O-Citrus modular laptop business strategy and market launch

Citrus Business Strategy and Product Launch Planning

Defining the most critical aspects of the O-Citrus laptop PC product introduction and continued marketing, distribution, competitive position, service and support is the intent of this plan. The unique value proposition of the O-Citrus laptop is its highly modular motherboard and components architecture, which makes build-to-order strategies highly profitable and quickly accomplished, while also significantly reducing enterprise customers" time to service and support the system. One of the systems' key differentiators is its low Mean Time to Repair (MTTR) and due to the modular architecture, Mean Time between Failures (MTBF), which combine drive down Total Cost of Ownership (TCO) for enterprise accounts. Enterprise accounts including Fortune 1,000 corporations' Information Technologies (it) departments are the primary target market, with specific configurations of the O-Citrus specifically created for additional market segments. As the supply chain planning and management is crucial for the success of this product introduction, the decision has been made to launch O-Citrus domestically first and then selectively expand into other regions of the world.

Market Segmentation Strategy

The primary market segment that the O-Citrus laptop will be enterprise accounts looking to standardize on a highly modular and configurable laptop that is also easily serviceable by their own technicians. In addition to offering both Microsoft and open source operating systems, the O-Citrus will also be configurable with larger Hard Disk Drives (HDDs), additional memory, and support for disk drives that can be partitioned by operating system. Also included will be support for RAID 5 functionality for ensuring 100% data replication through the use of laptops as part of an enterprise storage network, which is a critical requirement for enterprise laptops in intensive development environments.

Additional configurations are planned for the 3D graphic artist and designer audience of enterprises, software development, and network administrators who require extensive support for troubleshooting TCP/IP-based networks. Underscoring all these segment-specific features is the customized Citrus BIOS and firmware that is optimized to the specific needs of each of these segments, giving enterprise customers exceptional system performance at a low cost.

In summary, the enterprise computing market is the primary target market, with the specific segments in this market being software development, graphics development, and systems troubleshooting and administration.

Defining the O-Citrus Core Competency and Unique Value Proposition

The core competency of O-Citrus is in designing personal computers including laptops, desktops and servers that are purpose-built to have highly modular designs that ensure the lowest TCO for enterprise customers. As these designs are modular, there is significant flexibility in their configurations. The unique value proposition of O-Citrus is in designing, producing and selling systems that offer enterprise customers the greatest flexibility in configuration and deliver the lowest lifetime cost of any comparable laptop, desktop or server. To support the core competency and unique value proposition, the supply chain is designed to ensure a very high level of transparency and visibility, further supporting the flexibility enterprise customers need in creating their custom configurations.

Supply Chain Planning and Management

The entire PC industry's viability is strongly correlated to profitable inventory turns made possible through tight integration to suppliers multiple levels deep in the supply chain. The high level of integration requirements necessary for the Citrus business model to consistently deliver product orders on time, in the right configuration, to the right location necessitates a multiple of systems working on synchronization with one another. The lessons learned from Dell Computer Corporation's extensive supply chain, noted here, need to serve as the model for the Citrus supply chain. Figure 1 graphically illustrates the Dell Computer Corporation supply chain requirements overlaid to their most critical it systems. One factor contributing to Dell's success in the enterprise market is their ability to align it resources to supply chain requirements, all in support of the company's mission.

Figure 1: Analyzing the network topology of Dell Computer Corporation

The most critical lessons learned for Citrus of studying the Dell Supply Chain systems is the role of the i2 Supply Chain Management system, the critically important DOMS (Distributed Order Management System), and the links to logistics companies, system integrators, repair, service and support providers, and distributors through EDI. In addition the links to 3rd party hardware and software suppliers, component suppliers, and OEM customers all form the foundation of Dell's supply chain, supplanted with critical enterprise-level systems as shown in Figure 1. Not shown in Figure 1 but equally important are the many customer service, pricing, customer relationship management (CRM), and pervasive use of the Dell Premier Page extranets. Dell considers Premier Pages to be a highly effective it strategy that has delivered major competitive gains in enterprise-class, small and medium businesses, and in many state, local and federal governments. While Dell is understandably reticent to discuss this major competitive advantage the company has, it did at one time quote the figure of 50,000 of these extranets being in existence, in 14 languages (Dell Press Release, 2000). For Citrus to succeed in the enterprise market, there needs to be a strong focus on how to create their own version of Premier Pages to better serve these customers. All of the applications and functions on the Pages need to be tightly integrated back to supply chain management, supply chain planning, logistics and fulfillment systems as Dell has successfully done.

Competitive Differentiation Factors

The O-Citrus laptop line will specifically be designed to have the highest MTTR and MTBF in the industry in addition to one if not the very lowest TCO, making the entire product family ideal for enterprise accounts. The modularity of the system itself, made possible by hardwiring the motherboards of the systems with high performance BIOS and firmware will also be a key differentiator. Secondly, the supply chain systems, specifically Distributed Order Management and the ability to quickly and profitably build custom configurations for enterprise accounts will be a differentiator relative to larger and slower competitors including HP and Lenovo. Thirdly, Citrus will publish every quarter a benchmark for every customer showing them their performance as a supplier and guarantee a specific level of performance to agree on metrics of performance. Enterprise PC and laptop purchasers have often wanted this level of accountability, and Citrus will supply this free to every enterprise customer to provide an accurate glimpse of overall performance.

Fourth, Citrus will also define its own internal benchmarks and reward employees when performance on these key performance indicators is at or above plan. Table 3 provides the key performance indicators (KPIs) that Citrus need to use internally to measure and monitor its performance. These need to pervade all processes within the company and be measured every month, with the results posted in the production centers and also in the administrative offices. Company-specific, sales, quote and order processes, customer service, and warranty and returns KPIs all reflect financial performance, over time, for any company. By measuring these KPIs and engraining them into the company culture, Citrus can create a sustainable differentiator in exceptional performance as well. The bottom line is that Citrus must turn accountable and measurable performance into a lasting competitive advantage over the long-term.

Analyzing Industry-Wide KPIs for PC Manufacturers

Areas of Measurement

Baseline: What is Measured

Industry Definition

Company-specific

Project costs and expenses

Use as a baseline for defining ROI

Number of orders per year

Determine configuration's impact on inventory turns

Current inventory and costs

Inventory turn savings

Customer Data

Lifetime cost per customer; avg. deal size by customer

Sales

Order cycle time

Order cycle times reduction of 35% or more recorded with mftrs contacted

Cost of Sales

Days Sales Outstanding reduction from 55 to 23 days on average

Cross-sell and up-sell revenue

Increase of 46% on aggregate

Average sales price per order

Increase from 7% to 29%

Quote and Order

Average costs to complete an order

91% reduction in cost per order

Special Pricing Requests

Over 92% ROI on automating Special Pricing Requests

Bad or incomplete orders

Incomplete order reductions of 30%

Customer Service

Number of customer complaints

89% reduction in cost of simple requests

Revenue lost to churn

69% when cross-selling is used with quote-to-order

Number of calls on order status

Median level of 15,000 per week to 200

Warranty and Returns

Reduction in warranty cost on customized products

14% reduction at a minimum

Labor cost reductions

Decrease order re-work from 18% to 1%

Distribution and Multi-Channel Management Strategy

As the O-Citrus laptop series is primarily sold to enterprise accounts, the primary sales channel will be a direct sales force who will call on CIOs and VPs of it, in addition being able to present to company boards of directors. While a direct sales force is expensive, this specific product and its unique attributes warrant the investment. Further, the unique value proposition of the O-Citrus laptop series centers on highly quantitative MTTF and MTTR calculations in addition to TCO measures, all of which must drive a positive ROI for customers. These are all essential aspects of selling into enterprise accounts and require training and an expertise with financial modeling in addition to in-depth knowledge of how systems work. Second, the direct sales force makes sense as a first phase of considering a reseller channel strategy to gain access into corporate accounts from relationships these resellers have.

Support and Services Strategies

As Citrus is primarily focused on the enterprise market, it is critical that service and support be made part of the essential part of the product launch. Support needs to be tiered with escalation paths for laptop compatibility problems and for break/fix workflows. Second-tier support needs to support Maintenance, Repair and Overhaul (MRO) workflows as well. These process workflows from the customers' standpoint need to be Web-based and accessible on a 24/7 basis.

From a services perspective, there is the need for having a dedicated, non-exclusive manager on each account to get projects completed on time and manage their services. In addition, for larger accounts there needs to be a dedicated, exclusive account manager assigned for both sales and service. The role of this manager on larger accounts is to ensure the largest customers stay with Citrus, and also work to up-sell them additional services. In addition to these two strategies, intensive training on the modularity, upgrades and self-service of the systems will be provided to enterprise accounts prior to product introduction.