i have assignment

lfhe Amazon of lnnovation {trrn Novemb er 26, 2012, Amazon.com customers ordered 1ffi"5 million items worldwide, an average of 306 items per 'uecond. On its peak order-fulfiIlment day, Amazon shipped mmore than 15.6 million units, and the last unit delivered in ttiune for Christmas was ordered on December 24 at l1:44 AM aued delivered that same day, 3 hours later.l2 Such perfor- m:urce is only possible because of Amazon's innovative use of foformation systems. Some of its major innovations are listed in Figure I -8.

You may think of Amazon as simply an online retaileq and ftat is indeed where the company achieved most of its suc- cess. To do this, Amazon had to build enormous supporting infrastructure-just imagine the information systems and ful- fiIlment facilities needed to ship 15.6 million items on a single day. That infrastructure, howeve4 is only needed during the busy holiday season. Most of the yea4 Amazon is left with ex- cess infrastructure capacity. Starting in 2000, Amazon began to lease some of that capacity to other companies. In tlie procbss, it played a key role in the creatisn of what are termed. cloud seruices, which you will learn about in Chapter 4. For now, just think of cloud services as computer resources somewhere out in the Internet that are Ieased on flexible terms. Today, Amazoq,s business lines can be grouped into three major categories:

. Online retailing

. Order fulfillment

. Cloud services Consider each.

Amazon created the business model for online retailing. It began as an online bookstore, but every year since lgg8 it has added new product categories. In 2011, the company sold goods in 29 product categories. Undoubtedly, there will be more by the time you read this.

Amazon is involved in all aspects of online retailing. It sells its own inventory. It incentivizes you, via the Associates pro- gram, to sell its inventory as well. Or it will help you sell your inventory within its product pages or via one of its consign- ment venues. Online auctions are the major aspect of online sales in which Amazon does not participate. It tried auctions in 1999, but it could never make inroads against eBay.13

Today, it's hard to remember how much of what we take for granted was pioneereit by Amazon. 'lCustomers who bought

Case Study 1

this, also bought that;" online customer reviews; customer ranking of customer reviews; books lists; Look Inside the Book; automatic free shipping for certain orders or frequent custom- ers; and Kindle books and devices were all novel concepts when Amazon introduced them.

Amazon's retailing business operates on very thin margins. Products are usually sold at a discount from the stated retail price, and 2-day shipping is free for Amazon prime members (who pay an annual fee of g79). How do they do it? For one, Amazon drives its employees incredibly hard. Former employ- ees claim the hours are long, the pressure is severe, and the workload is heavy. But what else? It comes down to Moore,s Law and the innovative use of nearly free data processing, stor- age, and communication.

In addition to online retailing, Amazon also sells order ful- fillment services. You can ship your inventory to an Amazon warehouse and access Amazon's information systems just as if they were yours. Using technology known as Web services (discussed in Chapter 6), your order processing information systems can directly integrate, over the Web, with Amazon,s inventory fulfillment, and shipping applications. your cus- tomers need not know that Amazon played any role at all. you can also sell that same inventory using Amazon's retail sales applications.

'Amazon Web Services (AWS) allows orgahizations to lease time on computer equipment in very flexible ways. Amazon,s Elastic Cloud 2 (EC2) enables organizations to expand and contract the computer resources they need within minutes. Amazon has a variety of pagnent plans, and it is possible to buy computer time for less than a penny an hour. Key to lhis capability is the ability for the leasing organization,s computer programs to interface with Amazon's to automatically scale up and scale down the,resources leased. For example, if a news site publishes a story that causes a rapid ramp-up of traffic, that news site can, programmatically, request, configure, and use more computing resources for an hour, a day, a month, *Tflr";

with the Kindle devices, Amazon has become a vendor of both tablets and, even more importantly in the long term, a rrendo. of online music and video. And to induce cus- tomers to buy Kindle apps, in 2013 Amazon introduced its own currency, Amazon Coins.

Y"For the Eighth Consecutive Year, Amazon Ranks #1 in Customer Satisfaction Dudng the Holiday Shopping Se asonj, Amazon.com, last modified December 27, Z.Ol2,

.http://phx.corporate-ir.net/phoenix.zhtml?c=126060&p=irol-newiArticle&tO=lzagiBs8lTrtyitiynt=. '"For a fascinating glimpse of this story from someone inside the company, see "Early Amazon: Auctions" at ttitp)/ginaen.blogspot.com/2006/04/ early-ama zon-auct ions.h lml, accessed August 201 2.

32 GHAPTEFI

Figure 1-8 lnnovation at Amazon Sou rce : Data f rom Amazon.cbm

r The lmportance of MIS

First online bookseller

Launch of'Amazon.com Associates Program-sellers earn revenue by featuring Amazon.com products on theirWeb sites

Amazon.com Prime

Alexa Web lnformation Service

Kindle

Amazon.com Web Services enhance- ments and upgrades

Kindle 2 and Kindle DX

Kindle applications for iPhone and iPod Touch

Kindle for Mac, iPad,

Android, and Web

1-ClickrM Shopping

Amazon.com Advantage Program-self-service consignment sales for media

Amazon.com auctions-comPetitor to eBay that failed

1993 1994 1995 1996 1997 ',1998 1999 200s 2006 2007 2008 2009 2010

Amazon.com Associates Web Services-gives' developers access to Amazon.com product data

Search lnside the BookrM

Amazon.comWeb Services (AWS)-leasing of computer infrastructure

Borders Group Alliance and

Target Stores Alliance

Lau nches Marketplace-sellers can sell goods on the Amazon.com Web site and Amazon.com can fulfill the orders

http://phx.corporate-ir.net/phoenix.zhtml2c=176060&p=irol-corporateTimeline' accessed June 201 3

Amazon

Kindle Paperwhite Kindle Fire HD

facilitated

GIIJEEiTIClNSi

l-4. In what ways does Amazon, as a company, evidence the willingness and ability to collaborate?

l-5. In what ways does Amazon, as a company, evidence the willingness and ability to experiment? Use Amazon Coins

as an example: https://deueloper.&mazon.com/post/ T x2 E ZG RG 2 3V N Q 0 K / I ntr o ducing- Am az o n - C o in s - A- New -

Vir tual- Cur r en cy -fo r- Kin dle - Fir e. ht nxl.

l -6. In what ways do you think the employees at Amazon must

be able to perform systems and abstract thinking?

l-7. Describe, at a high level, the principal roles played by each of the five components of an information system

that supports order fulfillment.

l-8. Choose any five of the innovations in explain how you think Moore's Law innovation.

Figure 1-8

l-9. Suppose you work for Amazon or a company that innovation as seriously as Amazon does' What do

suppose is the likely reaction to an employee who

to his or her boss, "But, I don't know how to do

l-10. Using your own words and your own experience, skills and abilities do you think you need to have

thrive at an organizatibn like Amazon?