Thoughts on Enterprise Case.

[Dan Roach]

From the text:

"Without ever doing a ROI calculation, Enterprise decided to develop a system to connect electronically with its insurance customers - reasoning that such automation was simply 'good for the customer' and, hence, was an investment in information technology Enterprise should be making."

Seriously?

[Jared Call]

I think that someone influential and/or charismatic in Enterprise leadership felt particularly visionary that day, and just decided that this was the wave of the future, that they needed to do it even if they couldn't figure out the ROI.

Maybe they were convinced that they didn't have all of the right pieces to do an accurate ROI, or that it had never been done before, so that an accurate ROI wasn't going to be possible.

-jared

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[David Hall (ZMSC)]

Hey all!

 

Below are my thoughts on the case. I also wanted to find out from everyone if 3:00 PM or later is a reasonable time for everyone. Thaylene is traveling during our normal time but expects she will be back in her office then and can meet with us.

 

Let me know if you can accommodate or fi we keep our time and catch her up when she is back.

 

Thanks!

 

My Thoughts:

 

I got the impression they decided to do this because if it was right for the customer, it didn’t matter what the ROI is. My overall impression of the company strategy is, if taking care of the customer is the standard or the litmus test, and we make decisions with the customer in mind, we will make the right decision for the company’s success. While that may have been a gamble, in this case, it seems to have paid off for them. They built a system that was difficult to replicate, had a high cost and high barrier to entry for competitors, and probably most importantly, they continued to invest in ARMS so it remained relevant and caught up with technological advancements.

 

I also somewhat disagree with the assessment at the end of the case where the authors say, “We do not believe that this case represents a unique opportunity…” They state in the next sentence, “If anything, what was unique was Enterprise’s recognition of the strategic value the platform represented and their competence to engineer a platform from which they could appropriate a substantial portion of the value being created.”

 

If what the authors state is a fact that, “Most, if not all, organizations participate in net values.” Then why was Enterprise able to take an existing technology and do something with it that so many others apparently struggled with?

 

At the end of the day, I feel like, while it may have been a gamble, or a shotgun idea, their implementation and continued support and evolution has positioned them to provide a better experience for consumers, insurance companies and auto body shops.  I feel like this was an example if where a large company wasn’t afraid of being nimble, embracing their role as an emerging disruption in their business, and fail fast if they had to.

 

DH

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[Thaylene Rogers]

Any word on time of call?  It will determine whether I rush back to provo. Currently in San Francisco about to take off.

Sent from my iPhone

Thaylene Rogers

[Nathan]

Later today should work all right for me. 

I agree that their strategy is "take care of the customer and everything else will work out", where I wonder if their position is as strong as it could be is related to this.  They never showed that this project is making them money, and while it is being sold as strengthening their position with insurance companies and auto-body shops, I still wonder how they are quantifying that.  Will insurance companies simply replace them with their own system later?  They seem to have economic incentives to do so (more control over the vehicle repair process), but little incentive to let enterprise be the middle man.  At the same time it seems that the examples and exhibits acknowledge this is already the case, so I'm not sure why or how enterprise has been able to remain so deeply involved.  Are the insurance companies really that far behind?  Is Enterprise over spending for the benefits they are getting?  How is any of this visible to the end-user?  Does it add convenience?  Eliminate other competitors who can't accomplish similar integration?

-Nathan

[David Hall (ZMSC)]

We will push the time back to 3:30 today. Will that give you some time to get back?

[Thaylene Rogers]

The big question is what position would you take?  1, 2, or 3, and what supporting evidence for that can we state as well as what evidence provides support against the other 2 cases.  I'm in support of 2, strong but attackable. Also, we need to rank their competitive advantages In Order of strength. I have thoughts on my tablet and will get them to Dropbox ASAP.

Sent from my iPhone

Thaylene Rogers

On May 19, 2014, at 7:50 AM, "David Hall (ZMSC)" <David...@zionsbancorp.com> wrote:

[Thaylene Rogers]

That works.  Thanks 

Sent from my iPhone

Thaylene Rogers

[Jared Call]

I have a conflict at 3:30.  I'll take some time right now to review everyone's thoughts and comment.

-jared

[Jared Call]

Case Preparation Questions:
1. Which of the following best describes ERAC’s competitive position relative to competitors and why?
  1. Virtually unassailable
  2. Strong but attackable
  3. Weak

I think that #2 is the answer. Feeling secure in the value network you've already built is dangerous.  It's not hard to find examples of companies who had well-established technologies that were unseated by newcomers, to the great detriment of the incumbent businesses.  The case was written in 2004, but some popular technologies we're familiar with were already being displaced at that point.
Yahoo and Google: Yahoo started in 1994, incorporated in 1995. Google incorporated in Sept 1998, was recognized by PC World as being the search engine of choice in December of the same year.

  - Internet portals used to be very common, now they're less common except for the default start page on Internet Explorer.  I wonder how much of msn.com's traffic is due solely to the default startup setting in IE.

iPhone and Blackberry: RIM vs Apple timeline quick read here: http://www.telegraph.co.uk/technology/blackberry/10237847/BlackBerry-timeline-from-RIM-to-RIP.html

IBM and everyone else

2. What are the main barriers to entry that are in place to deter competitors? Rate them according to their strength.
Note: The question is not what enterprise should do now. Rather, it is how strongly positioned they are relative to the competition and why? Use the principles from the readings and the class discussions to support your position.

Barrier #1: Experience.  Enterprise is very familiar with the business practices of insurance companies, and has spent 10 years fine-tuning ARMS. A viable competing technology would have to have a similar understanding of insurance companies' business processes.

Barrier #2: Relationships: Enterprise has well established relationships with autobody shops and insurance carriers.  GMAC is one example of an insurer who has seen business increase (by how much?) by using ARMS to streamline claim and repair communications.

Barrier #3: Cruft. ARMS has roughly 10 years of cruft buildup.  It would take a competitor significant effort and mythical man-months to built up as much redundant code in need of re-architecture, refactoring, or removal as the 10 year-old ARMS system undoubtedly has.


Ok, Barrier #3 is a geek joke, but I had to put that in there.  Probably not good for the poster though.

-jared

[Dan Roach]

Ok, so "#3 Cruft" is a joke, but I think you touched on a good point: this thing is big.  And complicated.  And therefore expensive to build.  That certainly is a barrier to entry.

That being said, I can't help but think that a lot of what they're offering in terms of customization is unnecessary.  Yes, they got a lot of experience and developed close relationships with their insurance customers through that effort, but did you really need to build this system to get that?  More importantly, if you're a competitor, can you get #1 and #2 without the hassle of #3?

Agree with Nathan on the cost issue.  As I (sarcastically) pointed out initially, not knowing or caring what this is costing you versus what it's bringing in feels dangerous.  I'm concerned you can get the same kind of value net a cheaper cost.

Agree with overall consensus that the answer is "Strong but attackable."

[David Hall (ZMSC)]

I’m glad you added the disclaimer… I was trying to figure out who Cruft was, I thought I missed something from the reading!

 

I agree with your assessment Jared. And if there has ever been a class where your “geek jokes” are applicable, this is it. I think there may actually be something to what you are saying, even not knowing what cruft is.

[Jared Call]

If we can assume (I don't know if this is a safe assumption or not) that competitors like Hertz and/or Budget are sufficiently motivated, and have been working with insurance companies for several years as well, then couldn't they build a competing system?  It doesn't have to be better, it only has to provide competitive benefit(s) at a similar usage price as ARMS.

According to Google definitions, cruft is: badly designed, unnecessarily complicated, or unwanted code or software.  :)

-jared

[David Hall (ZMSC)]

I think that assumption still supports the overall competitive position we identified. At this point, it almost feels like their biggest competitor wouldn’t be another insurance company, but a software company that would develop and deploy an interface with all the rental agencies. But initial investment and conversion costs are still significant barriers.

[Nathan]

The also have to worry about competitors that automate things at the auto-body shops, like our local friends at MPi who automate all sorts of automotive business applications.

-Nathan

[Jared Call]

Sorry -- just saw this.  4pm may work for me, 4:15 or later would be better. After 7 or 8 is even better.

[Jared Call]

I've been checking off and on tonight but don't see much new out in Dropbox.  What can I do to help?

-jared