Should I stay or should I go - Casa del Libro case, an analysis

Here the situation faced by the management team of Casa del Libro in 2002.

They run some numbers which lead to the conclusion that they will grow exponentially if they move to the on-line channel, they implement a super platform with the bestinbreed solutions, they partner with a key ISP, AOL, and what happens? 6 months after the launch a combination of internal (severe flaw in the design phase of the ambitious platform which thus cannot perform as expected) and external factors (the explosion of the Internet bubble, 9/11 and AOL poor performance) create the worst economic scenario ever!

Forced to undergo a severe company restructuring, the dilemma is: should they keep and maybe redesign the non performant and expensive super platform (combination of Sun Machines, 4 servers with 2 CPUs each, Unix OS, Oracle database, Vignette for content and e-commerce, search engine Excalibur, plus firewall) or switch to a new, simple and less expensive one (MSFT on HP servers, Windows NT, SQL Server as database engine, MSFT Commerce Server 2000 as electronic commerce application)?

The answer seems implicit in the question, however it is not straightforwad.

So, as a famous song goes, Should I stay or should I go?

1. Should I stay?

STRENGHTS --> All solutions used in the platform are the best in breed and are characterised by their flexibility; UNIX OS allows higher flexibility in comparison to Windows and it is cheaper (no license to be paid, maintenance cost almost zero because of the open source nature); Oracle allows interoperability in comparison to SQL Server; Vignette provides top quality in enterprise content management.
WEAKNESSES --> Too many different solutions lead to high maintenance cost; integration and communication among them is a continuous challenge; huge redundancy; complexity; servers are very big and expensive.
OPPORTUNITIES --> such a platform may successfully support a company in a fast growing market; customers data can be easily used to identify trends, propose ad hoc services and promotions, such a platform can offer a unique shopping experience.
THREATS --> the integration of the various solutions is a daily challenge, chances of failure, it requires a lot of people specialised in each of them, if the market size is below a certain level breakeven might not be easily achieved.

2. Should I go?

STRENGHTS--> MSFT offers one package containing all the different solutions the company needs (database, server, e-content management, search engine); lower maintenance cost; easy integration among solutions; quick and ad hoc customer service.
WEAKNESSES--> Microsoft OS and database are not as flexible as Unix and Oracle; security issues as MSFT is more widespread;
OPPORTUNITIES --> given the difficult market conditions, a simpler and better integrated solution might be the best solution in the short period.
THREATS--> should the market start to grow again, this platform maybe over-simplified and too rigid to properly support the company changed needs (longer period approach) and would lead to a need for updates and new batches, hence new costs and enhanced complexity.

RECOMMENDATIONS

Taking into account what highlighted above, I would recommend keeping the current platform and redesigning it for the following reasons:

1.COST Sunk costs cannot be recovered. The company would incur into new expenses should it go for a new platform and would not recover the ones arising from the first project. The amount of money used to purchase a new system can be utilised to redesign the existing platform making it leaner and smaller. Furthermore, given the financially critical moment the company may not afford to undergo a totally new IS project. The new supplier and related consultants would fly in claiming for a need for redefining the business case, undergoing new RFI and RFQ, basically they would recommend to start from scratch. This is expensive and time consuming. Furthermore, should the business scenario improve, the MSFT platform may require too some redesigning and updating, leading to further costs.

2.QUALITY OF THE PLATFORM Because of the unique combination of solutions, the current platform is much more powerful , flexible and really tailor made. This is without any doubt a competitive advantage in the long term. Despite the need for redesigning it so as to overcome the integration issues and cope with the current poor economic moment, switching to a new platform is not the most appropriate move. This is rather a panic reaction mode and short sighted approach which could lead to the need for updating/changing again platform in the future which would imply further pain and costs.