Mini Case Essay Example

  • Category:
    Business
  • Document type:
    Case Study
  • Level:
    Masters
  • Page:
    4
  • Words:
    2255

Mini Case—Information Technology

Part 1: Advantages and Disadvantages of SSTA

To begin with, it is noted from the statement made by Greg that SSTA has enabled the Company to find key leverage points for everyone who has helped the Company and vendor partnership that would on the other hand, deliver sustainable benefits to each one beyond price. This kind of vision with regard to Information Technology shows that the nature of the influence and purpose of the Information Technology has revolutionized. When Pollalis (2006) argued that in 1980s the information systems were adopted for only accounted purposes and batch processing, it is now conceptulised through this statement that Greg has seen a case where the Company has evolved to database-centred online systems which is able to support its processes. In as much as SSTA has integrated the vendor partnership so as to find key leverage points, financial position of the Company with regard to this advantage conflicts. That is, economic performance is directly linked to the ability of management to create a strategic fit between the position of this Company in its competitive product-market arena and the design of an effective administrative structure to support the execution of what Greg is attempting to achieve.

Conversely, as an advantage, SSTA was ensuring that each vender’s executive enjoys discounts, basic terms and consequently, business activities are streamlined and through the porgramme, Greg is no longer getting the business done at upper level but lower so as time management and effective cost of sales and suppliers. What this advantage brings as far as competitive advantage in the marketplace is concerned is that SleepSmart has promoted consistency and clarity process that links its business goals. Adding this advantage with statement such as, “He and the SSTA worked tirelessly to ensure that the software redesign the Company’s entire retailing infrastructure” one thing becomes apparent; that the IT strategy tends to be driven by Company’s strategy in its competing organisations. It is for this reason that it is expected that each of the venders would win by improving their retail offerings, which they could, in turn, sell to others. While this seems to be working for the Company, Rangan and Adner (2009) note that linking business goals to IT goals is the least process factor. Though Rangan and Adner does not mention it in the study, the point is companies such as SleepSmart where all members can develop enhanced organizational competence in the rapid implementation of technology, there is asymmetrical relationship in which SSTA is driven by its business strategy—something that will make the vendor partnership to succeed in future.

Lastly, the advantage with this programme as argued by Greg is that it gives functional integration which enables what Broadbent and Weill (2006) term as strategic perspective for managing functions. It is for this reason that we see cycle time has improved costs and technical service quality which has been at an all-time high and results were visible. The point of argument is that the Company has realized values from its IT investment. Therefore Slywotzky and Morrison (2000) believe that some strategic choices may negatively impact on company’s transformation, this case, Campbell (2005) position is disputed on the ground that the design and infrastructure of the company has been revolutionized through SSTA—an aspect that makes this partnership health in future.

Contrariwise, the company is also facing a number of challenges that are inherent with the SSTA. One of such is what the Company is now describing as overall slight decline in revenues which is a bad sign considering the prior history of the Company and the partnership it has just entered. What is happening in the Company is a fail to deal with questions of company’s business scope where this also narrows down to the aspect of product-market choices. To underscore this view, when Greg introduced SSTA there was mixed reactions owing to previous failures. While the Company is winning awards as a result, there are problems with specific orientation of the SSTA so as to enable it competing in the chosen market. This is the point where it arguable to say that contingency theory has not been considered with regard to its relative merit of technology vis-à-vis environment and size as determinants of this Company’s structure especially after partnership. Actually, this is the reason why stock prices are still in the dumpster thus jeorpadising future chances of this partnership. The best recommendation for this disadvantage is to apply a unique orientation of a strategy which is distinctive competences. This will be dealing with attributes of a strategy which can contribute to a comparative, distinctive advantage over competing firms in the product-market arena.

It is also clear from the assessment given that there is uncertainty on how SSTA or rather the IT can be used to generate more revenue and how much was up to the business. This is actually brings the second disadvantage; the programme did not offer features such as integration, single view of the customer and faster information. This is when a business attempts to introduce IT but fails to equip that with strategically-oriented decision-making processes to ensure successful alignment (Willcocks and Plant, 2010). The best way to deal with this situation is to transform the application of the IT into autonomous and discrete services but while doing this, agility is key—the more autonomous and discrete their IT infrastructure becomes the more agile it becomes.

Finally, what is happening in SleepSmart with regard to the introduction of SleepSmart Strategic Technology Alliance (SSTA) is a challenge and opportunity happening to companies is a competitive environment. On the same note, the advantages and disadvantages of the introduction of SSTA is multifaceted. For instance, this is the case where SSTA strategy becomes analogous to theCcompany in a way that with the vendor partnership, it can be defined in terms of the external domain. Scholars such as Galliers (2004) have come to contend that what SleepSmart is trying to do does not augur well with fiscal decentralization (transferring resources, powers and revenue generating mechanisms to single unit) without considering the structure of the firm. This cannot work for this Company since SSTA only shows that revenue enhancement and cost-cutting are not mutually exclusive.

Part 2: Focusing IT on top and bottom line

Scholars such as Hirschheim and Sabherwal (2009) have recognized thin line between focusing IT on the top-line and focusing IT on the bottom-line. However, within the context of SleepSmart these two approaches are distinct. The Company is using SSTA as IT tool so as to become more competitive. This competiveness help the organisations reduce cost of services and products and when such is done effectively; they necessitate differentiation and focus strategies as well. For instance, Wal-Mart has adopted and effectively used overall cost strategies successfully. Contrariwise, the aim of a bottom-line is to promote efficiency through reduction of overall costs. Back to top-line strategy, it is aimed at gaining more revenue by selling services and products to new customers or offering new products and services to customers. This is what SleepSmart has attempted to do by adopting e-commerce with SSTA so as to reduce cost of distribution.

On the other hand, organisations such as Nokia and Coca-Cola have used enterprise resource planning and customer relationship management software to improve customer service and reduce costs (Bergeron et al., 2009). While this is what SleepSmart tried to adopt, it tended to fail and the baseline for future practice that will sustain the partnership is to use the same IT alignment strategy but create efficient, effective link between targeted customers and suppliers so as to create customer service and long term relationship between customers and the SleepSmart. Additionally, getting distinct difference between the two approaches needs an example of Apple that has focused on top-line in the past 5 years where they have designed computers that are unique compared to other PCs. To align its IT and effectively focus on top-line, SleepSmart needs to establish data warehouse to assist especially in its partnership. This will for example, improve customer service provision, effectively understand buying patterns, target marketing and new business opportunities.

Elaborating on bottom-line, as already noted companies here are interested in cost reduction. These reductions can come in form of reducing cost of human capital, transport cost, minimizing errors. It is for this point that Broadbent and Weill (2006) liken bottom-line strategy to overall cost leadership strategy by Porter. Understanding this strategy from the perspectives of IT and SleepSmart, bottom-line means addressing the function of IT and how such can affect both the top and bottom but not necessarily equally. Practically, SleepSmart has already failed to use the technology in the implementation of a customer self-service system on the web to reduce costs. For the partnership to succeed in future, there must also be an integration of bottom-line and top-line which act as extension of a transaction processing system thus placing SleepSmart technology in the hands of its customers’ thus allowing it to process their transactions. The best example to give is the ATMs and online banking as bottom-line strategies that reduce costs. Conclusively, there is distinct difference is the two approaches and the point is, bottom-line and top-line are different methods but to the same end for SleepSmart. While the former increased net profit, the latter achieve that end by increasing revenue.

Part 2: How SleepSmart can generate more revenues

As at now the business is three years down the road. Unfortunately with this experience, the SSTA is wearing thin and need renewing owing to the fact that most of the players has been changed and some more than once. The best way to revert this trend is to suggest ideas that SleepSmart would use to generate additional revenues using Information Technology. First, there should be relationships and product development which are keys where IT will enable top-line growth. When it comes to this partnership and aspirations Greg has, using the technology will enhance the customer experience and therefore boost customer spend. Additionally, it is true that competition is rearing its ugly head among the partners in this Company so this suggestion will improve its product development through the origination of services ideas or product, or channels for existing products. But one thing must be noted, first, cost cutting and revenue generation are not mutually exclusive endeviours. That is, SSTA should be structured such that it supports both cost reduction and revenue generation. This will be right performance metrics that are able to address both sets of objectives.

Secondly, statements such as, “…we have done well, but we cannot make money by just winning awards” shows that clear strategy has to be laid and this is to advise SleepSmart to restructure its Information Technology so that it encourage innovation. In doing so, revenue-generation objectives will have to entail major changes such as the “…many partners who had come out with new offerings and were lobbying to get them included in the technology blueprint.” The best way to restructure its IT is to integrate its staff within business units as well as assigning the staff to product development. This will promote innovation in tandem with revenue growth. It can be noted that Greg is stressing on the potential of outsourcing to help a focus on revenue growth, this actually not a priority. Instead, the company should go for full-scale decentralization and in doing this, IT services should be delivered in a considerable and more decentralized fashion that the case within the Company.

Theoretically, Information Technology’s mandate to cost cut is not likely to disappear. This statement is backed by Charles Soobroy, information systems and technology at Sony BMG Music Entertainment (Rangan and Adner, 2009). With this statement in mind, what this Company needs is to close the expectation gap. It is note that there is expectation between senior technology personnel and executive suite regarding the strategic question regarding how the central revenue-generation should be for IT. However, practically, this Company has some steps to help SSTA bridge its gap. IT in this case outsources noncore procedures which create a big impact on SSTA’s ability to innovate in generation of revenue but CEOs apparently doubt with the latter appearing to have somewhat higher expectations. This is the gap that needs to be bridged so to make IT generate money rather than just being award winning.

References

Bergeron, F., Raymond, L. and Rivard, S. (2009). Ideal Patterns of Strategic Alignment and

Business Performance, Information & Management 41(8): 1003–1020.

Broadbent, M. & Weill, P. (2006) Management by maxim: how business and IT managers can

create IT infrastructures, Sloan Management Review, Vol 38, pp 77-92.

Campbell, B. (2005). Alignment: Resolving ambiguity within bounded choices, PACIS 2005,

Bangkok, Thailand. 1–14.

Galliers, R. (2004). Reflections on Information Systems Strategizing, in C. Avgerou, C. Ciborra

and F. Land (eds.) The Social Study of Information and Communication Technology, 1st edn, London: Oxford University Press, pp. 231–262.

Hirschheim, R. and Sabherwal, R. (2009). Detours in the Path Toward Strategic Information

Systems Alignment, California Management Review 44(1): 87–108.

Pollalis, Y.A. (2006) Patterns of co-alignment in information-intensive organizations: business

performance through integration strategies, International Journal of Information Management, Vol 23 No 6, pp 469-492.

Rangan, S. & Adner, R. (2009) Profits and the internet: seven misconceptions, Sloan

Management Review, Vol 42 No, pp 444-453

Slywotzky, A.J. & Morrison, D.J. (2000) How digital is your business? Nicholas Brealey

Publishing, London

Willcocks, L. & Plant, R., (2010) Pathways to e-Business leadership: Getting from bricks to

clicks, Sloan Management Review, Vol 42 No 3, pp 50-59.