All posts by 352272as

Optimal Management of Digital Content of Tiered Infrastructure Platforms – A Summary


Multimedia content providers have faced an exponential growth in digital content in recent years, and this explosive trajectory is likely to be sustained in the future. Information lifecycle management (ILM) using multiple tiers of infrastructure at varying performance and operating cost levels is a natural solution to this growth and the shifting popularity of digital content over time. However, content migration across tiers has traditionally tended to be expensive because of extensive planning, debugging, and reconfiguring.

Furthermore, firms (both content providers using in house facilities as well as infrastructure-as-a-service— IaaS—providers) therefore rarely tended to archive data and thus overprovisioned the top-of-the-line storage infrastructure (such as the solid state drives or SSDs) to ensure scalability and prevent service disruptions. Putting all of a firm’s multimedia objects in such a highly accessible high-performance storage and delivery system may assure exceptional quality of service for all objects at all times. However, this extreme strategy ignores the temporal and media-specific characteristics of digital content and assumes the same revenue earning potential for all objects across the board, thereby being inefficient from a profit maximization perspective. This practice leads to significant inefficiencies in terms of resource utilization, cost, returns on infrastructure investments, and ultimately net returns of the firm.

Moreover, Du et al. (2014) carried out a longitudinal empirical study to evaluate the proposed migration and revenue-management strategy. They collected data on 1,334 unique videos from Amazon VOD over 13 weeks and used these to construct the complete digital media network for each week and to approximate their expected direct hits. They have developed a joint strategy by which a tiered service provider such as Limelight can set quality of service–differentiated infrastructure prices and a media content provider such as Amazon VOD can allocate digital content across tiers. They propose a bi-level model where both parties maximize profits and develop a polynomially-solvable optimal algorithm. They model two primary effects—direct access differential revenue effect caused by the tiers and traffic-generating effect caused by the media objects— which together lead to a traffic convergence effect on any node, resulting in direct and indirect marginal revenues from a node.

Finally, some key managerial implications emerge from this study. First, sellers of tiered services would do better to maintain a narrow technological gap between the two tiers; because of the highly connected nature of digital media objects, a larger difference in quality of service would mean greater erosion in network wide revenues. Second, if the buyer and seller are interested in forming a vertically integrated alliance, the bi-level solution can serve as the basis for negotiation and the evaluation of the transaction costs in that process. Finally, videos in the long tail can justifiably be placed in Tier I, as they enable discovery of other videos; even though their direct access effect is relatively lower, their traffic-generating effect has larger network wide revenue implications, often more so than more popular items.

Resources:

Du, A.Y Das, S. Ram, D. Gopal, Ramesh, R. (2014). Optimal Management of Digital Content of Tiered Infrastructure Platforms. Information Systems Research 25(4): 730-746.

Crowdsourcing brand design does not add up


99designs, the world’s largest graphical design marketplace is one of the best examples of value co-creation. The platform was launched in 2008 by Matt Mickiewicz and Mark Harbottle. Their headquarters are based in San Fransisco, with additional offices in Paris, London and Rio de Janeiro. 99designs helps start-ups and small businesses as well as marketing agencies and other organizations with design needs by providing the creativity of over 250,000 graphic designers from 192 countries around the world. In excess of $62 million has been paid out to the above design community in more than 250,000 hosted design contests.

The platform acts as a middleman between business owners and graphic designers: the platform hosts contests in which clients post their needs and designers compete to fill their needs. Designers apply finished work customized to the clients’ specifications in the contest listing. According to 99designs, a win-win scenario exists: its clients gain access to the site’s resources (the designers), while the designers are given an opportunity to compete in contests that can accumulate to a pay-out of $600,000 monthly. This is not the only winning part of the platform: the company seems to have a big advantage too. It states it will generate up to $12 million in revenues and is growing monthly with 10%.

However, many graphic designers think the platform is not suitable to their needs. ‘99designs is something akin to a Walmart,’ says Dan Ibarra, industry veteran and co-founder of Aesthetic Apparatus, a Minneapolis design studio. ‘It’s not necessarily dedicated to bringing you good work, but to bring you a lot of it. That’s not necessarily better.’ 99designs fosters work in which the designer invests time and resources with no guarantee of payment, a huge gamble for designers competing against thousands of others. Competition is stiff: For each project, 99designs says an average of 95 designs are submitted.

Looking at the numbers, it also makes sense for business owners to not use 99designs. James Archer, CEO of Forty, explains this very well: ‘let’s say you find an up-and-coming student designer at your local university, and pay them $1,000 to design a logo for you. If their normal rate is $50/hour (which is reasonable for a less-experienced designer), you’ll get about 20 hours of their time for research, brainstorming, designing, revision, etc. It’s not a ton, but for a small business you could probably get a pretty good logo out of that project. In addition, that student designer has made some much-needed money, you’ve supported the local economy, etc. Let’s compare that to a crowd sourced “design contest.” You put up the same $1,000, and you get 100 logo variations from different designers. They’re certainly not going to put 20 hours’ worth of thinking and effort into a 1-in-100 chance at getting $1,000. If you divide that 20-hour-effort by the 1-in-100 chance, it comes to a reasonable time expenditure of just 12 minutes.’

So why does 99designs work so well even though the designers don’t seem to like it and businesses could be better off by just hiring one designer? Please let me know what you think in the comments.

Resources:

https://www.crunchbase.com/organization/99designs

http://www.forbes.com/2010/07/09/99designs-spec-graphic-technology-future-design-crowdsourcing.html

http://forty.co/crowdsourcing-your-brand-design-the-math-just-doesnt-work-out

Commoditized Digital Processes and Business Community Platforms: New Opportunities and Challenges for Digital Business Strategies


The emergence of the digital business strategy concept has coincided with three other conceptual advances for our field. First, it is increasingly recognized that companies need to strategize not just about product-market segments), but also about their ecosystems. Second, there is growing awareness of the potential benefits of replacing proprietary data exchange conventions with open, Internet-based standards such as RosettaNet’s partner-interface-processes in high tech, MISMO standards in the mortgage industry, and RFID standards in retailing. Third, there is great interest in the possibilities of shared digital platforms like Salesforce.com and Amazon’s cloud-based hosting services (Markus and Loebbecke, 2013).

With their article, Markus and Loebbecke (2013) want to invite the Information Strategy Community to consider the implications of three new conceptual developments in the field. First of all, they propose the concept of the business community as consisting of overlapping ecosystems of competing orchestrators (large, powerful companies at the core of an ecosystem) in defined areas of business activity (for example automotive retailing or mortgage lending). Secondly, they distinguish standardized and commoditized digital processes in business. According to Markus and Loebbecke (2013), whereas standardized business processes are still heavily customizable to the preferences of an orchestrator, commoditized business process seem to be substantially the same across an entire business community. Finally, there must be a differentiation between customizable digital platforms that are ‘shared’ by many companies that are not necessarily in the same industry and business community platforms that are tailored for use by all members of a business community.

As stated by Markus and Loebbecke (2013), when ecosystems overlap, the digital business strategies of orchestrators have consequences beyond the boundaries of their own ecosystems. Orchestrators impose the costs of multiple platforms and process variations on their partners by pursuing competitive advantage through customized business processes and closed digital platforms. By doing this, the orchestrators will be harmed as much as their partners due to the resulting inefficiencies in terms of costs, errors and, delays. The holy grail of the digital business strategy is to achieve efficiency without sacrificing flexibility or differentiation. Markus and Loebbecke (2013) wonder whether truly efficient, dynamic business interoperability can be achieved without commoditizing business processes. Additionally, they wonder whether business community platforms are the way in which process commoditization and commonality of business practices will first come about.

Based upon the former doubts, Markus and Loebbecke (2013) believe that the concepts of business community, commoditized business processes, and business community platforms open up a range of important research opportunities concerning digital strategy. The following three opportunities are important to consider:

  • How much advantage do orchestrators really get from business processes tailored to their preferences?
  • When, how, and why do business process commoditization and/or widespread adoption of business community platforms occur?
  • What are the consequences of process commoditization and/or business community platform adoption, to the extent that they occur?

The focus of Information Strategy research needs to be expanded beyond business ecosystems to business communities.

Source:

Markus, L.M., Loebbecke, C. (2013). Commoditized Digital Process and Business Community Platforms: New Opportunities and Challenges for Digital Strategies. MIS Quarterly, Vol. 37 No.2/June 2013.

Burberry World: Co-Creation in the Fashion Industry


A good place for companies to start with co-creation is beginning to connect their internal sales people with their customers’ communities on social media. An example of a successful implementation of such a strategic approach is Burberry: its CEO, Angela Ahrendts, decided to act upon a grand vision of the company as a social enterprise where all employees, customers, and suppliers share the same experience of the brand, whether through stores or digital platforms. The digital platform that Burberry, the iconic British fashion brand, is called Burberry World (Harvard Business Review, 2012). Burberry is a British fashion brand that produces clothing and accessories. Besides that, Burberry produces their own fragrance line and owns franchise stores all over the world.

On the 13th of September 2012, Burberry announced their most digitally-advanced brand experience for the first time. Part event space, part innovation hub, part store, Burberry Regent Street blurs the physical and the digital to create ‘Burberry World Live’. Highlights of this digitalized store include (Burberry, 2012):

  • Immersive audiovisual experiences with nearly 500 speakers and 100 screens;
  • Innovative use of radio-frequency identification technology;
  • Digitally-enabled gallery and event spaces;
  • Increasing personalization as online insights meet offline interactions to create the most progressive luxury customer service.

BURBERRY-WORLD-LIVE-121-REGENT-STREET-670x397

Angela Ahrendts states: “Burberry Regent Street brings our digital world to life in a physical space for the first time, where customers can experience every facet of the brand through immersive multimedia content exactly as they do online. Walking through the doors is just like walking into our website. It is Burberry World Live. We call Burberry a young, old company: forever moving forward while never forgetting our 156-year heritage. The fusion of history and innovation in Burberry Regent Street is the brand’s most comprehensive creative and commercial expression.”

Beyond the above mentioned vision, Burberry world is a collection of applications that was developed by Salesforce.com that allows stores’ sales and service people and customers to re-invent their interactions as a mini-community. Employees that work in the store can engage with the customers: through a software program called Chatter, the employees can not only have access to traditional CRM-related transactional data, they can see an aggregation of their customers’ social media posts and activities as well.

Moreover, customers can also engage with the brand on their terms. They can create their personal Burberry portal and start conversations on a variety of lifestyle issues, such as music and fashion. Customers also use these portals to make store appointments to view a new collection item or repair their previously bought items. Using both the engagement from the employees’ and customers’ side, the platform unleashes mutual emotions and generates useful data to both parties.

Furthermore, the scope of Burberry’s co-creation strategy is not limited to the sales and service interaction. It is also possible for customers to remotely participate in fashion shows and to order items directly off of the runway. Additionally, they can suggest designs for the next trench coat (my personal favourite).

References in order of appearance:

https://hbr.org/2012/12/co-creation-the-real-social-me/

http://www.burberryplc.com/media_centre/press_releases/2012/burberry-world-live-arrives-in-london