STRATEGIC IT ALIGNMENT AT VERMONT TEDDY BEAR

Information Systems for Managers-II

Submitted by : Group 4, Section B
Chirag Arora Dhruv Aggarwal Neha Sushilkumar Bhomia Nidhi Singh Nitya Saxena
GROUP 4

2013PGP112 2013PGP128 2013PGP248 2013PGP249 2013FPM008 2013FPM009

Prasenjit Chakrabarti

Vermont Teddy Bears (VTB) Business Model

PRODUCT AND SERVICES VTB dropped many product lines between 2005-08 and focused on following three products o Teddy Bear(Plush Toys): VTB sold standard as well as customized bear o PajamaGrams(apparal/gifts): Outsourced to low cost overseas factories. It was largely not in sink with demand with high lead time of 6 weeks. o Calyx Flowers(flowers/gifts): Offered flowers with long vase life VTB followed multi channel approach to enhance sales viz Stores, Mail Order, Web and Telephone TARGET MARKET:
PRODUCT Teddy Bear TARGET MARKET OnSeason:Men who bought for their girlfriend /wife/mother OffSeason: Children Women Men

PajamaGrams
GROUP 4

Calyx Flowers

Vermont Teddy Bears (VTB) Business Model

VALUE PREPOSITION Teddy Bear: VTB was in gift delivery service business with their biggest customer for teddy bear were men who ordered bear at the last minute. Thus on time delivery at short notice was their forte. PajamaGrams: Currently the demand lacked supply during valentine rush due to high lead time, they were in process of developing better forecasting method and promotions like family pack to attain better customer satisfaction Calyx Flowers: VTB dealt directly with growers thus eradicating middle men which helped them offer fresh and long vase life flowers REVENUE MODEL o VTB offered full range of gift with an option to customize that earned good profit margin. o To ensure round the year demand for teddy bear, it targeted children in offseason and men in on season. o As promotional activity, plans to offer PajamaGrams apparel GROUP 4 as family pack were in pipeline

Review on the Operational Capabilities of their Business

The operational capabilities of the company are not very strong. Thus they plan to enhance operational capabilities by adopting following modifications over time: o Select new enterprise system to replace the accounting systems responsible for orderentry, sales and inventory management o Focus on building or buying new supply-chain software to enable efficient procurement of raw materials and finished goods o Acquire CRM to serve customers better across various product lines and channels They planned to modernize the aging and complex systems on which the company relied The major time of IT employees was spent on troubleshooting and thus no time was left for development of new applications or implement new versions of packaged software More organized approach was required for triaging and prioritizing the support calls They had three different brand and four different channels, each supported by different software. A more robust and adaptable IT platform needed to be developed

Challenges faced during Peak periods

To meet the surges, they needed to hire temporary workers in huge numbers During peak times, the system occasionally paused when the capacity was strained Software bugs were identified during the rush period of Valentine Issues of stuff arriving late and in poor quality were faced sometimes during the peak periods due to problems in supply chain management
GROUP 4

How far does their IS support their Operational Needs

The IS consisted of a mix of homegrown and packaged applications from a variety of vendors The system could not effectively handle the surge in demand during peak periods and paused when its capacity was strained The IT employees spent too much time in troubleshooting instead of spending time on new application development or implementing new versions of packaged software The middleware contained a great deal of business logic which was undocumented The systems had not been managed effectively over time The supply chain management needed improvement as there had been instances of stuff arriving late and being of poor quality

Main concerns/weaknesses of VTBs IS

Incomplete IT architecture document existed at VTB and change controls were minimal If certain employees were to leave, they would walk away with important knowledge which had not been captured or codified There was an unorganized approach towards prioritizing support calls There was a lot of hidden information as different information was with different people The middleware was extremely complicated and contained a great deal of business logic Users asked for enhancements which they could not deliver because they had not understood completely how the system worked as it had been mismanaged over the years Various applications did not have updated versions and ran several versions behind schedule

Suggest options for a well organized IT architecture

Current System
Best of Breed Approachseparate packages that offered close to optimal functionality

Advantages
Easy to implement Less concern for employees Inexpensive compared to ERP

Disadvantages
Employees using individual preference Complexity increases with increase in customer base

Proposal 1
Implementation of ERP

Advantages
No need of middleware Better control over systems Makes the system more stable and reliable

Disadvantages
Initial cost high Low initial returns Implementation phases require a lot of planning

Proposal 2
Outsourcing the maintenance and other activities that do not affect the business directly

Advantages

Disadvantages

Helps IT employees concentrate Lack of control over on developing new applications maintenance activities System easier to maintain in the long run External help available for troubleshooting during peak periods Cost effective