CASE STUDY 1. The Amazon of Innovation (P.22 – P.24)
4. Describe, at a high level, the principal roles played by each of the five components of an information system that supports order fulfillment. Hardware: includes dozens of networked computers with Internet access, hand-held devices such as Radio Frequency scanner or Bar Code scanner. All these hardware can be used for order fulfillment. More specifically, they may be useful for the tasks such as picking up items in a warehouse, packing items, and shipping the package out. Software: consists of hundreds of different programs that work together to achieve the goal of fulfillment. The software applications help different hardware communicate and coordinate with each other. Some programs are for warehouse work, others may help connect to shipping vendors. Data: the information system may contain millions of bytes of data. They are about products, customers, orders, shipments, and other relevant things. Procedures: the information system may have hundreds of procedures that are being followed by workers in warehouses, shipping department, and other departments. Customers may also need to follow certain procedures to complete the order processing.
People: the information system involves many users. Not only employees directly use the information system, but also other users doing the maintenance and supporting service of the system. Other relevant shareholders may also have interest in this information system. 5. Choose any five of the innovations in Figure 1-5 and explain how you think Moore’s Law facilitated that innovation. Because of the Moore’s Law, the cost of computer processing, data storage, and network communication become lower and lower over the years. Therefore, it opens up many possibilities for business. Amazon took advantage of this technology advancement and implemented many innovations as shown in Figure 1-7 of this case. Some examples of Amazon innovations are:
1-click shopping means that a customer doesn’t need to repeat data entry for the shipping and payment information for each and every order with Amazon. It saves customers time and effort to do business with Amazon. Amazon stores customer information such as name, homes address, credit card information, bank account information in amazon’s database. So customers only need 1 click to get their order through. In Amazon’s marketplace, users can sell their own products and can choose the option to let Amazon handle the order fulfillment. This happens because customers (people who sell their stuff on Amazon) use the existing data storage and communication capability of Amazon to fulfill their orders. In return for using Amazon’s existing infrastructure and system, users are being charged a small commission fee for each sale. Amazon Web Service enables businesses to lease computing resources from Amazon. Amazon has existing extra data storage and CPU processing infrastructure that provides this capability. Amazon offers this extra technology capability as cloud service to businesses to gain addition revenue. Otherwise these extra technology capabilities will be in idle and wasted. Search inside Book, Amazon has to store additional information about the book to enable this feature. Digitalization of book, scanning book in digital and readable format, makes this function possible. This innovation also attracts more potential book buyers. Amazon Kindle exploits the digitalization of books (e-books). It has the ability to store digital book content and transmit the digital book via Internet. Amazon Kindle also provides some useful applications for book readers to make the book reading experience enjoyable and interactive.
Moreover, with the Amazon Kindle platform, it makes Amazon a potential new seller of online music and video. 6. Suppose you work for Amazon or a company that takes innovation as seriously as Amazon does. What do you suppose is the likely reaction to an employee who says to his or her boss, “But, I don’t know how to do that!”? A company like Amazon, who is very serious with innovation wouldn’t tolerate the attitude of employees saying “I don’t know how to do that.” People who say that are those who fear change and new things. Those people aren’t open to new ideas and new experiments. Amazon and other companies thrive because they encourage innovations and have a culture of willing to experiment. Therefore, Amazon will not tolerate such an attitude. Those employees not feeling comfortable working in companies like Amazon, which has such demanding culture of experimenting new things. In early August 2013, the news broke out that Amazon founder and CEO was buying the classic old media outlet – Washington Post, which has been around for many decades. With the ever evolving new advancement of technology and business models, old media format such as traditional newspaper face extreme challenge. Over the past decades, the revenue and subscription of newspaper keep declining.
It is in this exact background that the owner of Washington Post decided to find a new owner for the Post. Amazon founder and CEO said that he cannot imagine newspaper business can exist in the current paper format in 20 years. He is bringing in the innovation and the idea to the Post, trying to adapt to the new technology landscape and new generation of readers who prefer emerged in technology. Moreover, he is looking for potential synergy between the Post and Amazon. On the fundamental side, they both share the principle business model- as content creator and publisher, attracting advertisement opportunity and creating a community of users. It remains to be seen the new innovations Amazon can bring along that transforms different business sectors and disrupt others.