IBM Case Study What Is the Key

IBM Case Study

What is the key problem facing IBM Europe managers (at the end of the case)?

It is a complex problem of recruiting more resellers for the new B2B initiative based on order capture, distributed order management, and minicomputer product configuration and customization workflows running RosettaNet PIPs over an XML network. This problem was made more complex by the fact that for any reseller to participate in the new B2B initiative, they would need assurances they would not be disintermediated from the sales they bough to IBM. Another aspect of this challenge was the lack of faith in RosettaNet throughout the industry for being able to scale beyond simple, EDI-0like batch transactions of which it was known for (Boh, Soh, Yeo, 2007). During this time of RosettaNet's development it was common knowledge that the standard had been created for sharing content yet the only process workflow that everyone could agree on was how to complete as transaction (Venkatesh, Bala, 2007). In summary, there were very significant challenges ahead for Boullery and his team.

1b. What is (are) the sub-component(s) of this key problem: describe the problem as a set of (no more than) 1 to 3 decisions they must make involving which choices? (you are not required to list 3!)

The three sub-components of the problem all revolve around the core challenge for the reseller partners having expertise in XML, RosettaNet PIP development and integration, distributed order management, and product configuration all in the context of indirect channel strategies. As each of these partners has long-standing selling relationships with a core customer base. They have earned the trust of these customers with their ability to solve complex problems well. The greatest sub-component therefore is the challenge of finding the resources to implement the complex integrations at the XML level with the RosettaNet PIPs to support complex transactions. This need for integration expertise is made more challenging when resellers have EWRP systems as Logix and Magirus have., Each has their own processes in place for managing orders, defining custom minicomputer configurations, and also communicating pricing discounts. The inclusion of the new B2B initiative from IBM is going to burden many of these businesses that due to their business model, are already stretched very thin in terms of IT resources.

II. Problem Analysis

2a. Mid-range computers are "different" and thus IBM relies on others to sell them -- What is the difference? What is its significance in IBM's business model?

There are many differences of mid-range computers, starting at the operating system, to the configuration of their memories, processor selections, and the definition of which applications will be used on them. Mid-range computers also require a higher level of maintenance and support to keep them running efficiently. They often are used for running enterprise-wide applications, with ERP being the most prevalent.

The role of the IBM partner channel is to quote the best possible mid-range computer for their customer's specific and unique needs. IBM's approach to selling mid-range computers is very unique in that it opens up the opportunity for resellers to completely customize mid-range systems for customers' needs. This build-to-order approach to selling mid-range computers can be very profitable, as long as the business processes stay highly efficient and accurate to the customers' unique needs (Kirchmer, 2004). IBM is attempting to redefine how the build-to-order or product configuration process is accomplished with resellers; no small feat given the complexities of integrating to their native ERP and other enterprise systems. The focus in IBM is how to motivate the resellers to see the value of RosettaNet PIPs running on XML as a transaction standard.

2b. What part of IBM's value chain link to which part of its partners' value chain for selling mid-range computers in Europe (MENA)? How?

There are actually several touch points of the IBM value chain to partners' value chains in MENA for the mid-range systems. The first is at the system of record level where the ERP systems of the resellers are integrated to IBM for pricing, product availability and catalog data. The value chain integration at this point is at the system foundation level. A second touch point is in the area of demand management and the ability to coordinate efforts in selling to shared customers. This is the most prevalent touch point throughout the case study as much of the analysis discusses channel management integration. A third touchpoint of value chains is in the post-sales support and warranty support area. This area is not mentioned that often in the case, yet it is clear from the analysis that post-sales service and warranty support is a significant revenue stream for both IBM and the resellers.

2c. What is the role of information for this inter-value chain linkage to work properly?

It is the catalyst of all transactions, pre-sales, sales and post-sales strategies between IBM and its resellers. The challenge for IBM is to automate the processes that are the most reliant on complex product configuration, pricing and product ordering workflows while also increasing order accuracy. The use of the RosettaNet standard to enable greater order capture, order management, and complex build-to-order product configuration process workflows is accomplished using the Transaction-based PIPs that dominate the adoption of any aspects of this standard (Chang, Shaw, 2009). The challenge IBM has is transforming the accuracy, efficiency and economic value of the connections with its resellers by concentrating on making business processes asreal-time and error-free as possible. The use of the RosettaNet standard running on XML networks is the solution Boullery and his team arrive at with the early-adopter partners throughout MENA.