Context:
Casa del libro was founded in 1923 in Madrid. The company is the second bookseller in Spain. Casa del libro belongs to Planeta, the main editorial group in Spain. It is also known for their database with more than 3'000'000 references.
The bet:
In the late 90's, Planeta wanted to achieve leadership in the Spanish book market, and saw the casadellibro.com a way to achieve it. Casa del livro already sold book in the internet, but in a very rustic way, with a demand of lot of processing. In 1999, they hired a consulting firm and in 2001 a CEO, to develop this business.
The problem:
To support the expectations of a increasing market, and business expectations, the consulting firm, suggested the most advance and expensive IT solution. This year, brought to the company new challenges: 11th terrorist attack, the AOL, their partner in internet was slowing activity, and the IT solution did work. In such context, the group adopted a austerity position, trying to cut expenditures
The question:
Should they keep the platform and redesign or change to another, in this case Microsoft?
To make a decision, we must to make some questions:
- Is this a long term bet to Planeta?
- The priority is to reduce cost or develop a business that can bust sales?
- Was the investment first platform considered a sunk cost (as it should)?
- Was is the trend in the demand in the business plan?
In my opinion this is a short call decision: focus on cost, focus in rapid implementation, so we should opt for the Microsoft solution. The old system had higher installation cost, had a very high maintenance cost and to justify its implementation the scalability was fairly high. The Microsoft solution would have lower installation costs and low maintenance cost. In this period, beginning of 2000 e-commerce in Spain was a mirage, so we should be very cautious in our decision. We should never forget that at this time, the first investment is a sunk cost, so we should decide on future expectations.
tbs
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