INFORMATION

TECHNOLOGY AND

BUSINESS

INNOVATION

Group Members

Ajaya Kumar Sahu -

0021/49

Vishal Raut -4034/19

Afzal Hussain - 0194/49

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.

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

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

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.

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

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.

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

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.

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

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

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

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.