ISO1
Introduction to Information Technology
Assignment I
Assignment code: 2012 IS01 B1 Last date of submission: 15th October 2012
Maximum marks: 100
Attempt all the questions. All question carry equal marks
Section A
1. What are the capabilities of Internet? Explain how an organization can gain competitive advantage by using these capabilities.
2. a) What is the difference between system software and application software? List various types of system software and application software. Explain each of them with example.
b) Explain various functions performed by an Operating System. What is the difference between client operating system and server operating system?
3. a) Write a note on the usage of information systems at various levels of an organization.
b) How does Information Technology is helping business going global?
4. a) What is database? How it is different from file system? What are its features?
b) Differentiate between LAN, WAN and MAN? List and explain various topologies used in network implementation.
Section B
CASE STUDY
Snyder's of Hanover: New Systems for an Old Family Company
Harry V. Warehime began tempting the taste buds of southern Pennsylvanians with his Hanover Olde Tyme Pretzels in 1909. Since then, Snyder's of Hanover, as the company came to be known, has expanded its business beyond any scope that its founder might have dared to imagine. Snyder's of Hanover remains a family-owned and family-run company, but it has become the world's second largest pretzel maker, with 12.1 percent of the pretzel market. Snyder's pretzel and chip varieties include Old Tyme Pretzels, Jalapeno Pieces, Butter Snaps, and EatSmart All Natural Veggie Crisps, as well as other popular snacks. In 2002, Snyder's posted revenues of $164 million, trailing only Rold Gold, the reigning champion of the pretzel industry.
In addition to manufacturing its complete line of snack foods, Snyder's distributes its own products, as well as those of other snack food companies such as Tasty Baking Company's Tastykakes. With 40 distribution facilities all over the United States and Europe, over 4,500 products, and over 150 product lines, the home office in Hanover, Pennsylvania, has a considerable amount of data to manage.
If there was one last vestige of old-fashioned business left at Snyder's, it was the company's method of managing and analyzing data. Although Snyder's sells more than 78 million bags of pretzels, chips, and organic snack items each year, some of its core systems were still heavily manual and paper-based.
Snyder's financial department was using electronic spreadsheets for much of its data-gathering and reporting. Lois Stambaugh, Hanover's financial analyst, would spend the entire final week of each month collecting Excel spreadsheets from the heads of more than 50 departments worldwide. Then she would consolidate and reenter all the data into another Excel spreadsheet, which would serve as the company's monthly profit-and-loss statement. The financial data were harvested and consolidated the same way at the end of each fiscal quarter and the end of each year.
The overwhelming presence of the human factor made data-entry mistakes a concern. If a department needed to update its data with last-minute information after submitting its spreadsheet to the main office, the head analyst had to return the original spreadsheet, and then wait for the department to resubmit its data, before finally entering the updated data in the consolidated document.
Perhaps most important, this system of gathering the company's financial statistics at regular, but infrequent, intervals meant that important data simply were not available as often as they were needed. Snyder's lacked the ability to react to sudden trends and unpredictable events because the data were supplied too late to adjust shipping schedules, pricing schedules, or delivery counts.
CEO Michael Warehime and his management team could track the gross profits of business units but not the performance of each of Snyder's 4,500-plus products and over 150 product lines. For example, the spreadsheet-based system lacked the detail to show whether a specific snack product such as Sourdough Hard Pretzels or Pumpernickel & Onion Sticks was actually making or losing money. For a business focused on both production and distribution, this was a hindrance to growth.
Additionally, the spreadsheets could not reveal which distribution routes were worthwhile and which were cutting into the company's profit margin. Under these circumstances, Snyder's could only use the sales data it collected to make rough predictions about how much of a product should be manufactured and how quickly a product run should be repeated on a particular distribution route. Snyder's market share had been growing steadily until 2002, when it suddenly stalled; its annual sales growth, which had outpaced the industry's for years, was then no better than average. It was time to leap forward to a more modern approach in which the company could react to data immediately.
In late 2002, Snyder's of Hanover solicited the help of Satori Group, a provider of business performance management solutions to the consumer packaged goods industry that is headquartered in Conshohocken, Pennsylvania. Satori Group demonstrated how Snyder's could implement its proCube software to gather better sales and marketing data and, therefore, make better business decisions. ProCube would automate Snyder's budgeting processes, creating accurate forecasting facilities, improving financial reporting techniques, and refining Snyder's product marketing analysis so that Snyder's could evaluate the viability of each of its individual brands and products. Such analytical power was just what Snyder's would need to compete with Rold Gold, which is backed by the corporate powerhouses of Frito-Lay and PepsiCo.
What Snyder's found so appealing about proCube was the ease with which it could be integrated with the company's existing information systems. ProCube enables Snyder's department heads to continue using Microsoft Excel spreadsheets to collect sales and returns data. These data are collected in a large data repository, where they are consolidated and organized before being used by proCube reporting software for analysis. The proCube software also uses manufacturing data from Snyder's enterprise system.
Snyder's financial department now spends a couple of days preparing those same monthly, quarterly, and yearly statements that used to devour weeks' worth of productivity. This is only the first step in what Snyder's hopes is a chain of improvements that will result in new growth.
The next step is to add new levels of detail to the profit and loss data that Snyder's can collect and report so that the company can track and assess the profitability of individual products. Management could then use the proCube software to find out information such as how many bags of Honey BBQ Pretzel Pieces were sold in Michigan last week, or which stores and delivery routes are best servicing customers who like this product. The system will also enable managers to project sales for their unit for the next quarter or next year.
Such a system requires additional work to implement. Dave Thomas, Snyder's director of information technology, noted that to achieve the desired level of detail in its data analysis, the company must study all of its business processes. A comprehensive review will enable Snyder's to determine what types of data result from their business processes and which data they actually want to use.
These system enhancements will eventually provide information enabling Snyder's to increase production and distribution frequency of its most popular products almost immediately, rather than having to wait for an end-of-the-month report. Likewise, production and shipping of less popular products can be curbed. In other words, Snyder's will be able change its business model from one dependent on forecasts to one that's more demand-driven.
The first two phases of the proCube implementation carried a price tag of approximately a quarter-million dollars. The next phase introduced a corporate portal to provide Snyder's department heads and executives with easier access to sales figures and distribution plans. The portal features a user-friendly Web interface through which managers can retrieve key data, as they require them. Upon completion, the cost of the entire venture should approach a half-million dollars.
Snyder's has also incorporated improved IT into other areas of its business. In 2003, Snyder's chose Gelco Trade Management Group's TMS Passport solution for its trade promotion funds management. Again, Snyder's found an IT solution that could be implemented quickly without sacrificing power. Gelco's TMS Passport promises a quick return on investment (ROI) for a competitively priced and scalable package. The package features fund management, deduction management, payments, and analysis and reporting capabilities. In turn, Snyder's is confident that it can effectively plan and manage its trade promotion activities for years to come, even as the business continues to expand.
The American consumer has continued to increase its intake of pretzels over the last decade, and the snack food industry as a whole continues to boom. Snyder's faces stiff competition from rival Frito-Lay and other major players in the snack food industry such as Utz, Kellogg's, and Kraft Foods. At the very least, Snyder's has made a sincere attempt to transform its business practices with an eye toward rocketing to the top of the boom. The question remains whether a family-owned organization can continue to compete with major corporate players in an industry that has yet to hit its ceiling.
Questions:
1. Assess Snyder's competitive standing in the pretzel and snack food industry.
2. What types of information systems are essential for this company?
3. How well did Snyder's information systems support its business? Explain.
4. How much did proCube improve Snyder's systems? Which management, organizational, and technology issues did it address? How does it provide value?
5. Assess the impact of Snyder's new systems on the way it runs its business and its business model. How much do these systems improve its competitive position?
ISO1
Introduction to Information Technology
Assignment II
Assignment code: 2012 IS01 B2 Last date of submission: 15th November 2012
Maximum marks: 100
Attempt all the questions. All question carry equal marks.
Section A
Q1.a) What is executive information system and what are its characteristics?
b) Explain the components and structure of a decision support system.
Q2. What is Strategic Information System? What type of models you will use to analyze an organization’s strategic position? Take an example of any Indian organization and explain how it will use IT in strategic analysis.
Q3.a) What is an Artificial Intelligence. Describe the role of AI in problem solving purpose of various business organizations?
b) What is data mining? Discuss various techniques of data mining in business applications with example.
Q4. Write the short notes on the following:
i. Electronic commerce
ii. Computer based supply chain management
iii. Client server architecture
iv. Bluetooth technology
v. IT ethics
Section B
CASE STUDY
99 Cents Only Stores: IT Infrastructure on a Budget
99 Cents Only Stores is one of the leading retailers in the deep-discount sales industry. The first 99 Cents Only Store opened in 1982, and as of March 31, 2006, the company operates 232 retail locations, including 164 in California, 36 in Texas, 21 in Arizona, and 11 in Nevada. The stores carry mostly name-brand general merchandise, including food and beverages, health and beauty aids, cleaning supplies, house wares, hardware, stationery, toys, gifts, pet products, and clothing.
The chain makes purchases from over a thousand suppliers, including such notables as General Electric, Colgate-Palmolive, General Mills, Johnson & Johnson, Procter & Gamble, Kraft, Nabisco, and Unilever. Stores cover an average of 22,000 square feet, and average $4.3 million in net sales per store. Overall, 99 Cents Only Stores experienced a 13 percent company-wide increase in sales in 2004, totaling $972 million. By 2006, total sales projected to over $1 billion.
The majority of products can be restocked regularly. 99 Cents Only Stores also feature close-out merchandise, which is not available for reorder. The deep-discount industry is characterized by the purchase of close-out and special opportunity merchandise at costs below wholesale. Deep-discount retailers pass the savings on wholesale from these purchases to customers, who are able to buy products at prices that are well below retail. There is increasing competition with other deep-discount retailers for this special-situation merchandise, and some competitors have more financial resources and buying power than 99 Cents Only.
99 Cents Only Stores' recipe for continued growth is to open more stores while expanding same-store sales and trying to wring more out of each dollar to keep profit margins higher than competitors. The company has set a target of expanding its store square footage by 25 percent every year and believes that the states in which it already operates have the potential to support over 400 stores. Approximately half of the new stores launched in 2004 were in Texas. These stores are serviced by a 741,000-square-foot distribution center near Houston that the company purchased for $23 million in 2003.
How does 99 Cents Only Stores manage its widespread chain of stores while keeping down costs? The answer is, with information technology, but on a budget. In 2003, despite opening 38 new stores and beginning operations in the new distribution center in Texas, the company's IT budget did not surpass $5 million. Although David Gold, 99 Cents Only's founder and chairman, resists computer technology in his own office, he knows that computers have played a large role in enabling his company to grow. Gold introduced Radio Shack TRS-80 personal computers to the business in the 1980s. Gold's son, Jeff, now president and COO, programmed the company's first order-entry and warehouse inventory systems on those computers.
Today the company obviously requires far more computing power. The task of choosing and implementing that power without breaking the bank fell to Robert Adams, vice president of information services for 99 Cents Only Stores. 99 Cents Only Stores is not a typical single price point business. The average 99 Cents Only Store is about five times larger than the industry standard and generates approximately four times more in sales than its competitors ($4.3 million to $1 million). 99 Cents Only Stores also differs from its competitors in its target customer demographic, even pursuing locations in high-income areas. David Gold says, "Rich people like to save money too, and they do it in higher volumes."
With these factors in mind, Robert Adams continues to improve and expand the company while keeping the clientele satisfied and not spending too much money. For example, he saved the company tens of thousands of dollars on database management software licenses by searching the Web for the best price available rather than simply defaulting to the usual vendor. Adams acknowledges that he is able to make such decisions because the company is family-owned and -run, which concentrates the power among only a few people. In fact, most projects that the company takes on are implemented rapidly because there are fewer people involved in the decision-making process.
At every step of the way, Adams evaluates actual cost versus business value to the company of every initiative, whether it involves technology, real estate, or the melding of the two. Because Adams has a programming background, when it comes time for the company to deploy a new system, he can effectively weigh the cost of purchasing software off the shelf against the cost of writing the software code himself or with his IT team. Because 40 percent of 99 Cents Only Stores' products flow through the inventory only once because they are close-out items, the company's systems need to be very flexible to deal with unique nonrepeating items in inventory. Given these parameters, Adams often finds that the cost of buying prepackaged software combined with the time and cost required to customize such software for the deep-discount business makes programming the company's systems in-house the better option.
One of Adams's greatest challenges was launching the company's new distribution center in Texas in 2003. The sale of the facility, which David Gold purchased for $23 million from Albertsons, included over 200,000 square feet of refrigerated storage, approximately 500,000 square feet of dry storage, forklifts, cabling, and furniture. Working with a tight time constraint, Adams had to decide between revising the warehouse management system he had designed for the company's distribution center in City of Commerce, California, so that it could be used in Texas and purchasing a system from a developer or vendor. Adams already knew that his own system would have to be replaced in California to keep up with the company's aggressive growth plans, so he set about finding a warehouse management system that allowed for the degree and ease of customization that his company would require.
In addition to carrying close-out merchandise that only goes through inventory once, 99 Cents Only Stores sometimes receives shipments of products that aren't exactly what the company ordered. However, as Adams says, "We have to accept it, get it to our stores, and turn it fast." A system that would lock out such shipments because of inflexible rules would be a hindrance to the business.
Adams found the flexibility he needed in HighJump Software's Supply Chain Advantage software. The HighJump package addressed all of the major concerns related to the operation of the new distribution center: quick implementation, high functionality (particularly in regard to receiving), adaptability, and interoperability with the advanced automation technology of the new distribution center. One of the most attractive aspects of the package was that it didn't force 99 Cents Only Stores to change its business processes to conform to the structure of the system.
Christopher Heim, who retired as president and CEO of HighJump in 2006, explains that his company basically developed a set of tools that enables users to build their own sets of functions according to the needs of their particular businesses, "almost akin to an Excel spreadsheet." The Supply Chain Advantage system is designed in such a way that users can make changes themselves instead of relying on IT specialists, the vendor, or outside sources to upgrade and manage the system. This is especially important to Adams, who likes to avoid recurring costs that can drain a company's budget.
HighJump developers worked with Adams and his staff to integrate the system with the specific needs of 99 Cents Only Stores, including a radio frequency identification (RFID) system and a voice-based inventory picking system. The Supply Chain Advantage package includes a warehouse management system, Warehouse Advantage, that tracks the status of every product during its time in the warehouse. Warehouse Advantage works closely with a Voxware voice-based picking system, which instructs warehouse employees known as "pickers" to retrieve products that need to be released from the warehouse for shipment to stores. The Voxware system also informs pickers when storage bins need to be refilled and where to find replenishments.
The Supply Chain Advantage software module called Yard Advantage manages the company's delivery trucks, directing them to the proper locations for loading or unloading and monitoring the inventory that each truck is carrying. Customer Service Advantage creates a portal that employees at 99 Cents Only Stores retail locations can use to check on scheduled shipments. Managers use Advantage Dashboard to monitor the performance of both facilities and workers using charts and graphs that update in real time. Event Advantage alerts warehouse managers to unforeseen problems in the supply chain before they can have a negative effect on profit margin.
Adams was sufficiently satisfied with HighJump's solutions to plan for implementation of the Supply Chain Advantage systems at his company's City of Commerce distribution center. The process of installing the systems in this California center could be more complex because the center operates three shifts and employees need retraining. Furthermore, the City of Commerce center already serves 150 of 99 Cents Only Stores' retail locations. When the Texas center went online, it was responsible for far fewer stores. Adams also decided that the receiving process in City of Commerce should undergo the conversion to the HighJump system first. Once that process functions smoothly, other functions will be added.
99 Cents Only Stores planned to have the City of Commerce distribution center running on HighJump technology beginning in the fall of 2004. The need for improved systems had become very apparent. In mid-2004, the company's stock price had fallen around 50 percent. One factor contributing to the falloff was that the California distribution center was working beyond its means, which decreased productivity, affected delivery schedules, and left stores unable to replenish their shelves. Overall the chain experienced lower same-store sales and increased sales of products with lower profit margins. By 2006, 99 Cents Only Stores was seeing positive trends in same-store-sales. The company did experience a loss in net income for the quarter ending September 30, 2006 as compared to 2005. This was due to $1.8 million in temporary labor costs to implement inventory control and initiatives, $2 million in expenditures for consulting and accounting related to the annual audit and Sarbanes-Oxley compliance requirements. The latter resulted in several delays in filing the company's Form 10-K for fiscal 2006.
99 Cents Only Stores has to regularly reevaluate its inventory control procedures and expand its warehouse capacity. To bolster the company's leadership, CEO Eric Schiffer announced an organizational realignment in November 2006. The distribution and transportation departments were placed under the wings of Jeff Gold, who was already in charge of store operations. Jim Parros came aboard to full the new position of Senior Vice President of Logistics. Buying and merchandise planning reported directly to Schiffer. 99 Cents Only Stores will continue to explore advanced information technology giving the highest priority to technology initiatives that promise the best return on investment (ROI). If a new project comes along that offers a better opportunity to improve the business, the company will shift gears even if the previous project has not been deployed fully. The company still receives most of the benefit of the first project, and doesn't miss out on a new opportunity. Can 99 Cents Only Stores continue to rely on the uneasy relationship between leading-edge technology and a bottom-line-oriented business to rebound from its recent struggles?
Questions:
1. Analyze 99 Cents Only Stores using the value chain and competitive forces models.
2. Evaluate the current business strategy of 99 Cents Only Stores in response to its competitive environment. What is the role of information technology infrastructure in that strategy? How does it provide value for 99 Cents Only Stores?
3. How effective is 99 Cents Only Stores' strategy for IT infrastructure investments? Explain your answer.
4. How successful have 99 Cents Only Stores' strategy and use of information systems been in addressing the company's problems? What kind of problems can they solve? What are some of the problems that they cannot address?
Introduction to Information Technology
Assignment I
Assignment code: 2012 IS01 B1 Last date of submission: 15th October 2012
Maximum marks: 100
Attempt all the questions. All question carry equal marks
Section A
1. What are the capabilities of Internet? Explain how an organization can gain competitive advantage by using these capabilities.
2. a) What is the difference between system software and application software? List various types of system software and application software. Explain each of them with example.
b) Explain various functions performed by an Operating System. What is the difference between client operating system and server operating system?
3. a) Write a note on the usage of information systems at various levels of an organization.
b) How does Information Technology is helping business going global?
4. a) What is database? How it is different from file system? What are its features?
b) Differentiate between LAN, WAN and MAN? List and explain various topologies used in network implementation.
Section B
CASE STUDY
Snyder's of Hanover: New Systems for an Old Family Company
Harry V. Warehime began tempting the taste buds of southern Pennsylvanians with his Hanover Olde Tyme Pretzels in 1909. Since then, Snyder's of Hanover, as the company came to be known, has expanded its business beyond any scope that its founder might have dared to imagine. Snyder's of Hanover remains a family-owned and family-run company, but it has become the world's second largest pretzel maker, with 12.1 percent of the pretzel market. Snyder's pretzel and chip varieties include Old Tyme Pretzels, Jalapeno Pieces, Butter Snaps, and EatSmart All Natural Veggie Crisps, as well as other popular snacks. In 2002, Snyder's posted revenues of $164 million, trailing only Rold Gold, the reigning champion of the pretzel industry.
In addition to manufacturing its complete line of snack foods, Snyder's distributes its own products, as well as those of other snack food companies such as Tasty Baking Company's Tastykakes. With 40 distribution facilities all over the United States and Europe, over 4,500 products, and over 150 product lines, the home office in Hanover, Pennsylvania, has a considerable amount of data to manage.
If there was one last vestige of old-fashioned business left at Snyder's, it was the company's method of managing and analyzing data. Although Snyder's sells more than 78 million bags of pretzels, chips, and organic snack items each year, some of its core systems were still heavily manual and paper-based.
Snyder's financial department was using electronic spreadsheets for much of its data-gathering and reporting. Lois Stambaugh, Hanover's financial analyst, would spend the entire final week of each month collecting Excel spreadsheets from the heads of more than 50 departments worldwide. Then she would consolidate and reenter all the data into another Excel spreadsheet, which would serve as the company's monthly profit-and-loss statement. The financial data were harvested and consolidated the same way at the end of each fiscal quarter and the end of each year.
The overwhelming presence of the human factor made data-entry mistakes a concern. If a department needed to update its data with last-minute information after submitting its spreadsheet to the main office, the head analyst had to return the original spreadsheet, and then wait for the department to resubmit its data, before finally entering the updated data in the consolidated document.
Perhaps most important, this system of gathering the company's financial statistics at regular, but infrequent, intervals meant that important data simply were not available as often as they were needed. Snyder's lacked the ability to react to sudden trends and unpredictable events because the data were supplied too late to adjust shipping schedules, pricing schedules, or delivery counts.
CEO Michael Warehime and his management team could track the gross profits of business units but not the performance of each of Snyder's 4,500-plus products and over 150 product lines. For example, the spreadsheet-based system lacked the detail to show whether a specific snack product such as Sourdough Hard Pretzels or Pumpernickel & Onion Sticks was actually making or losing money. For a business focused on both production and distribution, this was a hindrance to growth.
Additionally, the spreadsheets could not reveal which distribution routes were worthwhile and which were cutting into the company's profit margin. Under these circumstances, Snyder's could only use the sales data it collected to make rough predictions about how much of a product should be manufactured and how quickly a product run should be repeated on a particular distribution route. Snyder's market share had been growing steadily until 2002, when it suddenly stalled; its annual sales growth, which had outpaced the industry's for years, was then no better than average. It was time to leap forward to a more modern approach in which the company could react to data immediately.
In late 2002, Snyder's of Hanover solicited the help of Satori Group, a provider of business performance management solutions to the consumer packaged goods industry that is headquartered in Conshohocken, Pennsylvania. Satori Group demonstrated how Snyder's could implement its proCube software to gather better sales and marketing data and, therefore, make better business decisions. ProCube would automate Snyder's budgeting processes, creating accurate forecasting facilities, improving financial reporting techniques, and refining Snyder's product marketing analysis so that Snyder's could evaluate the viability of each of its individual brands and products. Such analytical power was just what Snyder's would need to compete with Rold Gold, which is backed by the corporate powerhouses of Frito-Lay and PepsiCo.
What Snyder's found so appealing about proCube was the ease with which it could be integrated with the company's existing information systems. ProCube enables Snyder's department heads to continue using Microsoft Excel spreadsheets to collect sales and returns data. These data are collected in a large data repository, where they are consolidated and organized before being used by proCube reporting software for analysis. The proCube software also uses manufacturing data from Snyder's enterprise system.
Snyder's financial department now spends a couple of days preparing those same monthly, quarterly, and yearly statements that used to devour weeks' worth of productivity. This is only the first step in what Snyder's hopes is a chain of improvements that will result in new growth.
The next step is to add new levels of detail to the profit and loss data that Snyder's can collect and report so that the company can track and assess the profitability of individual products. Management could then use the proCube software to find out information such as how many bags of Honey BBQ Pretzel Pieces were sold in Michigan last week, or which stores and delivery routes are best servicing customers who like this product. The system will also enable managers to project sales for their unit for the next quarter or next year.
Such a system requires additional work to implement. Dave Thomas, Snyder's director of information technology, noted that to achieve the desired level of detail in its data analysis, the company must study all of its business processes. A comprehensive review will enable Snyder's to determine what types of data result from their business processes and which data they actually want to use.
These system enhancements will eventually provide information enabling Snyder's to increase production and distribution frequency of its most popular products almost immediately, rather than having to wait for an end-of-the-month report. Likewise, production and shipping of less popular products can be curbed. In other words, Snyder's will be able change its business model from one dependent on forecasts to one that's more demand-driven.
The first two phases of the proCube implementation carried a price tag of approximately a quarter-million dollars. The next phase introduced a corporate portal to provide Snyder's department heads and executives with easier access to sales figures and distribution plans. The portal features a user-friendly Web interface through which managers can retrieve key data, as they require them. Upon completion, the cost of the entire venture should approach a half-million dollars.
Snyder's has also incorporated improved IT into other areas of its business. In 2003, Snyder's chose Gelco Trade Management Group's TMS Passport solution for its trade promotion funds management. Again, Snyder's found an IT solution that could be implemented quickly without sacrificing power. Gelco's TMS Passport promises a quick return on investment (ROI) for a competitively priced and scalable package. The package features fund management, deduction management, payments, and analysis and reporting capabilities. In turn, Snyder's is confident that it can effectively plan and manage its trade promotion activities for years to come, even as the business continues to expand.
The American consumer has continued to increase its intake of pretzels over the last decade, and the snack food industry as a whole continues to boom. Snyder's faces stiff competition from rival Frito-Lay and other major players in the snack food industry such as Utz, Kellogg's, and Kraft Foods. At the very least, Snyder's has made a sincere attempt to transform its business practices with an eye toward rocketing to the top of the boom. The question remains whether a family-owned organization can continue to compete with major corporate players in an industry that has yet to hit its ceiling.
Questions:
1. Assess Snyder's competitive standing in the pretzel and snack food industry.
2. What types of information systems are essential for this company?
3. How well did Snyder's information systems support its business? Explain.
4. How much did proCube improve Snyder's systems? Which management, organizational, and technology issues did it address? How does it provide value?
5. Assess the impact of Snyder's new systems on the way it runs its business and its business model. How much do these systems improve its competitive position?
ISO1
Introduction to Information Technology
Assignment II
Assignment code: 2012 IS01 B2 Last date of submission: 15th November 2012
Maximum marks: 100
Attempt all the questions. All question carry equal marks.
Section A
Q1.a) What is executive information system and what are its characteristics?
b) Explain the components and structure of a decision support system.
Q2. What is Strategic Information System? What type of models you will use to analyze an organization’s strategic position? Take an example of any Indian organization and explain how it will use IT in strategic analysis.
Q3.a) What is an Artificial Intelligence. Describe the role of AI in problem solving purpose of various business organizations?
b) What is data mining? Discuss various techniques of data mining in business applications with example.
Q4. Write the short notes on the following:
i. Electronic commerce
ii. Computer based supply chain management
iii. Client server architecture
iv. Bluetooth technology
v. IT ethics
Section B
CASE STUDY
99 Cents Only Stores: IT Infrastructure on a Budget
99 Cents Only Stores is one of the leading retailers in the deep-discount sales industry. The first 99 Cents Only Store opened in 1982, and as of March 31, 2006, the company operates 232 retail locations, including 164 in California, 36 in Texas, 21 in Arizona, and 11 in Nevada. The stores carry mostly name-brand general merchandise, including food and beverages, health and beauty aids, cleaning supplies, house wares, hardware, stationery, toys, gifts, pet products, and clothing.
The chain makes purchases from over a thousand suppliers, including such notables as General Electric, Colgate-Palmolive, General Mills, Johnson & Johnson, Procter & Gamble, Kraft, Nabisco, and Unilever. Stores cover an average of 22,000 square feet, and average $4.3 million in net sales per store. Overall, 99 Cents Only Stores experienced a 13 percent company-wide increase in sales in 2004, totaling $972 million. By 2006, total sales projected to over $1 billion.
The majority of products can be restocked regularly. 99 Cents Only Stores also feature close-out merchandise, which is not available for reorder. The deep-discount industry is characterized by the purchase of close-out and special opportunity merchandise at costs below wholesale. Deep-discount retailers pass the savings on wholesale from these purchases to customers, who are able to buy products at prices that are well below retail. There is increasing competition with other deep-discount retailers for this special-situation merchandise, and some competitors have more financial resources and buying power than 99 Cents Only.
99 Cents Only Stores' recipe for continued growth is to open more stores while expanding same-store sales and trying to wring more out of each dollar to keep profit margins higher than competitors. The company has set a target of expanding its store square footage by 25 percent every year and believes that the states in which it already operates have the potential to support over 400 stores. Approximately half of the new stores launched in 2004 were in Texas. These stores are serviced by a 741,000-square-foot distribution center near Houston that the company purchased for $23 million in 2003.
How does 99 Cents Only Stores manage its widespread chain of stores while keeping down costs? The answer is, with information technology, but on a budget. In 2003, despite opening 38 new stores and beginning operations in the new distribution center in Texas, the company's IT budget did not surpass $5 million. Although David Gold, 99 Cents Only's founder and chairman, resists computer technology in his own office, he knows that computers have played a large role in enabling his company to grow. Gold introduced Radio Shack TRS-80 personal computers to the business in the 1980s. Gold's son, Jeff, now president and COO, programmed the company's first order-entry and warehouse inventory systems on those computers.
Today the company obviously requires far more computing power. The task of choosing and implementing that power without breaking the bank fell to Robert Adams, vice president of information services for 99 Cents Only Stores. 99 Cents Only Stores is not a typical single price point business. The average 99 Cents Only Store is about five times larger than the industry standard and generates approximately four times more in sales than its competitors ($4.3 million to $1 million). 99 Cents Only Stores also differs from its competitors in its target customer demographic, even pursuing locations in high-income areas. David Gold says, "Rich people like to save money too, and they do it in higher volumes."
With these factors in mind, Robert Adams continues to improve and expand the company while keeping the clientele satisfied and not spending too much money. For example, he saved the company tens of thousands of dollars on database management software licenses by searching the Web for the best price available rather than simply defaulting to the usual vendor. Adams acknowledges that he is able to make such decisions because the company is family-owned and -run, which concentrates the power among only a few people. In fact, most projects that the company takes on are implemented rapidly because there are fewer people involved in the decision-making process.
At every step of the way, Adams evaluates actual cost versus business value to the company of every initiative, whether it involves technology, real estate, or the melding of the two. Because Adams has a programming background, when it comes time for the company to deploy a new system, he can effectively weigh the cost of purchasing software off the shelf against the cost of writing the software code himself or with his IT team. Because 40 percent of 99 Cents Only Stores' products flow through the inventory only once because they are close-out items, the company's systems need to be very flexible to deal with unique nonrepeating items in inventory. Given these parameters, Adams often finds that the cost of buying prepackaged software combined with the time and cost required to customize such software for the deep-discount business makes programming the company's systems in-house the better option.
One of Adams's greatest challenges was launching the company's new distribution center in Texas in 2003. The sale of the facility, which David Gold purchased for $23 million from Albertsons, included over 200,000 square feet of refrigerated storage, approximately 500,000 square feet of dry storage, forklifts, cabling, and furniture. Working with a tight time constraint, Adams had to decide between revising the warehouse management system he had designed for the company's distribution center in City of Commerce, California, so that it could be used in Texas and purchasing a system from a developer or vendor. Adams already knew that his own system would have to be replaced in California to keep up with the company's aggressive growth plans, so he set about finding a warehouse management system that allowed for the degree and ease of customization that his company would require.
In addition to carrying close-out merchandise that only goes through inventory once, 99 Cents Only Stores sometimes receives shipments of products that aren't exactly what the company ordered. However, as Adams says, "We have to accept it, get it to our stores, and turn it fast." A system that would lock out such shipments because of inflexible rules would be a hindrance to the business.
Adams found the flexibility he needed in HighJump Software's Supply Chain Advantage software. The HighJump package addressed all of the major concerns related to the operation of the new distribution center: quick implementation, high functionality (particularly in regard to receiving), adaptability, and interoperability with the advanced automation technology of the new distribution center. One of the most attractive aspects of the package was that it didn't force 99 Cents Only Stores to change its business processes to conform to the structure of the system.
Christopher Heim, who retired as president and CEO of HighJump in 2006, explains that his company basically developed a set of tools that enables users to build their own sets of functions according to the needs of their particular businesses, "almost akin to an Excel spreadsheet." The Supply Chain Advantage system is designed in such a way that users can make changes themselves instead of relying on IT specialists, the vendor, or outside sources to upgrade and manage the system. This is especially important to Adams, who likes to avoid recurring costs that can drain a company's budget.
HighJump developers worked with Adams and his staff to integrate the system with the specific needs of 99 Cents Only Stores, including a radio frequency identification (RFID) system and a voice-based inventory picking system. The Supply Chain Advantage package includes a warehouse management system, Warehouse Advantage, that tracks the status of every product during its time in the warehouse. Warehouse Advantage works closely with a Voxware voice-based picking system, which instructs warehouse employees known as "pickers" to retrieve products that need to be released from the warehouse for shipment to stores. The Voxware system also informs pickers when storage bins need to be refilled and where to find replenishments.
The Supply Chain Advantage software module called Yard Advantage manages the company's delivery trucks, directing them to the proper locations for loading or unloading and monitoring the inventory that each truck is carrying. Customer Service Advantage creates a portal that employees at 99 Cents Only Stores retail locations can use to check on scheduled shipments. Managers use Advantage Dashboard to monitor the performance of both facilities and workers using charts and graphs that update in real time. Event Advantage alerts warehouse managers to unforeseen problems in the supply chain before they can have a negative effect on profit margin.
Adams was sufficiently satisfied with HighJump's solutions to plan for implementation of the Supply Chain Advantage systems at his company's City of Commerce distribution center. The process of installing the systems in this California center could be more complex because the center operates three shifts and employees need retraining. Furthermore, the City of Commerce center already serves 150 of 99 Cents Only Stores' retail locations. When the Texas center went online, it was responsible for far fewer stores. Adams also decided that the receiving process in City of Commerce should undergo the conversion to the HighJump system first. Once that process functions smoothly, other functions will be added.
99 Cents Only Stores planned to have the City of Commerce distribution center running on HighJump technology beginning in the fall of 2004. The need for improved systems had become very apparent. In mid-2004, the company's stock price had fallen around 50 percent. One factor contributing to the falloff was that the California distribution center was working beyond its means, which decreased productivity, affected delivery schedules, and left stores unable to replenish their shelves. Overall the chain experienced lower same-store sales and increased sales of products with lower profit margins. By 2006, 99 Cents Only Stores was seeing positive trends in same-store-sales. The company did experience a loss in net income for the quarter ending September 30, 2006 as compared to 2005. This was due to $1.8 million in temporary labor costs to implement inventory control and initiatives, $2 million in expenditures for consulting and accounting related to the annual audit and Sarbanes-Oxley compliance requirements. The latter resulted in several delays in filing the company's Form 10-K for fiscal 2006.
99 Cents Only Stores has to regularly reevaluate its inventory control procedures and expand its warehouse capacity. To bolster the company's leadership, CEO Eric Schiffer announced an organizational realignment in November 2006. The distribution and transportation departments were placed under the wings of Jeff Gold, who was already in charge of store operations. Jim Parros came aboard to full the new position of Senior Vice President of Logistics. Buying and merchandise planning reported directly to Schiffer. 99 Cents Only Stores will continue to explore advanced information technology giving the highest priority to technology initiatives that promise the best return on investment (ROI). If a new project comes along that offers a better opportunity to improve the business, the company will shift gears even if the previous project has not been deployed fully. The company still receives most of the benefit of the first project, and doesn't miss out on a new opportunity. Can 99 Cents Only Stores continue to rely on the uneasy relationship between leading-edge technology and a bottom-line-oriented business to rebound from its recent struggles?
Questions:
1. Analyze 99 Cents Only Stores using the value chain and competitive forces models.
2. Evaluate the current business strategy of 99 Cents Only Stores in response to its competitive environment. What is the role of information technology infrastructure in that strategy? How does it provide value for 99 Cents Only Stores?
3. How effective is 99 Cents Only Stores' strategy for IT infrastructure investments? Explain your answer.
4. How successful have 99 Cents Only Stores' strategy and use of information systems been in addressing the company's problems? What kind of problems can they solve? What are some of the problems that they cannot address?
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