Midterm Exam, MISB-600-11 Managing Information Technology
due 7/24/00 at classtime on paper or by email
Respond to two of the three problems listed below. Be thorough in your answers, but use no more than one page, double-spaced, for each problem.
1. AMVESCAP, PLC: Capitalizing on Intranets and Extranets
AMVESCAP was formed in February 1997 when Houston-based AIM Corporation and INVESCO, a UK company, merged. AIM’s funds are sold by 250,000 brokers worldwide, while INVESCO sells its no-load funds directly to investors. AMVESCAP manages #192 billion and has 2,700 employees.
AMVESCAP’s intranet went live on November 1, 1997, to approximately half of AIM’s U.S. employees and was immediately accepted. The staff can now find data such as historical net asset value in 30 seconds instead of the typical two-day cycle, because the intranet pulls information from multiple databases across multiple platforms.
This information-gathering process is identical to that of AMVESCAP’s extranets, offering access to Unix applications on Sun servers, NT applications on Compaq servers, and custom applications on an IBM mainframe – all from a Web browser.
John Deane, chief financial officer at AIM Management Funds and technology committee chairman at AMVESCAP, says that users shouldn’t have to worry about where information resides or how a particular transaction is processed. Using the intranet or extranets, Dean say, should be as easy as using buttons on a Touch-Tone phone.
However, unlike the intranet – which supplants previous communication methods – AMVESCAP’s extranets supplement existing information distribution channels. For example, AIM maintains 500 call centers that receive between 10,000 and 20,000 calls each day. Callers typically request fund brochures or check the values of their shares.
Asked whether online trading and information distribution on extranets will replace traditionally brokered trades and typical call centers, Dean say, “Everyone is jumping on the bandwagon, but it we were to look each the in the eye and be honest, none of us knows for sure what’s going to happen.”
- What business benefits does AMVESCAP gain from its intranet and extranets?
- What are the advantages of Web browser-based applications for a business?
2. U.S. Department of Energy and Lockheed Martin: Improved Reporting with a Multidimensional Database
Cutting one-third of the staff at the U.S. Department of Energy (DOE) not only escalated the workload but also focused a glaring light on how often users were getting bad information from database queries. Scott Applonie, information manager at the DOE in Idaho Falls, Idaho, said the problem of getting inaccurate and inconsistent information from database queries has plagued the federal agency for years. Maintaining high-quality queries is an important consideration for any business, but the stakes for the DOE are high. Faulty reports on government laboratories, nuclear facilities, and cleanup projects, for example, could result in fines from state and federal regulators.
In 1996, the number of the DOE’s outside contractors was cut from five to one, and the agency’s workforce was reduced from 12,000 to 8,000. “Going down to one contractor meant that Lockheed Martin saw the entire issue. When they pulled information together from different databases, they couldn’t correlate,” Applonie said. “With the number of organizations we have to watch over, the number of people reporting information to us, and the amount of information we had going out, we were facing quite a mess,” Said David Brown, a staff engineer at Lockheed Martin Idaho Technology Co. The company is the DOE’s prime contractor.
So Lockheed Martin adopted the Gentia application development environment, which culls information from a variety of DOE databases that run on IBM mainframes and Unix servers. It then loads the information into a multidimensional database stored on one server. Now, the various categories of information that the DOE uses – from financials to accident reports to human resources – are all calculated and reported by the Gentia analytical software from the data within Gentia’s multidimensional database.
The new system gives the agency one key application to consult for answers, Applonie said. The DOE is so pleased with the new system that it plans to tie more users in to the system later this year – more than double the 120 staffers who now have access.
- Why do you think that the U.S. Department of Energy was getting bad information from database queries?
- How does their new multidimensional database solve that problem?
3. E-Toys, Barnes and Noble, and Others: Paying for Success in E-Commerce
The World Wide Web used to be the great equalizer, a place where anyone, big or small, could put up a site and compete on a level playing field for consumer attention and dollars. No more. “In the last 12 months, the whole myth of ‘anybody can get up online and sell’ has been debunked,” said Nicole Vanderbilt, director of the digital commerce group at Jupiter Communications in New York. “It requires very deep pockets.”
And it isn’t just the cost of producing compelling content that is at issue. It is the cost of advertising on or partnering with the Internet’s heaviest traffic generators, notably America Online and major search engines, which wield increasing clout as smaller sites vie to stand out amid the clutter in cyberspace.
“You’ve got to go where the buyers are,” said Phil Polishook, vice president of marketing at eToys, Inc., which launched its website in October 1997 with a $3 million America Online deal. Barnes and Noble (BN.com), for example, will pay $40 million over four years to be the exclusive bookseller on AOL’s consumer service. Earlier AOL deals in 1997 were also in the tens of millions of dollars.
Top search engines such as Yahoo! And Excite are also becoming crucial ad buys for any online site. At Excite, for example, revenue for the third quarter of 1997 was $14.4 million, which exceeded the company’s sales for all of 1996. An estimated 41 percent of all people on the Web check into Yahoo!, making it second in consumer popularity after America Online.
Yet the top10 sites offer access to only about 10 percent of the surfing public, with the rest of the market offering just slivers of viewership. And as the Web and surfing habits mature, “it will be harder and potentially more expensive” for newcomers to get established and snare customers online, said Brett Bullington, an executive vide president at Excite. “But I think there will always be opportunities for new sites to do new things that will become hits on their own.”
- Is it a good business decision for companies to pay millions of dollars to America Online and the Internet search engines? Why or why not?
- Can a small entrepreneur still become a big success on the Internet without such large investments? Why or why not?