Peak Experience and Strategic IT Alignment at Vermont Teddy Bear.

Peak Experience and Strategic IT Alignment at Vermont Teddy Bear. Paper details: Please analyze Peak Experiences and Strategic IT Alignment At Vermont Teddy Bear: the case study should be double-spaced, 1-inch margin all around, 12 point font. Add headlines through analyzing the case study like introduction, ........., conclusion. Answer the following questions: 1. How would you describe Vermont Teddy Bear (VTB)’s business model (the products and services it sells, target markets to whom it sells the, the value proposition it offers, and its financial model? 2. How strong are VBT’s operational capabilities, given their chosen business model? What challenges do they face during so-called peak experiences? 3. How strong are VBT’s information systems, given their strategic and operational needs? If you were a member of the Board of Directors, what concerns would you have about the IT architecture? 4. At a time when cash reserves were quite limited, Bob Stetzel wants “an efficient, well organized enterprise IT architecture that could serve as a robust platform for the company’s changing business requirements.” Given your analysis in response to the previous questions, and any other aspects you consider important in this case, what specific, actionable and cost effective advice can you suggest? Add any figure, graphics or table to highlight some point in the case study on non count it page or separate attachment. use 5 sources, here are two sources: 1- the book. Austin, Robert D., Richard L. Nolan, and Shannon O'Donnell. The Adventures of an IT Leader. Harvard Business Press, 2009. 2- the case study I uploaded it. Case Study Rubric Criteria     Outstanding (3)    Above Average (2)     Average (1)     Poor (0) Main theme or idea is introduced    Stated clearly    is stated    illustrated    not stated Relates to course content or discussion and Analysis    frequent use of relevant frameworks    Some critical review rehashes data in case    Little or no use of relevant frameworks / analysis Conclusion is made.    Stated clearly    is stated    illustrated    not stated Exhibits    Correct and support & add to key points    correct    Poor    None References    Quotes with citations    Used one outside reference    Used only case study    No references Format    Answered all questions    Answered most questions    Answered some questions    Did not answer questions Grammar and Spelling    error free    errors do not interfere with meaning    few errors    Errors Teaching  case Peak  experiences  and  strategic  IT alignment  at  Vermont  Teddy  Bear Janis L Gogan, Mark O Lewis Bentley University, Waltham, Massachusetts, USA Correspondence: JL Gogan, Bentley University, Waltham, Massachusetts, USA. Tel: þ 781 891 2098; Fax: þ 781 891 2949; E-mail: [email protected] Abstract In winter 2010 Bob Stetzel, the new Chief Information Officer (CIO) at Vermont Teddy Bear (VTB), hopes to replace or modernize many of the company’s existing systems and invest in some new applications. This catalog marketer (via online and print catalogs) offers three separately managed brands: Vermont Teddy Bear (VTB), PajamaGrams, and Calyx Flowers. Sales are highly seasonal, with peak volumes at Christmas, Valentine’s Day and Mother’s Day. Stetzel has spent his first few months on the job cataloging systems and databases, learning about the ‘spider web’ of middleware connecting various applications and platforms, and locating employees with expertise to fix them. The company has survived an economic downturn and several costly strategic missteps. The CEO is seeking new sources of revenue and ways to leverage their well-known brand, while the CIO needs to set Information Technology ( IT ) priorities: should they invest in a full-featured Enterprise Resource Planning (ERP) package or take other steps that would more quickly yield tangible results? Whatever choice he makes, Stetzel will have to convince the CEO and the Board of Directors to provide the necessary resources. This case provides students with an opportunity to place themselves in the shoes of a CIO wrestling with strategic IT alignment challenges at a time when resources are severely constrained and competitive rivalry is fierce. Journal of Information Technology Teaching Cases Keywords: strategic IT alignment; IT governance; IT planning; e-commerce Introduction Bob Stetzel, Vice President of Information Technology (IT) at Vermont Teddy Bear (VTB), walked a tranquil path from his car to his Shelburne, Vermont office early one morning in mid-February 2010. The landscape outside his office, and the White Mountains beyond, were blanketed in a coating of fresh snow. Just a few days before, the scene was not tranquil at all; a small army of nearly 2000 temporary employees had descended on the company’s multi-building campus to help process and pack gifts ordered by tens of thousands of customers for delivery to their sweethearts for Valentine’s Day. Bob and his seven person IT organization had worked feverishly behind the scenes, ensuring that the company’s information systems could handle the surge in orders for pajamas, custom teddy bears, flowers and other gifts, placed via telephone, mail-order, and the Web. There were a few tense moments when the system – comprising a mix of homegrown and packaged applications from a variety of vendors, and knit together with middleware – occasionally ‘paused’ when its capacity was strained. Fortunately, his team – veterans of past Valentine’s Day ‘peak experiences’ – helped patch things together and ensured that nearly all orders were processed and delivered on time. Recognizing that customer retention was an important goal, Stetzel was relieved that most customers were happy with the service they received during the Valentine’s rush. Stetzel had been hired in November 2009 – just in time for a Christmas rush which included several tense moments as the systems struggled to handle a surge in orders. He hoped that before winter 2011 rolled around, his team could tame the complicated middleware and make progress toward an efficient, well-organized enterprise IT architec- ture that could serve as a robust platform for the company’s changing business requirements and support their long- term strategic and operational needs. Meanwhile, Stetzel knew he could expect another frenzy of activity in early Journal of Information Technology Teaching Cases (2011) 1, 61–70 & 2011 JITTC Palgrave Macmillan All rights reserved 2043-8869/11 palgrave-journals.com/jittc/ JIT0 31 For the exclusive use of o. Bahkali, 2015. This document is authorized for use only by omniah Bahkali in IT 580 SUMMER 2015 taught by Schaeffer, Marymount University from May 2015 to August 2015. May, when orders would peak just before Mother’s Day (second Sunday in May). Software bugs that had been identified during the Valentine’s rush needed to be fixed by members of his team before this next peak experience. Stetzel also wanted to carve out time in March and April to sort out his priorities for the IT organization so that the relatively calm days between June and November (when there were no major holidays to cause orders to suddenly surge) could be put to good use modernizing the aging and complex systems on which the company relied. What project to do first? Should he oversee the selection of new enterprise software to replace the accounting systems responsible for order-entry, sales, and inventory management? This would replace a lot of problematic middleware, but at a high cost. Would it be better to focus on  building  or  buying  new supply-chain  software  to enhance operational capabilities, enabling raw materials and finished goods to be more efficiently procured from vendors around the world? Should the company acquire or build a Customer Relationship Management (CRM) pack- age that would help them serve customers well across multiple product lines (bears, pajamas, flowers, other gifts) and channels (stores, mail-order, web, telephone)? Stetzel also wanted to build a new data warehouse and beef up the business analytics capabilities that were needed for effective marketing. Clearly, his team could not possibly accomplish all these things in one 6-month period. Besides, the company’s cash reserves were quite limited in this tough economic environment. Difficult choices would need to be made soon, and a plan devised to get the job done. As Bob Stetzel mulled over these concerns, CEO John Gilbert tapped on his door. ‘Do you have a moment, Bob? I learned some interesting things at last week’s Toy Fair (American International Toy Fair, held in New York City) that might affect our business – and perhaps your information systems. Vermont Teddy Bear company background 1981 : VTB was founded by John Sortino, who sold teddy bears from a pushcart in a Burlington, Vermont open-air mall. The company nearly went bankrupt around 1990, but recovered when Sortino introduced a ‘Bear-Gram’ service, promoted via radio advertisements in the New York City area.  Customers  (mostly  men  buying  for  wives  or girlfriends) phoned 1-800-829-BEAR to order a ‘persona- lized’ bear (choosing from several colors of bears and about 100 costumes such as tutus, wedding gowns, fire fighter and doctor or nurse outfits). The bear was shipped in a decorated hatbox with ‘air holes’ and a note from a ‘Bear Counselor.’ The market response to this promotion was impressive; revenues grew from less than $2 million in 1990 to $17 million in 1993, allowing VTB to raise $10 million in an initial public offering and earning it a ranking of number 21 in Inc. Magazine’s listing of American’s fastest-growing public companies. Despite the initial success of the Bear-Gram service, numerous challenges threatened the company’s survival. Although radio advertising and a toll-free phone number generated lots of orders for teddy bears as gifts for Valentine’s and Mother’s Day (80% were purchased by adults for other adults), it was less cost-effective at other times of the year. In an attempt to induce adults to buy teddy bears for children throughout the year, the company began to sell through high-end toy stores such as FAO Schwarz, department stores such as Bloomingdales, and more than 200 gift shops. VTB also opened company- owned stores in New York City and Freeport Maine. Unfortunately,  these  expensive  moves  combined  with construction of a new company headquarters in Shelburne Vermont,  entailed  high  expenses  (leasing  space  for company stores cost $600,000 a year), which were not sufficiently offset by sales. 1997 – 1999 : A new CEO, Elisabeth B Robert, closed the company stores (except the factory store in Shelburne) and launched a ‘Make-a-Friend-for-Life’ venture with retailer Zany Brainy: in-store machines assembled and stuffed personalized bears (similar to Build-a-Bear Workshops, a competitor). 1999 sales reached $21.5 million. 2001 – 2003 : 2001 sales reached $37 million. Retail partner Zany Brain filed for bankruptcy, but Robert was not worried by this development, since ‘we’re not a retailer; we’re in the gift delivery service business (Helmich, 2002). She re-focused VTB on direct marketing via telephone and website  (55%  of  Bear-Gram  orders  originated  online, 44% by phone). Producing about 450,000 bears per year in Vermont, VTB continued to target both children and adults.About65%oforderswerefrommen,with30%of annual sales for Valentine’s Day (February 14). Their biggest customer was ‘Late Jack,’ an internal moniker describing men who ordered bears at the last minute instead of buying flowers or chocolates for girlfriends, wives, or mothers. To increase sales to women and to generate orders at other times of the year, VTB developed Gift Bag Boutique (handbags and gift baskets of food, accessories, and/or pajamas). In 2003, the company acquired high-end florist Calyx & Corolla (renamed Calyx Flowers). 2005 – 2008 : VTB reverted to private ownership. Revenues reached $66 million (Bears led at $31 million, followed by Flowers at $17.5 million and Pajamas at $14.5 million. Corporate sales, TastyGram, and other sources contributed the rest). Pressures intensified from strong competitors like 1-800-Flowers (which also sells gifts). The marketing VP expressed concern about demographic trends such as a drop in the number of young adult males (Exhibit 1). VTB dropped several product lines. Three remained: Bears, PajamaGrams, and Calyx Flowers. Right after Valentine’s Day, 2008, 15 employees were laid off. In September Elizabeth Robert resigned, a month before an October stock market crash that reverberated worldwide. Interim CEO William York, a veteran of LL Bean and Dell, served during a time of further retrench- ment. 2008 sales totaled about $75 million. 2009 : A January press release announced VTB laid off 35 more  employees.  VTB  retained about  200  employees; during three peak seasons (Christmas, Valentine’s Day, Mother’s Day) temporary employees were hired. In March 2009, John Gilbert joined VTB as its new CEO, having previously served as Chief Marketing Officer for TJX Companies and in marketing positions at Dunkin Donuts, Pepsi, Coca Cola, and elsewhere. In a press release Peak experiences and strategic IT alignment JL Gogan and MO Lewis 62 For the exclusive use of o. Bahkali, 2015. This document is authorized for use only by omniah Bahkali in IT 580 SUMMER 2015 taught by Schaeffer, Marymount University from May 2015 to August 2015.