Customer as they would be using this online retail store. The thrust of this strategy would fall into the category of Differentiation

Roles, Roles and Relationships

Using information systems to compete dictates an essential partnership, which is why the concept of Roles, Roles and Relationships is vital to understanding the importance of IT at Apple. The three elements of this concept are the role of information systems, the role of senior management and the relationship between the two.

At Apple Computer, the role of information systems is one of competitive priority. If a system can provide them with a competitive advantage, improved efficiency or increased effectiveness then it ought to be implemented. There is a necessary and essential relationship between competitive advantage and the deployment of new and improved systems. The purpose of these systems are to “...assure that the corporation’s present as well as future demands for information, information processes, information systems and computer-based technologies are provided in such a manner that the daily conduct of the business will not be impacted and that the future business opportunities can be capitalized on and managed by the corporation.¹³ Apple uses IS in just such a manner.

The role of senior management is perhaps more important than the information systems themselves. Management plays a major part in positioning and prioritizing the competitive role of information systems and therefore ought to be quite involved in many aspects of the systems deployment. This does not mean that these senior executives must be hands-on computer technicians; it does, however, mean that since information systems affect the long-term viability of the corporation and because the duty of the senior executive is to assure this viability, the two must definitely communicate and relate with one another.

Within Apple, the four executives (mentioned in the introduction to section III) share a major responsibility towards improving and expanding vital information systems. This dictates that when Avie Tevanian decides that a new system must be added in order to exploit a strategic opportunity, a web of interaction is set into motion. Avie would contact Ron Johnson and tell him about the need for this new system. If Mr. Johnson agrees with Avie’s recommendation, he is then put to task trying to convince Fred Anderson that the cost of not implementing this system dwarfs that of the actual implementation. If Fred Anderson disagrees with Ron Johnson and Avie as to the benefits of the system, it’s more than likely that they would all schedule a meeting and sit down to discuss the discrepancies. Once Fred Anderson decides that this new system would provide suitable benefit with regards to cost his duties direct him to the Chief Executive: Steve Jobs. Once he signs off on the expansion, Fred Anderson allocates the funds to the IS department and sets Avie and Ron to task.

One important idea to walk away with is that the communication doesn’t stop there. The activities of feedback, maintenance and cost-benefit analysis at the post-implementation stage are extremely important when trying to come to grips with the successes and failures of the new system.

Instead of focusing again on Apple’s successful implementation of an Online Retail System, the concept of define/redefine can be applied to another system the company relies greatly on with regards to providing value to customer: the point-of-sale transaction processing system implemented at all of Apple’s brick & mortar retail locations. The concept applies in a number of ways to this system, especially due to the completely new business model Apple had chosen with regards to sales and distribution.

Apple wanted to redefine the way it sold their products due to the lack of promotion and presentation found at the large third-party retailers. Retailers like Fry’s Electronics and CompUSA would leave their Mac department completely unstaffed and woefully under stocked. This obviously drove customers away from the platform if they were wary of computers to begin with, and since these were the very customers Apple needed the problem was easy to identify. To change the way they did business, Steve Jobs and Fred Anderson decided that the best course of action was to open their own stores, control their own inventory, monitor their own sales and customers, hire and fire their own employees and to generally control as much of their business as possible. This, however, would require a bit more from Apple than a mere redefinition of their sales approach.

Apple desperately needed to define their retail presence in a manner which would differentiate it from competitors such as Gateway and Dell, the former who relied on brick & mortar retail stores to place orders and the latter who relied on a direct order system via the telephone and/or internet. To clarify their retail presence, Apple studied exactly what customers did when they entered a store and tailored their information systems to assist them in every way possible. First and foremost, the entire store was filled with operable and easy-to-use products -- all of which are sold at the store. These products are all connected to the internet or to a computer which can interact with them (such as a digital camcorder); therefore, customers are able to both test the products on everyday tasks and to see how they stack up against one another.

The next big step in the retail definition was to provide support to existing customers who were experiencing difficulty with the product or had questions about products they want to purchase. This prompted the construction of a Genius Bar which is manned by at least 2 employees at a time (and usually more) who have access to the entire Apple Knowledge Base¹⁴ along with all their personal experience with the platform. Finally, the definition of Apple Retail was refined to include a wonderful paperless transaction procedure which executed on almost-exclusively Apple hardware. Purchases are completed by an employee manning an iMac at the front of the store who has access to the customers information and previous purchase. All four types of Apple customers (enterprise, education, development and consumer) were now able to apply their specific pricing right at the store in real time.

To sum it all up, by providing value to customers through the use of information technology and systems Apple was able to increase their sales, publicity and quality through increased awareness of every step in the transaction between the business and the customer. A value-added approach to designing and implementing information systems is priceless with regards to the furthered success of a business.

Significance of Telecommunications at Apple
There is a saying that truly describes the importance networks and telecommunications play to a business and the vital processes which make up it’s day to day operations: No field in the world offers more promise than the twin technologies of computers and telecommunications. The wisdom is inherent, describing the dependency the computer (and more abstractly, information systems and technology) has on sharing in information in a timely manner.

When Apple approached the subject of telecommunications design they had a number of criteria which needed addressing. The first criteria, user connectivity needs, dealt with finding a flexible system which could handle varying workloads. The second criteria, network access and use, was determined by analyzing the amount of information regularly being exchanged and the number of employees/processes trying to access it. Data security was a third focus of network design which resulted in a lot of headaches for a company as secretive as Apple. Lastly, the network designers focused on constantly improving response times, increasing information volume and designing a system which allowed both tech-savvy and business-savvy employees to have equal opportunity.

Apple’s telecommunications network consists of a number of important networks, all of which are vital to the long-term success of the business. The backbone of their communications infrastructure is their Cupertino-based intranet which links up all the facilities on the Campus in a secure and efficient manner. This network provides internal and private electronic mail delivery to ensure that the valuable corporate data present does not fall into the wrong hands. Other major processes which use this network are the video conferencing tools which Apple is starting to phase into the workplace. Their goal is to allow meetings to take place at the convenience of every employee and not just the instigator of the meeting. Also recently integrated into this network is the aforementioned ERP system which Apple hopes will shorten product lead time.

The importance of getting the right information into the right hands can never be overvalued, which is why Apple went to great lengths to make sure this highly extended intranet operated at the level expected of it. This extension of their intranet was designed to replace the aging extranet access supplied to 3rd party retailers who are slowly being phased out of the Apple business plan. In short, Apple’s telecommunications system was designed to be connectable, flexible, phaseable, available, reliable, manageable and maintainable.

Success Factor Profile
The success factor profile is an analysis tool used either as the basis for an initial planning process, as an assessment of the progress of new systems, or as an audit device for mature systems. This concept is important with regards to understanding exactly where a company is excelling and who is responsible for the success. While there are many areas in which Apple has shown marked improvement, only four stand out as true successes.

Culture is by far the most indicative success at Apple Computer, Inc. This is a company that fosters great employee relationships while still delivering top-quality products and services. The importance of a company’s culture can not be stressed enough since it affects nearly every aspect of both the long-term business and the day-to-day operations. The cultural emphasis rooted in the corporation is astounding, especially considering the business they are in. It is a value-driven factor which is implemented from the top down, starting with the CEO himself, Steve Jobs. Apple’s cultural motto can be summed up as the development of wonderfully exciting products by an equally wonderful team.

Another important success factor at Apple would easily be the business vision directed through the eyes of Steve Jobs. The man knows what the Digital Hub Industry is capable of and decided to hop in with “guns a blazing.” For instance, the decision for Apple to begin manufacturing their first major digital device -- the iPod -- came down to one man: Mr. Jobs. He understood the potential that this emerging market held and decided that it would be foolhardy to ignore it. Other key executives, such as Fred Anderson and Jon Rubinstein, the Senior Vice President of hardware engineering played a huge part in focusing this business vision to lead Apple into this new era of electronics revolving around the personal computer. Along these same lines, risk management is another important factor attributable to Apple’s senior management. The iPod was a huge risk for Apple, especially since they were selling a hard drive based digital music device for a price tag of over $300. Apple’s senior executives used a great deal of marketing data and technical know-how in order to decide that this risk was worth taking. Without Apple’s information systems, this risk probably would not have been taken since it was ultimately responsible for the task of putting the necessary information in the hands of these important decision makers.

Lastly, the most notable improvement by Apple in any field considered a success factor would be in their ability to link to suppliers. Due to the inability of Apple’s suppliers, such as Motorola and ATi, to get necessary products to their respective manufacturing locations on time, Apple decided to take drastic measures in order to secure their precarious footing. They decided to start taking offensive action and began courting other suppliers, such as IBM, Intel and nVidia. This allowed for choices to be made instead of the awful dependencies which led to the failed release of the original Power Mac G4 and G4 Cubes. Small changes to Apple’s information systems provided the necessary breathing room which helped shorten transition time between product updates. As such, Apple is now using more and more products from multiple vendors and has never looked back.

The Success of

Apple Computer, Inc.

At this point in the paper it is time to step back and analyze the areas in which Apple has succeeded in running their business, specifically paying close attention to the effect information technology has had. The Digital Hub Industry necessitates a strong information systems integration between all areas of a company and Apple has shown that they are more than willing to achieve this. Through the use of online retail systems, transaction processing systems, enterprise resource planning and numerous other systems, Apple has increased public awareness about their existing products and brought new products to market in a spectacular fashion.

It is important to recognize the importance that senior management has played in the development of these key information systems. Fred Anderson, Ron Johnson and Avie Tevanian worked together to constantly change and upgrade their systems in order to have the most effective information distribution and processing technology possible. There is no possible way to deny the effect this had on the business success of such ventures as the brick & mortar retail stores, the iPod and the iLife software suite.

But while senior management played an important role in designing and overseeing the construction and maintenance of the information systems at Apple, another man held the keys to success. Steve Jobs, the CEO and cofounder of Apple Computer, is perhaps the most successful element at the company. This chief executive has business vision in excess and is willing to take the risks necessary in order to preserve and extend the business. Without Steve Jobs, Apple would be lost.

A key factor to the success Apple had in the Digital Hub Industry is their attention to detail. Apple was not the first company to market a hard drive-based digital music player; they were merely the first company to get it right. They combined a clever user interface with high audio quality and marketed a product which appealed to both audiophiles (a term representing audio enthusiasts) and normal consumers. The importance of this product cannot be stressed enough! The iPod saved Apple in more ways than one, but the most notable way is through profit. The iPod has one of the best profit margins in the industry -- and it will soon be having more of an effect on Apple’s long-term profitability.

Recently, Apple has taken to developing their online music store, which they refer to as the ‘iTunes Music Store.’ This is one of the few unprofitable businesses that Apple runs, which prompts some to ask why they decided to do it. Well, the answer is quite simple: to sell more iPods. Apple’s online music service -- and their recent marketing gimmick with Pepsi -- encourages people to legally purchase music for use on the computers and mp3 players. But the trick here is that Apple’s music store sells songs in a format that is best suited for the iPod as opposed to the other products on the market. This allows Apple to leverage their “bleeding” music business against their exceedingly profitable digital device business.

Now, it cannot be said that Apple has been even remotely perfect with regards to both business success and successful deployment of information systems. There are still a number of areas Apple can improve in. For instance, Apple’s support services accessible by telephone. This system, which was introduced in the mid-1980’s, has been neglected a bit too much. Call time is a bit longer than expected; support personnel are a bit snappy; customer and product information are often outdated and therefore worthless. As support is essential to the success of any business, Apple truly needs to reevaluate their current implementation of this system. Many people know about the Online technical database mentioned earlier in the paper, as do they know about the aforementioned Genius Bars located in all Apple Retail Stores. But most people don’t have the luxury of using these options and depend on speaking to a real person over the telephone.

Another shortcoming of Apple would be their decision to stick to the PowerPC architecture that, day by day, is shrinking in stature compared to the x86 architectures maintained by powerhouses like Intel and AMD. Apple’s decision to use the PPC architecture was made in the early 1990’s and as such was not made by Steve Jobs, who was only recently brought back to power (as noted in the History section). The decision was perhaps the right move at the time, but now it seems that the cost of not doing business with a giant like Intel is almost unbearable. This is an area of their business that Apple, and more specifically Steve Jobs and Fred Anderson, will have to truly consider if they are hoping to change the status quo.

To conclude, Apple Computer, Inc. is a marvel of the Silicon Valley and a great example of a technology company that truly understands the value information systems can play in positioning a business for efficiency, effectiveness and competitive advantage.

Works Cited

Varian, Hal R., Intermediate Microeconomics: A Modern Approach

Fifth Edition, W.W. Norton & Company, New York: 1999.
O’Brein, James, Management Information Systems Fifth Edition, McGraw-Hill Irwen, San Francisco: 2002.
Callon, Jack D., Competitive Advantage Through Information Technology, McGraw-Hill Irwen, New York: 1996.
Linzmayer, Owen, Apple Confidential Second Edition, No Starch Press, San Francisco: 2004.
Carlton, Jim, Apple: The Inside Story of Intrigue, Egomania, and Business Blunders, Harper Business, New York: 1998.
http://www.apple.com/support/, Apple Knowledge Base, 2004
http//www.apple.com/pr/, Apple Public Relations and Press Info, 2004
http://phx.corporate-ir.net/phoenix.zhtml?c=107357&p=irol-index, Apple Investor Relations, 2004
http://www.appleturns.com/, As The Apple Turns, 2004
http://www.apple-history.com/, Historical Apple Product Offerings, 2003

My three best sources came from Jack Callon’s wonderful textbook on gaining competitive advantage through information systems. This provided a great deal of terminology necessary for the creation of this analysis term paper. My second most important source was Apple’s public relations website and their invester relations site. These provided a wealth of information needed to come to the conclusions I did. Lastly, the website As The Apple Turns was invaluable to me since it provided a comedic and satirical look at the business decisions Apple has made in recent years. Without their side of the matter I would be lost.