Bush Boake Allen Alibris Both companies on verge of e-something Overview of Week 2 Bush Boake Allen Alibris Both companies on verge of e-something

Bush Boake Allen Supplies flavors and fragrances to the world's leading consumer products companies Used in foods, beverages, soaps and detergents, cosmetics, toiletries, personal care items and related products. Aroma chemicals, natural extracts and essential oils serve as raw materials for a wide range of compounded flavors and fragrances. Conducts operations on six continents 60 locations in 38 countries worldwide 1999 worldwide sales of $499 million.

Bush Boake Allen Business Environment Need to produce desired flavors & fragrances quickly Requires experienced flavorists to mix 500+ ingredients High margins (40%) on accepted products Intensive R&D to develop accepted product Intense competition 9 companies hold ¾ share of $11 billion market

Bush Boake Allen Competitive pressures Need to acknowledge regional differences Understand and cater to local preferences Need for regional expertise and knowledge Requires regional R&D and Mfg centers for rapid response Bargaining power of customer is increasing Expecting rebates from “select” suppliers Reduces margins

Bush Boake Allen Empowering Customer Design Project Mercury Automated flavor prototyping Hold 500 ingredients Customer interactive Collect CRM data Provide convenient customer access Locate machines regionally Install in largest customers

Bush Boake Allen Empowering Customer Design * 07/16/96 Bush Boake Allen Empowering Customer Design Opportunities Early mover advantage Increased customer satisfaction Faster and more flexible flavor delivery Closer integration between product development and customers Increased product acceptance Increased ratio of developed to accepted flavors Reduced reliance on flavorists Risks Reduce perceived value of BBA Reduced margin Just an expensive experiment? *

Bush Boake Allen Issues Are there pitfalls in giving the customer a bigger role in the design and delivery of products and services? Three proposed strategies for using the Spider Internal use only On-site with select clients only Access for everyone online Which one would your recommend?

Alibris Business Environment Used Book Industry Estimated 6500 used book dealers in North America Estimated $2B / year – expected to grow to $7-8B Used book dealers geographically dispersed but networked Exploding growth of Internet (1998) provided opportunity for and trend toward eCommerce

Alibris Interloc Background Started by Dick Weatherford – rare book dealer Service to find used or rare books Book listings only Income model Based on record storage charges & use time Revenue $15K/mo Used mostly by independent dealers for searches Simple IT System Originated as a pre-Web message board

Alibris Background Brain child of Marty Manley and VC capitalizing on eCommerce trend Partnered with Weatherford Interloc becomes Alibris with $1M in venture funding Manley is CEO

Alibris Business Model Find and arrange the sale and delivery of rare, hard-to-find and out-of-print books eCommerce powered by Internet Dealers list books for free Change from original Interloc business model New IT system needed to support eCommerce Conduct the search and sale functions Ensure customer orders filled properly

Alibris IT System Challenge Approach Handle millions of SKU’s of single unit Search engine as fast as Amazon & Barnes & Noble Approach Implemented a standard Oracle IT system Hired implementation consultants Developed code in-house to customize system

Alibris IT System Implementation Crisis Database migrated successfully but … Oracle eCommerce IT System implementation failed Debating whether to drop Oracle and start over with original small vendor (Thunderstone) Loss of investment in time and effort to migrate database to Oracle system Thunderstone system may not scale with company growth Additional launch delay More custom coding

Alibris Current Situation Launch only weeks away Funding running out “White Knight” willing to provide $200K bridge Many unattractive conditions attached Considering offer to be a warehouse for another dealer

Current Articles on IT “Strategy and the Internet” “The Real New Economy” “Putting the Enterprise into the Enterprise System” “Getting IT Right” “Saving IT’s Soul: Human-Centered Information Management” “Six IT Decisions Your IT People Shouldn’t Make” “IT Doesn’t Matter”

“Article Analysis” Present the main points being developed by the author Explain these main points to the class using examples from article, experience, etc. Identify any critical insights or lessons learned Which ones can be applied to the Bush Boake Allen or Alibris cases

Synthesis The old analysis and synthesis routine What are the common messages from these articles?