Vermont Teddy Bear - Case Study Example

The business model of the company in question might be presented in the following way. There are three major products that it sells: teddy bears,pajamas and flowers. Speaking of services that it provides, it is essential to note that it offers the option of customizing the products. For example, a person might choose a costume for the bear. In addition to that, pajamas are also sold in family sets. More than half of the orders are placed by men. They mostly choose teddy bears with pajamas being second and flowers being their third choice. This usually happens on three key events: Christmas, Valentine’s Day and Morther’s Day. However, there are also orders which are placed by women. They whether buy present for their loved ones, relatives of children. Speaking of value, we should note that the prices of Vermont Teddy Bear are not only competitive, but they are also reasonable as the company provides a great deal of customization. Of course, the customers might find lower prices, but they may not find the same level of commitment and special care for their gifts. The financial model of the company is a rather simple one. It capitalizes the nostalgia of the people over simple gifts and offers something that is traditional and easily understandable. Indeed, teddy bears, pajamas and flowers do not contain any electronics and are suitable for the majority of the holidays. Speaking of the latter, there are three peak seasons in the year with roughly a month apart. However, sales are not very successful during the rest of the year due to a general shortage of demand. 2. If we analyzed Vermont Teddy Bear’s operation capabilities, we will have to conclude that they are not very strong. First of all, as one can easily see from Appendix 6 in terms of their IT portfolio maturity, the company is at Stage Zero. Thus, there is no standardization of software whatsoever and an exaggerated portion of middleware. Secondly, from Appendix 2 it is clear that there is a misalignment between the IT structure and business model of the company. For example, there are three major peak experiences that the organization should be prepared for, and they are easily predictable and inevitable. However, every time they occur, the system that is supposed to process them fails to work properly. That is why operational capabilities of the company in question are relatively weak. Speaking of the above mentioned peak experiences, we should note several aspects. First of all, the company is overloaded with orders. The employees call it the rush and indeed the number of orders that are placed is tremendous. That is why there is no wonder that the system cannot process all and shuts down. There is even an internal moniker that is given to men who place their order at the very last moment: “Late Jack”. The biggest challenge that occurs during the peak experiences is the loss of orders and, consequently, bad reputation among the customers. It is true that with the help of the heroic efforts of the employees, many orders that were almost lost because of the system failure were retrieved and performed properly. However, this is pure luck and such state of affairs should be avoided. 3. While considering Vermont Teddy Bear’s information system from a strategic point of view as it is mentioned in Appendix 3, we should point out that there is no long-term IT plan in place. In other words, the company has not been able to develop a proper vision of the direction in which it would like to develop. The operation aspect of information systems has already been explored. As it has been noted, the major challenge that the company is facing is the collapse of the system that is conditioned by the peak experiences. In spite of the fact that it is possible to predict this increase in demand, as of now the organization has not been able to implement any significant changes that would prevent these crashes. If I were in the board of directors, the first concern that I would raise would be related to the issue of IT architecture. As put in Appendix 3, there is a tremendous need for developing a unified technology platform since the company is failing at the present moment mostly due to the fact that it simultaneously uses programs that were provided by different vendors. The next important concern is conditioned by the ineffective IT culture within the organization. Thus, it is generally accepted that nobody possesses the entire knowledge about the IT architecture. Moreover, the people who were able to collect the precious knowledge about some areas of it have not documented it and should they leave, they will take this information with them. All this results in the emergence of “siloed” individuals. 4. It is quite obvious that the major priority that was identified by Bob Stetzel, namely “taming the bucking bronco”, is indeed the most important one at the moment. So, he and his department should document the existing IT architecture even though it may be imperfect because of all the middleware. This way they will be able to gain a proper understanding of the system that they are working with. After this is complete, the phenomenon of “siloed” individuals will disappear since all the information that is stored in the minds of these people will exist in writing. Of course, they will enjoy their extensive experience, but they will no longer be as irreplaceable as they used to be prior to documentation. The next step that is essential for the company focuses on diversification of the business model. It can be performed simultaneously with the steps that were described above or might be withheld until there is some success achieved. So, the major goal in diversification might be formulated as follows: the products and services of the company should be in demand throughout the year, not on three special occasions. This might involve addition of new products or development of their customization to make products more suitable for other occasions. Finally, the most important advice that might be given to Bob is the following: he should present his considerations to the board and start preparation for the major change within the company. In other words, the process of transformation should not be seen as something that is performed top to bottom, but rather as a conscious desire to deal with the existing problems. Appendix 1 Helpful Harmful Internal Strengths - well known image; - diversification of products; - custom products; Weaknesses - misalignment of IT and volumes; - lack of internal IT standard; - seasonal dependence; External Opportunities - nostalgia over simple gifts; - women delay birth, ready to spend more; - an open market for children toys; Threats - heavy competition in each segment; - electronics is becoming popular; - less interested in giving gifts; Appendix 2 If one takes a close look at Strategic Alignment Grid, one might suggest that Vermont Teddy Bear falls under the category of misalignment. On the one hand, it is obvious that IT infrastructure in this company is weak as there is no standardization and a lot of middleware. On the other hand, the business model is relatively strong. While it may be somewhat dependent on seasonal variations, but in the long run it allowed the company to become successful. Appendix 3 One might apply the following three criteria to Vermont Teddy Bear company in order to assess its performance. Speaking of the first of them, namely developing a long-term IT plan, it is obvious that the organization in question does not have one and it is one of the major priorities which were identified by the new CIO. If one considers the second criterion which is creating a unifying technology platform, one will be able to notice that it also does not exist in the company as there is a considerable amount of middleware that is not eliminated. Finally, the last criterion, cultivating a high-functioning IT culture, shows that Vermont Teddy Bear does not have an efficient IT culture in place since, on the one hand, few people fully understand the IT structure of the company, and, on the other hand, those who do might leave the organization taking this valuable knowledge with them. Appendix 4 As for the IT strategic impact grid, one would make no mistake arguing that the company in question falls under the turnaround mode. Indeed, the implementation of new IT promises a major transformation in processes and services. In addition to that, successful implementation of new IT will bridge the gap with competitors. Finally, at the present moment, this project is likely to be extremely costly for the organization. Appendix 5 Has the strategic importance of our IT changed? The strategic importance of the IT department changed significantly since it was recognized as the cornerstone of the business. In other words, it became one of the priorities of the company to design a fully operational IT infrastructure. What are our current and potential competitors doing in the area of IT? There is no valid information with regard to whether the competitors are aiming to purchase any ERP packages, but it is obvious that with the increase of penetration of technology into business more and more companies will be oriented at selling product via online. Are we following best practices in asset management? Vermont Teddy Bear does not follow the best practices in asset management since there is evidence of certain strategic development which appeared to be wrong in the end. This resulted in the shortage of resources and endangers the possibility of future development. Is the company getting adequate ROI from information resources? The company in question is not getting adequate ROI from information resources for several reasons. First of all, the cases when the system failed and stopped being operations were not occasional which resulted in some financial losses. Secondly, the IT structure is designed to deal with the demand during peak experiences and misses other parts of the year and potential clients. Do we have the appropriate IT infrastructure and applications to exploit the development of our intellectual assets? The answer to this question is negative since IT infrastructure has not been standardized or even fully documented. Furthermore, it does not allow the company to use the skills of its employees to its fullest since many have problems understanding the system as it is. Appendix 6 It is obvious that according to the IT Portfolio Management Maturity Model, Vermont Teddy Bear company should be placed on Stage Zero. First of all, it utilizes software that is provides by different vendors and is written in different programming languages. So, there is a high demand to standardization and development of a single program. Read More