased more. Points were accumulated for every purchase of £5 spent after a minimum of £10, and converted later into Clubcard vouchers, which could be redeemed in any Tesco store. So far this looks like any other loyalty program and this was the consensus in the British media and the opinion of Sainsbury (Tesco number 1 competitor and market leader) Chairman that considered the Clubcard no more than an “electronic version of Green Shield stamps (a previews loyalty program launched by Tesco in the 60’s)”. They were wrong.
The Clubcard loyalty program cost £300 million over the first three years and about 4,5% Tesco profits. But 6 months after the introduction of Clubcard, Tesco has increased its share of the retail grocery trade from 15% to 18%. This increase included not only the pull of competitor clients but also a large increase in purchases of products that usually customers didn’t get from Tesco (e.g. alcohol). Tesco attracted about 20 million members, of which over ten million are active users. By 1996, Tesco achieved finally is objective of becoming number one retailer in UK.
But how Clubcard contributed to this? Simple, through Clubcard Tesco was able to get a high amount of information related to Tesco Customers consumer behaviors (the consumers used their Clubcards in each purchase they did). Tesco was able to segment his market by costumer and this way Tesco was able to better promote his products and better target and satisfy the needs of each customer. To better handle the volume of information, Tesco invested in the NCR Teradata data warehouse to provide a 360-view of its customers. As results of this information managements Tesco was able to decide better what products to offer promotions, to create a Clubcard magazine with 80,000 variations... Tesco also updated the loyalty program to allow customers to collect points on holiday promotions with some of the most popular travel agents in the UK and today Clubcard members can also collect points towards vouchers when they spent money on sport goods, sporting events, gas, electricity with any of the Tesco’s several partners. To understand customer online behavior Tesco launched the ”Net Perception” (to provide a more personalized online experience). By being the first mover (first to know customers) and expanding Clubcard network (through Tesco’ partners), Tesco got a strong competitive advantage in understanding the customers behaviors, and this way get new costumers and in maintaining their fidelity to Tesco.
6/14/10
Should companies adapt to ERPs or should ERPs adapt to companies?
For the ones that don’t know what is an Enterprise Resource Planning (ERP) system, Wikipedia defines it very well:
“…a system that is used to manage and coordinate all the resources, information, and functions of a business”.
An ERP can support all the essential functions of the company’s business processes: Human Resources processes; Logistic processes; Finance processes; Sales processes… . The ERP objective is to increase the operational efficiency and productivity of business processes of the companies.
Now, let me give some examples to show you how useful an ERP can be. Imagine your company operates in Europe and you are on a business trip at USA and you want to know what were today sales of your company. Easy, you just need to access your ERP and run a report and you will get all the information regarding today sales. Another example, imagine that your company has several warehouses all around the Europe and you need product A in warehouse 1, before you buy the product you should check if you have product A in other warehouses and if the answer is yes, you should transfer the product to warehouse 1, avoiding you to spend money in a product that you have on stock. These were just a few examples to illustrate you how an ERP can improve your company productivity and efficiency. The ERPs are amazing sources of information, in a good ERP you can find all the information you want about any functional area of your company and with this online information make better decisions. Using the ERP you can have access to information like: stock levels; free capacity in your plant; total assets; people working; products with higher margins; … . All the operations/transactions performed in the company are recorded at real time in the ERP system, the ERP is like the camera that records everything that happens in your company and keeps all that information available for when you need it.
Today there are several ERP systems but the most known at very large global companies are the ones provided by SAP, Oracle.
Going to the question “Should companies adapt to ERPs or should ERPs adapt to companies?”. The answer to the question is simples, ERPs should adapt to companies. A company can’t change its processes, the way it operates just to have or adapt to an ERP. The ERP should be designed taking into account the company processes, it should reflect the company processes and be a source of competitive advantage for the company. A good ERP (or ERP implementation) is the one that allows the company to have the most efficient processes for the company. From my experience with ERPs at very large global companies I can say that ERPs can be very useful and powerful tools but they have to adapt to the companies and not the other way around.
“…a system that is used to manage and coordinate all the resources, information, and functions of a business”.
An ERP can support all the essential functions of the company’s business processes: Human Resources processes; Logistic processes; Finance processes; Sales processes… . The ERP objective is to increase the operational efficiency and productivity of business processes of the companies.
Now, let me give some examples to show you how useful an ERP can be. Imagine your company operates in Europe and you are on a business trip at USA and you want to know what were today sales of your company. Easy, you just need to access your ERP and run a report and you will get all the information regarding today sales. Another example, imagine that your company has several warehouses all around the Europe and you need product A in warehouse 1, before you buy the product you should check if you have product A in other warehouses and if the answer is yes, you should transfer the product to warehouse 1, avoiding you to spend money in a product that you have on stock. These were just a few examples to illustrate you how an ERP can improve your company productivity and efficiency. The ERPs are amazing sources of information, in a good ERP you can find all the information you want about any functional area of your company and with this online information make better decisions. Using the ERP you can have access to information like: stock levels; free capacity in your plant; total assets; people working; products with higher margins; … . All the operations/transactions performed in the company are recorded at real time in the ERP system, the ERP is like the camera that records everything that happens in your company and keeps all that information available for when you need it.
Today there are several ERP systems but the most known at very large global companies are the ones provided by SAP, Oracle.
Going to the question “Should companies adapt to ERPs or should ERPs adapt to companies?”. The answer to the question is simples, ERPs should adapt to companies. A company can’t change its processes, the way it operates just to have or adapt to an ERP. The ERP should be designed taking into account the company processes, it should reflect the company processes and be a source of competitive advantage for the company. A good ERP (or ERP implementation) is the one that allows the company to have the most efficient processes for the company. From my experience with ERPs at very large global companies I can say that ERPs can be very useful and powerful tools but they have to adapt to the companies and not the other way around.
Dell Hell: Don’t play with me, I am a blogger…
Dell Hell started when Jeff Jarvis, after buying a Dell computer, posted in his blog BuzzMachine the following:
“Dell lies. Dell sucks
…I just got a new Dell laptop and paid a fortune for the four-year, in-home service. The machine is a lemon and the service is a lie. I'm having all kinds of trouble with the hardware: overheats, network doesn't work, maxes out on CPU usage. It's a lemon.”
Jeff Jarvis bought a Dell laptop that had several problems and when he contacted Dell customer service the “Dell Hell” started. Jeff Jarvis decided to post in his blog his complains about Dell’s costumer service.
The interactions between Jeff Jarvis and Dell costumer service didn’t go well and Jarvis continued to post about it in BuzzMachine. Jeff’s posts increased popularity and other bloggers started to use the “Dell Hell” to spread negative comments about Dell’s customer service, weakening Dell’s reputation.
The catchy “Dell Hell” become popular very quickly and was noticed at The New Your Times and Business Week. For sure Dell didn’t expect that a post in a blog would have so much impact on Dell’s brand.
Blogging become a popular way to complain about Dell’s Costumer Service. Dell responded to this launching its own “Customer Service Blog”.
What Dell should have done? Dell should have solved this problem as soon as possible avoiding the huge brand damage that this caused. When a customer buys a product that is not ok the company that sold it should fixed it as soon as possible (nothing new is our days!!!), especially when this costumer is an influent blogger. To avoid the big dimension that this problem achieved Dell should have made Jeff Jarvis really happy from the beginning and hope that he posted is happiness and the end of Dell Hell in his blog.
To recover from the brand damage, Dell should first change its image within the bloggers community since these were the one that “caused” all the brand damage. The launch of Dells customer service blog was in my opinion definitely directed to this community. Just after changing bloggers opinion Dell will be able to change the overall public opinion.
“Dell lies. Dell sucks
…I just got a new Dell laptop and paid a fortune for the four-year, in-home service. The machine is a lemon and the service is a lie. I'm having all kinds of trouble with the hardware: overheats, network doesn't work, maxes out on CPU usage. It's a lemon.”
Jeff Jarvis bought a Dell laptop that had several problems and when he contacted Dell customer service the “Dell Hell” started. Jeff Jarvis decided to post in his blog his complains about Dell’s costumer service.
The interactions between Jeff Jarvis and Dell costumer service didn’t go well and Jarvis continued to post about it in BuzzMachine. Jeff’s posts increased popularity and other bloggers started to use the “Dell Hell” to spread negative comments about Dell’s customer service, weakening Dell’s reputation.
The catchy “Dell Hell” become popular very quickly and was noticed at The New Your Times and Business Week. For sure Dell didn’t expect that a post in a blog would have so much impact on Dell’s brand.
Blogging become a popular way to complain about Dell’s Costumer Service. Dell responded to this launching its own “Customer Service Blog”.
What Dell should have done? Dell should have solved this problem as soon as possible avoiding the huge brand damage that this caused. When a customer buys a product that is not ok the company that sold it should fixed it as soon as possible (nothing new is our days!!!), especially when this costumer is an influent blogger. To avoid the big dimension that this problem achieved Dell should have made Jeff Jarvis really happy from the beginning and hope that he posted is happiness and the end of Dell Hell in his blog.
To recover from the brand damage, Dell should first change its image within the bloggers community since these were the one that “caused” all the brand damage. The launch of Dells customer service blog was in my opinion definitely directed to this community. Just after changing bloggers opinion Dell will be able to change the overall public opinion.
6/7/10
Facebook. What is the future?
For those that don’t know Facebook was founded by Mark Zuckerberg, Eduardo Savery, Dustin Moskovitz and Chris Hughes in 2004. The Facebook started being used for people to get know each other, initial limited to Harvard students quickly was opened to other colleges. Today Facebook is the most used social network worldwide with 400 million active users worldwide. Facebook makes money mainly from advertising revenues.
It’s quiet difficult for me to predict what will happen to Facebook in the next 2 or 3 years. Facebook is still increasing very fast but in this market anything can happen (like a new social network being launched with high sucess) and Facebook could stop growing or even disappear. Some people think that Facebook reached a dimension (everyboby now has most of their friends/contacts in Facebook) that would be difficult for people to switch to other social network. I agree but this is not enough. The first social network I used was HI5, by the time I about Facebook I had already a big list of contacts in HI5. I started Facebook but for some time HI5 was still my first social network. As soon as most of my contacts become available in Facebook, I stopped using HI5. What I mean with this is that being big is very important but is not enough.
I expect that in the next 2 or 3 years Facebook will improve the “live” interaction between users, for example instant messaging. The Facebook “Chat” is a bit boring if I compare it with other instant messaging tools. Since I believe most of the people contacts are in Facebook makes sense to increase the use of Facebook for instant messaging. It’s easier to expand the contacts in Facebook then in instant messaging tools, in Facebook you just need the people name (no email adress in needed). I believe (and expect) that Facebook will work on this in the next years.
Other possible trend is that Facebook starts to offer social networks for specific subjects, for example professional, environment,… I believe that Facebook has is big dimension as advantage.
Connectivity with other websites. Is clear that Facebook has been increasing this I believe that the trend is to continue.
Overall I strongly believe that Facebook will continue to be the major player in social networks market in the next 2/3 years … but everything is possible…
It’s quiet difficult for me to predict what will happen to Facebook in the next 2 or 3 years. Facebook is still increasing very fast but in this market anything can happen (like a new social network being launched with high sucess) and Facebook could stop growing or even disappear. Some people think that Facebook reached a dimension (everyboby now has most of their friends/contacts in Facebook) that would be difficult for people to switch to other social network. I agree but this is not enough. The first social network I used was HI5, by the time I about Facebook I had already a big list of contacts in HI5. I started Facebook but for some time HI5 was still my first social network. As soon as most of my contacts become available in Facebook, I stopped using HI5. What I mean with this is that being big is very important but is not enough.
I expect that in the next 2 or 3 years Facebook will improve the “live” interaction between users, for example instant messaging. The Facebook “Chat” is a bit boring if I compare it with other instant messaging tools. Since I believe most of the people contacts are in Facebook makes sense to increase the use of Facebook for instant messaging. It’s easier to expand the contacts in Facebook then in instant messaging tools, in Facebook you just need the people name (no email adress in needed). I believe (and expect) that Facebook will work on this in the next years.
Other possible trend is that Facebook starts to offer social networks for specific subjects, for example professional, environment,… I believe that Facebook has is big dimension as advantage.
Connectivity with other websites. Is clear that Facebook has been increasing this I believe that the trend is to continue.
Overall I strongly believe that Facebook will continue to be the major player in social networks market in the next 2/3 years … but everything is possible…
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