STRATEGIC IT ALIGNMENT AT VERMONT

TEDDY BEAR

Information Systems for Managers-II

Submitted by :
Group 4, Section B
Chirag Arora 2013PGP112
Dhruv Aggarwal 2013PGP128
Neha Sushilkumar Bhomia 2013PGP248
Nidhi Singh 2013PGP249
Nitya Saxena 2013FPM008
Prasenjit Chakrabarti 2013FPM009
GROUP 4
 Vermont Teddy Bear’s (VTB) Business Model
• PRODUCT AND SERVICES
VTB dropped many product lines between 2005-08 and
focused on following three products
o Teddy Bear(Plush Toys): VTB sold standard as well as
customized bear
o PajamaGrams(apparal/gifts): Outsourced to low cost
overseas factories. It was largely not in sink with demand with
high lead time of 6 weeks.
o Calyx Flowers(flowers/gifts): Offered flowers with long “vase
life”
VTB followed multi channel approach to enhance sales viz
Stores, Mail Order, Web and Telephone
• TARGET MARKET:
PRODUCT TARGET MARKET
Teddy Bear OnSeason:Men who bought for
their girlfriend /wife/mother
OffSeason: Children
PajamaGrams Women
GROUP 4 Calyx Flowers Men
 Vermont Teddy Bear’s (VTB) Business Model
• VALUE PREPOSITION
Teddy Bear: VTB was in gift delivery service business with
their biggest customer for teddy bear were men who
ordered bear at the last minute. Thus on time delivery
at short notice was their forte.
PajamaGrams: Currently the demand lacked supply
during valentine rush due to high lead time, they
were in process of developing better forecasting
method and promotions like family pack to attain
better customer satisfaction
Calyx Flowers: VTB dealt directly with growers thus
eradicating middle men which helped them offer
fresh and long vase life flowers
• REVENUE MODEL
o VTB offered full range of gift with an option to customize that
earned good profit margin.
o To ensure round the year demand for teddy bear, it targeted
children in offseason and men in on season.
o As promotional activity, plans to offer PajamaGrams apparel
GROUP 4 as family pack were in pipeline
 Review on the Operational Capabilities of their Business
• The operational capabilities of the company are not very strong. Thus they plan to enhance
operational capabilities by adopting following modifications over time:
o Select new enterprise system to replace the accounting systems responsible for order-
entry, sales and inventory management
o Focus on building or buying new supply-chain software to enable efficient procurement
of raw materials and finished goods
o Acquire CRM to serve customers better across various product lines and channels

• They planned to modernize the aging and complex systems on which the company relied
• The major time of IT employees was spent on troubleshooting and thus no time was left for
development of new applications or implement new versions of packaged software
• More organized approach was required for triaging and prioritizing the support calls
• They had three different brand and four different channels, each supported by different
software. A more robust and adaptable IT platform needed to be developed

Challenges faced during Peak periods

• To meet the surges, they needed to hire temporary workers in huge numbers
• During peak times, the system occasionally paused when the capacity was strained
• Software bugs were identified during the rush period of Valentine
• Issues of stuff arriving late and in poor quality were faced sometimes during the peak
periods due to problems in supply chain management

GROUP 4
 How far does their IS support their Operational Needs
• The IS consisted of a mix of homegrown and packaged applications from a variety of vendors
• The system could not effectively handle the surge in demand during peak periods and paused
when its capacity was strained
• The IT employees spent too much time in troubleshooting instead of spending time on new
application development or implementing new versions of packaged software
• The middleware contained a great deal of business logic which was undocumented
• The systems had not been managed effectively over time
• The supply chain management needed improvement as there had been instances of stuff arriving
late and being of poor quality

Main concerns/weaknesses of VTB’s IS

• Incomplete IT architecture document existed at VTB and change controls were minimal
• If certain employees were to leave, they would walk away with important knowledge which had
not been captured or codified
• There was an unorganized approach towards prioritizing support calls
• There was a lot of hidden information as different information was with different people
• The middleware was extremely complicated and contained a great deal of business logic
• Users asked for enhancements which they could not deliver because they had not understood
completely how the system worked as it had been mismanaged over the years
• Various applications did not have updated versions and ran several versions behind schedule
 Suggest options for a well organized IT architecture
Current System
“Best of Breed Approach”-
separate packages that offered
close to optimal functionality
Proposal 1
Implementation of ERP
Proposal 2
Outsourcing the maintenance
and other activities that do not
affect the business directly
Advantages Disadvantages
•Easy to implement •Employees using individual
•Less concern for employees preference
•Inexpensive compared to ERP •Complexity increases with
increase in customer base
Advantages Disadvantages
•No need of middleware •Initial cost high
•Better control over systems •Low initial returns
•Makes the system more stable •Implementation phases require
and reliable a lot of planning
Advantages Disadvantages
•Helps IT employees concentrate •Lack of control over
on developing new applications maintenance activities
•System easier to maintain in
the long run
•External help available for
troubleshooting during peak
periods
•Cost effective