In 1999, the U.S. shoes industry was estimated to be a $40 billion market. As of that date the shoes industry was heavily dependent on direct retail channels such as established chain stores. It is also noteworthy that approximately 1 in 3 retail sales were lost due to out of stock issues, including: inventory limitations, constrains on the number of brands sold in a given location, the number of sizes and styles carried in each store, and so forth. Like its now parent company Amazon had done with books, Zappos overcame these limitations through the stocking of a vast inventory of all makes, styles, colors, and sizes, displayed and sold through their e-commerce platform.
From Idea to Business Venture
As Zappos rapidly grew, order fulfillment became a challenge. The firm could not always guarantee the timeliness of supplier drop shipments to individual customers. To meet the expectations of its online retail clientele, Zappos began to open its own warehouse and fulfillment centers, employing approximately 1,600 workers. By 2004, these centers carried in excess of 3 million shoes, handbags, and other clothing items and accessories, drawing on over 1,100 different brands. As a result, Zappos.com offered the best selection of shoes available anywhere online. Zappos eCommerce site exploded with growing popularity. By 2010, the website served millions of users/visitors daily and processes between 60-65.000 purchases every day.
Use of web-based Information Technology
As its business grew, the firm opened more web sites, including Couture.zappos.com, Outdoor.zappos.com, Rideshop.zappos.com, Running.zappos.com, Blogs.zappos.com, and Deliveringhappiness.com. [Note: Students should visit at least one Zappos Web site and assess its quality in terms of content, layout, and functionality.]
Reliable Utilities, Inc. (not it’s real name) is a regional, investor-owned electric and gas utility, with revenues of approximately $3.3 billion and assets totaling approximately $7.8 billion. The company transmits and delivers electricity and gas to 1.1 million electric customers in 81 communities and nearly 300,000 gas customers in 51 communities. Reliable employs more than 3,100 employees in its regulated business.
Reliable Communications, Inc. is an unregulated subsidiary involved in telecommunications activities over fiber optic networks.
Reliable Energy Systems, Inc. is an unregulated subsidiary that provides heating, chilled water services, and electricity to several hospitals, medical research centers and teaching institutions in its major metropolitan service area.
Reliable LNG Corp., a third unregulated subsidiary, operates liquefied natural gas facilities in two local communities to supplement pipeline supply during the winter months.
The IT Organization within Reliable Utilities, Inc. services the IT needs of the parent organization and all of its subsidiaries.
The drive for increased efficiency and cost management led the Reliable Utilities, Inc. IT organization to employ increasingly sophisticated and complex technologies (e.g., wireless remote meter reading; GPS systems in service vehicles; complex mapping systems of embedded pipes, conduits and wiring, etc.). Challenged to find, hire, and retain staff to deploy and maintain these systems, the IT organization launched a search for a partner who could provide a wide range of technical personnel for short- or long-term assignments as needed, and who could flexibly respond to evolving IT staffing needs on short notice. However, in order to maintain close relationships with the user community and to be on top of or to anticipate staffing and expertise requirements as these emerged from planning discussions, this partner needed to work in-house, as though he/she was part of the Reliable Utilities, Inc. IT organization.
The CIO of Reliable Utilities, Inc. therefore developed a request for proposal (RFP) and sent this document to several companies with the necessary range of services. After evaluating bidder responses and interviewing their key personnel, she negotiated a contract with the winning bidder. Under this agreement, a senior on-site partner executive operates as a member of the Reliable Utilities, Inc. CIO’s staff, attending staff meetings and participating in strategic planning sessions. This individual then dynamically assigns external IT resources to Reliable IT projects as the need arises. Once a project is completed, the partner’s people will leave, turning over the day-to-day running of the new IT-enabled platforms and services to Reliable’s own IT organization. As part of this hand-off, the departing experts will transfer their knowledge of the new systems to Reliable personnel. This process is referred to as “technology transfer.”
Question #3: In a global economy, many organizations will maintain a core staff to address theoperational and managerial needs of the enterprise while turning to external resources to staffspecial projects or to Outsource non-strategic corporate functions. For each of the scenariosbelow, the sourcing option (i.e. insoarcing, partnering, or outsourcing) is identiﬁed. What willbe the most important project management steps to successfully deliver a positive outcome inthe efforts described in the column one? (2 points) Example: Southwest Bank has decided tomove all of its IT services to a Cloudprovider. CapitaiOne has decided to outsource theenabling information system for its salesforce management to salesj’orcecom. Target, is about to take on a hugedistribution center development effort inLatin America with an insourced staffdrawn from across the organization. FastFit has decided to follow your adviceand move to the Web. To do so they havedecided to partner with IBM GlobalServices to help them develop their Website. Zappos has decided to move from their ownERP systems to Amazon’s ERP system. Forthis project they will employ internal ITresources as well as the IT services of theparent company’s IMKIT organization. Reliable Utilities has decided to join anindustry-based consortium to trade carbonemission credits. To manage this processthey are working with other consortiummembers to build and use an informationsystem to manage the trading of carboncredits. Prepare a RFP to ﬁnd the right serviceprovider. Create a SLA to clarify both SW Bank’s andthe vendors responsibilities. Test and QC all services before launchingthem to customers.