Tag Archive | Busines Model

Tired of waiting at what is supposed to be a fast-food restaurant?

As part of the Digital Transformation Project, we are proposing the implementation of a pre-ordering smartphone application for McDonalds Netherlands. On the base of our study conducted with university students living in Rotterdam, a pre-ordering application would be very well perceived at a fast-food chain like McDonald’s. Respondents indicated that, even they associated McDonald’s with quick service, they still had to wait up to 10 minutes for their food. The implementation of an app, that would take care of the ordering, as well as the payment in advance, would highly increase time-efficiency at the restaurants for consumers, as well as employees.

This digital transformation would go in line with McDOnald’s business model in terms of a reciprocal relationship since the implementation of a pre-ordering service would increase time-efficiency, which is a big part of McDonald’s business model. Being an IS Innovator (as they typically are one of the first companies to apply new technologies, as it was the case with NFC bank card payment), the prer-ordering app would moreover enable McDonald’s to secure its market leadership through fostering a relatively new type of innovation. Few companies in the industry have already applied such applications, however, more and more are joining the trend. In order to reassure its market position, McDonald’s should join the trend rather sooner than later.

The application is proposed for the Dutch market, where consumers are very much focused on time efficiencies and are very familiar with the use of smartphones, which leads to the assumption that the application will be accepted and anticipated by consumers. According to McDonald’s, the Dutch market furthermore shows great potential for growth, making it the ideal starting point for the introduction of such an application. The conducted survey confirmed these assumptions since a great majority of respondents indicated that they would make use of such an application if this would mean they would not have to wait for their ordered food.

As for any innovation, financial factors are important to be considered. The cost of the application, including the creation costs, the costs oft he IT expert team, the neccessary machines, and the marketing costs in order to raise awareness about this new ordering channel, are estimated to be approximately US$ 4,650,000. However, McDonald’s can be assumed to have enough financial resources to finance the development and implementation of the suggested application. Furthermore, its in-house tech team can decrease the costs for most kinds of technical issues.

In the end, there are also risks associated with the implementation of a new app, primarily stemming from its development, launch, user surface, and technical quality.

Those risks could involve no interest of acceptance by customers, and therefore more losses than revenues financially. There is furthermore the risk that franchisees will go against the company and not want to buy a license and install the use of the application. Finally, problems could surface due to technical issues, feasibility, and ease of use for certain smartphone operating systems and due to the competitors being further along in the innovation process which applications already further developed, which would turn McDonald’s into a laggard for innovation.

However, overall the implementation of such information technology has great potential and should not be offset because of the possible risks. McDonald’s should implement this application in order to not fall behind in the Industry, where other companies are already successfully employing such technology, and to improve their time efficiency, which is a crucial part of their business.

Team 34

Advertisements

Digital Transformation Project – Hotel Okura Amsterdam

Imagine entering your hotel room after a long flight. You are hungry and tired, but realized you forgot to make a reservation in your favourite restaurant within the hotel. You turn on the television, and you are greeted by a message stating that there are still two more tables left in your favourite restaurant. You indicate that you would like to reserve a table for that evening. When unpacking your suitcase, another notification pops up, asking you whether or not you would like to order a steaming cup of hot chocolate, as you have regularly ordered after a long flight.

mockup okura

Hotel Okura Amsterdam (HOA) is a five-star Japanese hotel located in Amsterdam. HOA recently acknowledged the urge for an interdepartmental IT system integration to improve personalization and therewith customer satisfaction; the company currently operates 40 different operating systems. These insight together with many others were obtained during an in-depth interview on business and IT strategy with Okura’s Rooms, Engineer and IT manager. The business strategy of HOA is dedicated to being ‘’Unique and Complete’’, making striving for a high level of customer satisfaction key; a question in this is how a customer can be convinced of the uniqueness of HOA.

The interview brought to light that the non-integrated structure results in inefficiency. Each division registers its own data and information between divisions is transferred verbally instead of it being retrievable from a centralized data system; many opportunities are lost due to this. The current business strategy is to be improved by integrating an IT infrastructure with IT related processes. The proposed solution therefore strives for a high level of integration. However, due to the issue of scale and the importance of (financial) feasibility of the project, the first generation will solely focus on combining the F&B (Food & Beverage) system with the hotel room system. The solution itself, the infotainment which is further explained below, does have a long term focus of eventually integrating all of Okura’s 40 different operating systems.

The trends of superpersonalization and big data to enhance customer value, in combination with the need for responsive service and modern facilities in the room (current guest satisfaction regarding room technology is low), result in the following proposed solution. To cater for the business need of HOA, we propose to provide real-time personalized information in the hotel room of the guest through a television application. Various systems will be able to communicate with each other and can provide the guests with useful information (or upselling). The system will include the reservation process for the restaurants, the room service information and the room service ordering process. The F&B is initially focused on as this is the main source of income from hotel guests for HOA and it limits the initial investment. Additional functionalities can be added at a later stage.

Authors (BIM2015 – Team 6): 

  • Stéphanie Visser – 407153
  • Job Deibel – 407756
  • Dirk Breeuwer – 329445
  • Jord Sips – 421144
  • Colin van Lieshout – 414788

Digital Transformation Project: Elsevier and the cloud

Elsevier is a world-leading scientific publishing company and offers over 2,500 unique journals and more than unique 33,000 book titles (Elsevier, 2015). These offerings are unique and therefore differentiate them from the competition. Additionally, Elsevier offers web-based, digital solutions, such as ScienceDirect, Scopus, and Reaxys. These unique services enable researchers, students and other individuals to better consult the content made available by Elsevier (and other publishers). These solutions are just an example of all the Internet features Elsevier tries to implement into their business fundamentals. Currently, Elsevier’s business is shifting from scientific publisher towards a professional information solutions provider. Elsevier’s CEO Ron Mobed is encouraging the business to ‘Lead the way’ (Mobed, 2014). From this corporate vision, we can infer that Elsevier is striving to implement new technologies in order to disrupt the publishing industry.

To generate revenue, Elsevier mainly sells access to scientific journals to its customers. The value proposition Elsevier offers is that they consult the institution how to generate revenue with their services. The demonstration of this value proposition is done on a yearly basis by Sales directly to the institution. However, these business-to-business negotiations are transforming due to emerging technologies, which for example result in the increase of consumer informedness (Li et al., 2014).

To control this transformation (e.g. consumer informedness) and provide other complications regarding technology development, we propose an online application driven by cloud computing. It is an online platform where the institution can login, create and adjust similar metrics as currently shown by Sales. This innovation will further expand the current concept of Elsevier’s value to the institutions, but will introduce risk since institutions are not required to contact Elsevier anymore for these metrics. The same focus will remain, where not only the value of their investment in Elsevier is presented, but also how Elsevier’s services contribute the institution‘s revenue through an increased institutional competitiveness and collaboration among researchers. Competitiveness will help the institution to gain a better market position and earn more out of four sources: block funding, project funding, commercial monetization, and tuition and endowment. Collaboration among researcher will improve the quality of their research, which will lead to better publications and will result in more value for the institution. In conclusion, the online application will lead to more captured value for Elsevier and lead to more value and revenue for the institution.

References

Elsevier, 2015. At a Glance. [Online] Available at: https://www.elsevier.com/about/at-a-glance [Accessed 7 October 2015].

Li, T. et al., 2014. Consumer Informedness and Firm Information Strategy. Information Systems Research, 25(2), pp.345–63.

Mobed, R., 2014. Elsevier’s vision. Amsterdam, Netherlands: Elsevier. Internal employee presentation.

A Thin Revolution

Without any doubt, everyone within this blog has already heard about the concept of outsourcing. In this post, I am going to write about a particular product, that has incredible potentiality: the thin client.

I firstly got in touch with the concept of thin client when I was reading the book: The Big Switch written by Nicholas Carr. In its book, the author does an interesting parallelism between the diffusion of the electricity and the computers, forecasting the computing to become soon an utility. According to him, the next big change will be the outsourcing of the computers, as a matter of fact he predicts a bright future for the so called as-a-service-models (in particular in his book he speaks of SaaS and HaaS). In its chapter 4, called: Goodbye, Mr. Gates, he explains how this is going to be possible: through the use of thin clients. Thin clients are stateless, fanless desktop terminal that has no hard drive. They works thanks to a connection with a data centre (which could be proprietary or also outsourced), which allow the users to have all features typically found on the desktop PC, including applications, sensitive data, memory, etc. In other words, the thin client allow users to perform, in most of the occasion, as they would do with a personal computer. The only case in which normal computers are better, is when it comes to very intensive and demanding applications, such as AutoCAD, this is due to the absence of hardware.

bbb
Figure 1: In this image we can see how different workstations (speakers, mouse, keyboard, monitor), thanks to the thin clients, can be setted to perform the same functions of normal PCs.

Thin clients are linked to a single powerful host machine, which can run multiple operating systems and multiple applications on the same server at the same time. This is possible only thanks to the use of virtualization, i.e. a software that separates physical infrastructures to create various dedicated resources.

Creating such an infrastructure has several benefits for a company:

1) Lower Operational Costs: An office environment where several workstations are involved can access a single server unit, thereby reducing the operational costs covering these related actions:

  • Setting up the device takes less than ten minutes to accomplish.
  • The lifespan of a “client” unit is very long, since there are no moving parts inside. The only parts that need constant replacements are the peripherals that are external to the PC. This means that when something breaks at the “client’s” end, it can be as easy as taking a replacement unit to replace the broken one. Even wear and tear is considerably unnoticeable.
  • Energy efficiency – A slim unit is said to consume 20W to 40W as opposed to the regular thick PC, where power consumption during operation mode consumes 60W to 110W. In addition, the thin PCs need little or no air conditioning at all, which literally means less operating costs. Whatever air conditioning needed is demanded and supplied at the server area.
  • Work efficiency – Its work environment can be far-reaching and extensive; as it can provide quick access to remotely located workers simultaneously operating on server-based computing.

2) Superior Security: Since users will only have access to the server by network connections, security measures like different access levels for different users can be implemented. That way, users with lower access levels will not be able to see, know, or in worst case scenarios, hack into the confidential files and applications of the entire organization. They are all secured at the server’s end, which is also a way of securing data files in the event of natural disasters. The servers will be the only machines that need to survive the disaster as the main location of all the saved data. Immediately after the disaster, new “clients” can easily be connected to the server, for as long as the latter remains intact.

3) Lower Malware Infection Risks: There is a very slim chance of getting malware on the server from a thin client because inputs to the server only come from the keyboard, mouse actions, and screen images. The PCs get their software or programs from the server itself; hence, patches, software updates and virus scanning applications are being implemented only on the server’s end. It follows that the servers will be the one to process information and store the information afterwards.

4) Highly Reliable: Business organizations can expect continuous service for longer durations since thin clients can have a lifespan of more than five years. In as much as these units are built as solid state devices, there is less impact from wear and tear through constant use.

5) Space Savings: the small dimension of a thin client allow to have a better workplace with more space for the normal working activities.

bbb

Figure 2: An HP t420 Thin Client

Of course the thin clients have some downsides such the fact they have to be always connected and that a powerful central host machine is needed, but for companies which have to bear expenses for setting up an IT infrastructure the thin clients could be a real revolution.

Sources:

Carr, N. G. (2008). The big switch: Rewiring the world, from Edison to Google. WW Norton & Company.

http://www.devonit.com/thin-client-education

http://www.businessnewsdaily.com/5791-virtualization-vs-cloud-computing.html#sthash.BkbfScvb.dpuf

http://www8.hp.com/us/en/thin-clients/t420.html#!&pd1=1

http://www.thinclientbrasil.com/thin-client/como-funciona-thin-client.php

http://www.brighthub.com/environment/green-computing/articles/66417.aspx

YouTube vs. Vimeo

YouTube and Vimeo are part of the electronic market of online video hosting. They operate in the same market and offer the same services, albeit at different levels of quality and at different prices. The cost structures are very similar, as are their distribution channels. But why is YouTube so much bigger then Vimeo, if their business models are so similar? First, both companies will be introduced, thereafter we will explain the differences in performance.

YouTube is a video sharing platform, primarily based on user-generated content. Since its foundation in early 2005, it has grown into the largest online video streaming service in the world, with a staggering 71.5% market share – measured in terms of unique users – in June 2015 (Statista, 2015). Today, YouTube accounts for billions of views by millions of users daily (YouTube Press, 2015). YouTube was taken over by Google in 2006.

Vimeo, founded in 2004 and bought by IAC in 2006, situates itself as a video sharing website, rather than a hosting website. Its focus is on sharing creative work and personal moments with a supportive community (Vimeo, 2015a).  With a US market share of 0.9% (Statista, 2015) Vimeo satisfies a small niche market, compared to larger competitors such as YouTube.

The initial focus of both companies differs: YouTube is focusing on the viewers, by providing them with as much content as possible. The focus of Vimeo is different: they focus on the uploaders and constructive feedback for them. This difference may explain why Vimeo is charging their uploaders, while YouTube does not. This focus of Vimeo led to a higher quality of video’s on Vimeo’s platform. Despite this, the price-sensitivity of the consumer makes YouTube more attractive, as shown in the market shares (71.5% vs. 0.9%).

Another difference between the companies is the corporate structure. YouTube is a part of Google and can therefore rely on the deep pockets of the parent company. The parent company of Vimeo is IAC, which is much smaller than Google.

While YouTube and Vimeo have access to the same distribution channels, the usage is ultimately dependent on their users and uploaders. With YouTube enjoying a larger market share, the company has a stronger brand awareness and will be used most often by the users through those distribution channels, despite the fact that Vimeo is available too.

Taking into account these fundamental differences, we believe that YouTube has a distinct advantage over Vimeo, despite the fact YouTube’s operations are not profitable. We believe that in the long term, YouTube will continue to grow and erode the profitability of competitors through their predatory pricing, supporting further growth and the conquering of additional market share. Vimeo may be able to satisfy the long tail of the market for another while, backed by increased network effects and electronic brokerage effects, stronger brand awareness and increasing price sensitivity, YouTube will inevitably steal away Vimeo’s users in time.

Group 28

Christian van Gelder (342109cg)
Euclid Haralambidis (313081eh)
Joey Kortram (344951jk)
Ivar van der Lugt (418691il)
Arjan de Winter (372092jw)

Sources:

Statista. (2015). Statista. Opgeroepen op September 20, 2015, van Statista: http://www.statista.com/statistics/266201/us-market-share-of-leading-internet-video-portals/

Vimeo. (2015a). Vimeo. Opgeroepen op September 22, 2015, van Vimeo: https://vimeo.com/about

YouTube Press. (2015). YouTube Statistics. Opgeroepen op September 20, 2015, van YouTube: https://www.youtube.com/yt/press/statistics.html

Your News

Everyone wants to stay up to date, and wants to be aware of the latest news. This results in a booming market of news applications. We are all familiar with NU.nl for the basic news and funny facts, NOS.nl if we would like to have some more insights and a lot of people have installed Bright nowadays to be able to get to know the latest innovations and lifestyle trends. All these news applications are slightly different and we want to have access to them all on our mobile phone to stay up to date. But is there no easier way to read this variety of news articles?

Let me introduce you to Recent News. This news application is launched in September 2015 and is taking care of the importance of customization. Recent News will first ask their new users to fill in their interests and what kind of articles they are looking for. There are many subjects and specializations to choose from. After this artificial intelligence will take over. A learning system is integrated and Recent News will customize your news based on your preferences, past reading behaviour and similar users. The news application is able to learn your interests and will propose exactly these articles you may like to read (Bright, 2015; Recent News, 2015).

In my opinion Recent News is one of the innovations that is able to serve the future. Nowadays users will ask for more personal and customized products and services. Because of the Internet the market is more transparent than ever, consumers are better informed and they can find exactly what they want (Clemons, 2008). Firms have to make sure that they will respond to these needs; firms have to be able to customize their services the best they can. Clemons (2008) shows that this trend called resonance marketing; the firm should find the perfect fit with the customer.
Another feature of Recent News will also fit the latest trends: the location-based suggestions. Recent News will propose the users news articles based on their location. According to Ghose, Goldfarb and Han (2013) mobile Internet differs from Internet on personal computers. They show that mobile Internet is an important driver of the rise of location-based services. In our case Recent News will respond closely by proposing articles to their users based on their location, within news application local news becomes more important and preferable.

I am curious about how the future will look like. How can we still improve customization and make products and services even more personalized? Is artificial intelligence the future of businesses to customize the services and is this the way to really get to know the customers? Besides that I am wondering if news applications such as Recent News are able to replace the variety of news applications that exist these days? Let’s count the number of news apps that we have right now and compare it to the number we will have over two years.

References:
Bright, 2015. ‘App van de week: Recent News’ http://www.bright.nl/app-van-de-week-recent-news, last visited: 20 September 2015.
Clemons, E.K. 2008.  How Information Changes Consumer Behavior and Consumer Behavior Determines Corporate Strategy. Journal of Management Information Systems 25(2) 13-40.
Ghose, A., Goldfarb, A., and Han, S. 2013. How is the Mobile Internet Different? Search Costs and Local Activities. Information Systems Research. Articles in Advance. 1-19.
Recent News, 2015. http://www.recent.io/, last visited: 20 September 2015.
Author: Lizan Bakker

How computers can make you look good – Ipsy

Last Monday (14th of September) the beauty products start-up Ipsy of YouTube celebrity Michelle Phan raised about 100 million dollars.

Even though being an online celebrity with almost 8 million subscribers (Youtube, 2015) gives you a great edge in starting up a beauty company, it was not because of Michelle that they raised this dazzling amount of money. For a long time already, beauty and fashion startups are trying to create software that learns and anticipates on what people want to wear. Ipsy believes the future is super-intelligent software that knows your tastes so well it will send you products that you’re guaranteed to like. (CNET, 2015)

Customers are paying a monthly $10 subscription fee to receive a so-called ‘glam bag’ full of beauty products. The fun thing about Ipsy is that the content of the bag is customized for the individuals. Customers have to fill out a quiz with 12 personal questions (think of skin color, eye color, etc), after which software will analyze their answers and determine which beauty products they probably like. Customers can review their products online, which is taken into account for their next order. (Ipsy, 2015)

michelle-phan-glam-bag-2

You may recognize this kind of business model, because Netflix did exactly the same in the movie industry, by offering recommendations based on what users liked to watch. I think we all know what kind of movement they have started. (CNET, 2015)

Ipsy is not the only company trying to use software to recommend products in the beauty industry. Competitor Birchbox is also shipping boxes of beauty products for a $10 monthly fee. The only thing that sets them apart except the boxes they arrive in. is the market they are aiming for. Birchbox is more aimed towards body/skincare and Ipsy is distributing make-up. (Brooke, 2015) With worldwide revenue for beauty care products expected to grow towards $461 billion in 2018, the market may be large enough for both.

Even though raising $100 million dollar and having three profitable years shows us that the algorithm they are using is getting pretty good, it is not fool proof yet. Problems range from products for the wrong skin color to inaccurate product descriptions. (Penninipede, 2013) Ipsy’s CEO says that there are still a lot of problems to work out: “That’s where the algorithm is not foolproof”. (CNET, 2015)

Author: Sven Sabel (354240ss)

References:

https://www.youtube.com/user/MichellePhan/about

http://www.cnet.com/news/f-u-n-d-e-d-silicon-valley-bets-100-million-that-its-computers-can-help-you-look-good/

http://help.ipsy.com/customer/en/portal/articles/1465221-what-s-a-glam-bag-

http://www.thesmallthingsblog.com/2013/06/battle-of-boxes-ipsy-versus-birchbox/

http://www.sammithebeautybuff.com/2013/09/why-i-cancelled-my-ipsy-subscription.html

Amazon knows what you´re going to buy BEFORE you even push “buy” – they know you too well!

Everybody is highly aware about the data-driven culture at Amazon, and how they are utilizing Big Data in every direction to boost revenues. Now they are going down another avenue of their business models powered by Big data, more specifically, their distribution channels and how they are delivering products to their customers. Amazon wants to ship products to their customers even before they make a purchase – Amazon knows their customers very well through Big Data patterns. They use previous orders, product searches, wish lists, shopping-cart contents, returns and even how long an Internet user’s cursor hovers over an item to decide what and when to ship. This “anticipatory shipping” will dramatically reduce delivery time and probably increase customer satisfaction to the extent that the customer will be even more willing to use online-channels. Amazon continues the battle of customers with instant order fulfillment, which everybody I assume has experienced at IKEA. IKEA´s business model and its value proposition is reflected upon their capability of instant order fulfillment, maybe not on all products, but especially the fast movers. We love to get the products we order and buy right away, so imagine the case of ordering from home and get it the same day or even within a couple of hours. It is important to mention that this is not something that Amazon has implemented yet, but only filled a patent. Anyway, this truly reflects the capabilities of Amazon´s data scientists to utilize Big Data to transform their business model and in the end use their supply chain as a strategic weapon. This shows the relentless implications of predicting customer behavior/demand.

If we take this predictive shipping to the next level and combine it with Amazon´s vision of transporting products using unmanned flying vehicles, they will dramatically change the order fulfillment process of both online and offline players. The drawback of this predictive shipping process would of course be costly return and unnecessary impact on the external environment. But as this algorithm is constantly fed with new data, the prediction will strengthen by time. So next time you´re diving into Amazon´s endless world of products it might be the case that one of these products is already on its way!

Source: http://techcrunch.com/2014/01/18/amazon-pre-ships/

WordPress.com

To start off this blog I would like to draw your attention to the back-end of this blog, WordPress.com. WordPress is developed by Matt Mullenweg, while he was seeking a more rich environment for his blogs. As we discussed the “free” model in class, I found the next upcoming article very interesting. The Forbes article talks about the origin of WordPress and how it struggles to make money while being the industry leader. The book mentioned in class, Free by Chris Anderson, talks about the ‘freemium’ model, where free content is supported by advertisements or users that pay for specific features.

Chris Anderson states that “every industry that becomes digital eventually becomes free”. As Editor-in-Chief of Wired, he created this extensive article of his opinion, please watch the short video.

My question to you: Do you think “freemium” is a sustainable business model for the next 5-10 years?