Electronic Business: Concepts, Methodologies, Tools, and Applications (4-Volumes) P73 pptx

654 Developing an Online Fleet Management Service workplace safety. In hindsight, the brothers were happy they stuck with their intuition and ignored this advice. We felt then that a proliferation of products would spread our start-up resources much too thin. So we decided, against the advice of our advisors, to FRQFHQWUDWHRQWUDI¿FVDIHW\DORQH/RRNLQJEDFN we see this decision as critical to the company’s early survival and subsequent success. Taking this focus one step further, they de- cided to initially provide training for drivers of passenger vehicles only (such as sales people, managers, and others). They would not consider the massive trucking market, as truck drivers (at that time) were less comfortable with computers and much less likely to have Internet access. It took a year for the product to be brought to launch status. Lesson scripts needed to be developed, driving situations videotaped, voices added to the lessons, and quizzes developed. Also, the basic delivery structure, utilizing the Web, had to be put in place. AlertDriving’s Web site was developed to provide information about the company and its products, to allow testing of a sample lesson, and to provide access to training modules for customer employees. $VDQHZSOD\HULQWKHGU LYHUWUDL Q LQJDQGÀHHW risk management business, AlertDriving needed to establish credibility. One way they did this was E\HQOLVWLQJ7UDI¿F6DIHW\0DUVKDOV²SHRSOH with considerable experience as provincial police, VWDWHWURRSHUVRUFLW\WUDI¿FRI¿FHUV7KHVHSHRSOH provided advice on the initial product and allowed AlertDriving to boast about their hundreds of years of experience. Over time, the role of these TSMs migrated to services concerning accident investigation and reconstruction. They were paid R Q D I H H  E D V H G E D VL V  V R S U RY L G H G V L J Q L ¿ F D Q W Y D O X H  during the start-up phase, at relatively low cost. In high tech marketing, the concept of the ³ZKROH SURGXFW´ LV ZHOO HVWDEOLVKHG 0RRUH 1999). Most potential customers are looking for one-stop shopping, and a compelling reason to buy comes when the entire package (the product/ service, training in use of it, after-sales support, etc.) is made available. As Rob and Gerry Martin talked further with potential customers and de- veloped the initial training series, they developed a better understanding of what AlertDriving’s ZKROHSURGXFWVKRXOGEH7KH\IRXQGWKDWÀHHW managers routinely checked the driver license records of potential drivers and sometimes the records of current employees. All aspects of a SHUVRQ¶VGULYLQJUHFRUGVSHHGLQJWLFNHWVWUDI¿F infringements, accidents, etc.) were available. However, it wasn’t always easy to do this. The brothers observed that a quick, user-friendly means of accessing an individual’s MVR (motor YHKLFOHUHFRUGZRXOGPDNHOLIHHDVLHUIRUÀHHW PDQDJHUV6RWKH\HYDOXDWHGVHYHUDO¿UPVWKDW provided access to such records and teamed up with First Advantage Corporation, a Florida-based EDFNJURXQGFKHFNLQJ ¿UP 7KH $OHUW'ULYLQJ Web site was developed to interface with First Advantage’s database. While the margin on this business was low, it was a natural complement to AlertDriving’s training product (which had much higher margins). In April 2000, AlertDriving had its next major test at the National Association of Fleet Administrator’s (NAFA) tradeshow. With an entry fee of US$15,000 (equivalent at the time to some $23,000 Cdn), it was an agonizing decision. Gerry and Rob decided this was the best time and place to showcase their new product. So they put their marketing experience into high gear by preparing an extensive preshow direct mailing and telemarketing campaign. Results were very positive — their booth was always busy and WKH\VLJQHGXSWKHLU¿UVWFXVWRPHU&XPEHUODQG Farms, operator of a U.S. gas and convenience store chain). In addition, they came back with a long list of prospects. Again drawing on their marketing experience, they hired telemarketers 655 Developing an Online Fleet Management Service to contact everyone on the prospect list, gauge their level of interest, and encourage them to look at www.alertdriving.com. Rob and Gerry then spent time following up on the more prom- ising prospects and Gerry worked on closing the GHDOV7KHHQWLUHF\FOH¿UVWFRQWDFWWRVLJQLQJD contract) was usually several months, and it took FRQVLGHUDEOHHIIRUW,QJHQHUDOPRVW¿UPVZHUH quite reluctant to seriously consider this innova- tive approach to driver training, but there were S U R J U H V V LY H ¿ U P V Z K R X QG H U V W R R G W KH D G Y D Q W D J H V  and cost savings. AlertDriving also started using Web site data to observe which potential clients were coming to the Web site, how long they stayed, what they looked at, and which test modules they tried. This provided leads for them to pursue. Once we knew who was looking at our Web site and testing the sample modules, we knew who to follow up with. We’d call them and ask if they’d had a chance to look at our material, knowing full well they had already worked through it. We didn’t bother with people who came in and only stayed a minute or two. Gradually, it became clear that negligent entrust- PHQWZDVDPDMRUFRQFHUQIRU86ÀHHWRSHUDWRUV People injured, or simply involved, in an accident ZLWKVRPHRQHGULYLQJDÀHHWYHKLFOHFRXOGVXHWKH company owning the vehicle. The lawsuit would be based on the argument that the company had not exercised due diligence in hiring the vehicle operator and properly training the driver. Courts FRXOGPDNHDZDUGVLQWKHVHYHQ¿JXUHUDQJHZLWK the largest judgment coming in at US$48 million. Fleet managers needed to show that due diligence had been pursued in selecting drivers, monitoring their driving record, and ensuring that they took appropriate driver training. Besides mitigating the risk of negligent entrust- ment, there were direct savings available to cus- tomers. Driving records affected insurance pre- PLXPVDOWKRXJKODUJHU¿UPVRIWHQVHOILQVXUHG AlertDriving used this to show how successful driver training not only paid for itself, but resulted LQRYHUDOOVDYLQJVIRU¿UPV$OOÀHHWPDQDJHUVKDG to do was use the services on the AlertDriving Web site, which kept records of everything done E\WKHÀHHWPDQDJHUDQGWKHGULYHUV In 2001, the company incorporated. Originally operating under Sonic Sales Aids (the old busi- ness), the name AlertDriving.com now became prominent. Growth continued, with an operating GLYLVLRQRIDPDMRUSKDUPDFHXWLFDO¿UPLQLWLDWLQJ a pilot program for 700 of their drivers. This led to an expanded program for the division’s entire ÀHHW WKH IROORZLQJ \HDU IROORZHG D \HDU ODWHU by a contract for all its North American drivers (some 13,000). AlertDriving found that more and more large clients (and prospective clients) were invest- ing millions of dollars in their own Learning Management Systems (LMS) to manage their corporate training needs. Once this trend became apparent to the Martin brothers, they moved quickly to take the necessary steps to ensure their driver training programs were compliant with AICC and SCORM, 2 the industry standards governing the delivery, tracking, and reporting of Web-based training material in North America. AlertDriving earned the distinction of being WKHRQO\'RFHQWFHUWL¿HGFRQWUDFWRUVXSSO\LQJ RQOLQH ÀHHW ULVN PDQDJHPHQW SURJUDPV 7KLV ZDVDVLJQL¿FDQWFRPSHWLWLYHDGYDQWDJHEHFDXVH Docent was the largest LMS software provider to AlertDriving’s Fortune 1000 target market. By 2004, AlertDriving had expanded their product line further. Their driver training pro- grams were now available for drivers of light duty pickup trucks, as well as 15-passenger vans. Other services were also provided (see Appendix A for a complete list, as of December 2005). While AlertDriving was based in Canada, sales were almost exclusively in the USA. One reason was the greater concern about lawsuits. Another was 656 Developing an Online Fleet Management Service that American companies were more aggressive in seeking savings and were more comfortable with new technology. Timmons and Spinelli (2004) discuss the balancing act a growing business must walk. Sometimes referred to as a three-legged stool, their model of the entrepreneurial process is shown in $SSHQGL[%$OHUW'ULYLQJ¿WVWKLVPRGHOZHOO both in terms of meeting many key questions as- sociated with each of the three major components and in terms of the ups and downs a new venture faces as it establishes itself. SETTING THE STAGE The Internet has changed the way many small businesses operate and provided opportunities for creating new types and forms of business. AlertDriving.com is a recent Canadian e-business start-up that utilizes the Web and information technology to meet customer needs in a new, in- novative manner. Using e-learning and e-business D V D P H D Q V R I R Y H U F R P L Q J VL J Q L ¿F D QW H Q W U \E D U U L H U V  LQDQHVWDEOLVKHGLQGXVWU\3RUWHUWKH¿UP has developed a solid foothold in a traditional industry. Furthermore, their product/service line has expanded as they moved driving training and ÀHHWULVNPDQDJHPHQWIURPWKHSK\VLFDOWRWKH virtual value chain (Rayport & Sviokla, 1995). AlertDriving’s Web site (www.alertdriving.com) SURYLGHVDQLQWURGXFWLRQWRWKH¿UPVHH$SSHQGL[ C) and their services (see Appendix A). AlertDriving has taken advantage of new learning delivery methods available through the Internet. E-learning is a rapidly growing market, replacing traditional classroom education and training in our knowledge economy (Brockbank, 2002; Nagy, 2004). AlertDriving has focused on DYHU\QDUURZQLFKHZLWKLQWKLVEURDG¿HOGHVWL- mated at a market potential of US$600 million for the North American market. Yet their approach is WUDQVIHUDEOHWRRWKHUWUDLQLQJDQGOHDUQLQJ¿HOGV providing a potential means of entry into a much larger market. $OHUW'ULYLQJRSHUDWHVZLWKLQWKHÀHHWPDQDJH- ment services sector. Fleet management refers to the discipline of tracking, maintaining, and otherwise manag- LQJ D ÀHHW RI YHKLFOHV LQ DQ RUJDQL]HG PDQ- ner. In most cases, fleet management soft- ware is relied upon to accomplish this task. Fleet management software offers a number of useful features. It can be used to schedule Preventive Maintenance (PM) and inspections, automatically generate fuel, mileage, tire, and trip logs, organize all contact information on drivers, employees, and customers, track all details on each DFFLGHQWFODLPWUDI¿F YLRODWLRQ PDQDJH SDUWV inventory and automatically generate and print ZRUNRUGHUV(QWHUSULVHOHYHOÀHHWPDQDJHPHQW VRIWZDUHVKRXOGRIIHUDVHWRIÀH[LEOHZHEEDVHG reporting tools, and in general will be highly customizable to any vehicle environment. 3 :RUOGZLGH ÀHHW PDQDJHPHQW LV D PDWXUH business sector, with several large, well-estab- lished and integrated competitors. Traditionally DKDQGVRQ³ORZWHFK´DSSURDFKKDVEHHQWDNHQ 7KHÀHHWVHFWRUFDQEHVHJPHQWHGE\W\SHRIYH- hicle (car, SUV, passenger van, cargo van, truck (further segmented by GVW), equipment, off- road, etc.) and type of organization (commercial, QRWIRUSUR¿WJRYHUQPHQWODZHQIRUFHPHQWDQG emergency, etc.). Fleets are further segmented by size (<500, 501–2000, 2001–5000, >5000 vehicles). Organizations will have one or more ÀHHWPDQDJHUVRYHUVHHLQJWKHLUÀHHWRSHUDWLRQV and managing the associated risk. While the move E\PDQ\¿UPVWRIRFXVRQFRUHFRPSHWHQFLHVDQG outsource the context (Moore, 2003) is relatively UHFHQWRXWVRXUFLQJRISDUWVRIÀHHWPDQDJHPHQW has been common for several decades (e.g., leasing DQG¿QDQFLQJ7RGD\PDMRUÀHHWPDQDJHPHQW 657 Developing an Online Fleet Management Service VHUYLFH ¿UPV SURYLGH VXFK VHUYLFHV DV YHKLFOH OHDVLQJÀHHWSROLF\DQDO\VLVDQGUHFRPPHQGD- tions, benchmarking, vehicle recommendations, ordering and purchasing vehicles, arranging for vehicle delivery and administration of the title and registration process, tax and insurance require- ments, pursuing warranty claims and remarketing used vehicles, fuel management, maintenance management, road assistance, periodic inspec- tion, accident services, driver training, and driver SUR¿OLQJ CASE DESCRIPTION As of 2005, AlertDriving had a proven value proposition for current and prospective custom- HUVDQGDQHVWDEOLVKHGSUHVHQFHLQWKHÀHHWULVN PDQDJHPHQW¿HOG:KLOHWKH\PD\KDYHHVFDSHG notice by major competitors in the past, this is no longer the case. Having proved the viability for applying e-learning to this market segment, WKH\H[SHFWHGWRVHHRWKHU¿UPVWDNLQJDVLPLODU approach. Indeed, this has already happened, al- though the competition could not match the current quality and capability of AlertDriving’s products. Appendix D lists many of the major competitors, along with other sources of information. AlertDriving’s customers had three reasons IRULQYHVWLQJLQWUDI¿FVDIHW\PDQDJHPHQWSUR- grams. Negligent entrustment suits were on the increase and organizations needed to show they had exercised due diligence. Insurance companies PRQLWRUWKHLUFOLHQWVDQGJRDIWHU¿UPVZLWKKLJKHU than average claims records — either increasing their rates or dropping them. Finally, for self- LQVXUHG¿UPVWKHFRVWRIDFFLGHQWVFODLPVORVW WLPHUHSDLUVHWFFDQEHUHGXFHGVLJQL¿FDQWO\ through proper driver selection and training. U.S. N a t i o n a l S a f e t y C o u n c i l d a t a s h o w t h a t b u s i n e s s e s directly spend about $60 billion annually on traf- ¿F FROOLVLRQV DQG H[SHULHQFH DOPRVW  PLOOLRQ lost workdays. The customer value proposition comprised three components: (1) a one-stop Web-based traf- ¿FVDIHW\PDQDJHPHQWSURJUDPDQHOHDUQ- ing driver training program available anytime, DQ\SODFH YLD WKH ,QWHUQHW DQG  VLJQL¿FDQW cost savings compared to behind-the-wheel or classroom training. Appendix A lists AlertDriving’s products DQG VHUYLFHV DQG WKHLU :HE VLWH EULHÀ\ GH- scribes each. Internet-based learning accounted for approximately 75% of AlertDriving’s 2004 revenues. Another 20% of revenues came from vehicle record checks and the Motor Vehicle Record checks program. Other products and services accounted for the remaining 5%. Gerry estimated AlertDriving’s share of their segment at 80% to 90%. Most of AlertDriving’s revenues came from the U.S. market, but by the end of 2004, expan- sion to Europe was contemplated. As of early 2005, AlertDriving planned to have their Internet products available in 12 languages within a year. Unlike some of their competitors, they would not simply use translated voice-over versions of the North American product to penetrate this market. Instead, they would create a new, customized package from the ground up. This represented a substantial undertaking, since it included location ¿OPLQJLQWKHWDUJHWFRXQWU\HQVXULQJWKDWFRXQ- WU\VSHFL¿FGULYLQJUHJXODWLRQVZHUHDFFXUDWHO\ presented, incorporating information from current local driving manuals, and using a native speaker to record all voice-over material. Dealing with the language portion alone was estimated to cost some $15,000 to $20,000, with the overall cost to offer four to six modules in each of 12 countries UHDFKLQJVL[¿JXUHV Expansion to Asia was not currently contem- plated because there were many more languages, Internet penetration was much lower than North America and Europe, and Gerry perceived that scooters, not automobiles, were the dominant form of motorized personal transportation. In 658 Developing an Online Fleet Management Service addition, the legal environment governing traf- ¿FVDIHW\LVVXHVZDVXQIDPLOLDUWRWKHEURWKHUV *HUU\VDLG³:HMXVWGRQ¶WNQRZKRZWRGR$VLD at this time.” HUMAN RESOURCES AND ORGANIZATIONAL STRUCTURE AlertDriving continued to be a lean organization. Additional employees had been hired only as necessary and as the company could afford them. In the early days, there was no formal organiza- tional structure and there were few employees. Over time, more employees were added, and by mid 2005 there were 21 in total (including one co-op student). Appendix E shows the company’s organizational chart. Finding the right people, and keeping them, KDVEHHQGLI¿FXOWDWWLPHV*HUU\VDLG We put a lot of emphasis on the hiring process now that we’ve come to the realization that we made a few poor choices along the way. Some of our hiring decisions proved to be extremely disrup- tive and costly to the company. The new focus on getting the right people has helped, but we still need to be a lot better at attracting, hiring, and training new personnel. Training new employees was equally chal- lenging, especially in the sales area. It could take six months or more to get someone up to speed. Gerry provided a recent example: On the job training is often not the best approach but practical considerations tend to dictate that’s what must happen. Recently Rob and I had to put a large amount of time and energy into training two new salespeople on our products and the market. We worked very hard to get them comfortable and knowledgeable so they could stop being a drain on our limited resources and start to contribute to sales and to the bottom line. $VDVPDOOHQWUHSUHQHXULDO¿UP$OHUW'ULYLQJ had a strong bias for action. While an organizational structure existed, everyone was more interested in producing results than simply looking after their particular job area. One employee said: Nobody’s too proud to do anything around here. I’ve seen Gerry and Rob pick up a broom and empty the garbage when it had to be done, and unlike my previous job in a highly bureaucratized orga- nization, formal job titles are almost irrelevant. My own title varies with the hour. I’m supposed to be an Admin Team Leader, which means I’m responsible for helping the administrators in our FOLHQW¿UPV¿JXUHRXWKRZWRUXQRXUSURJUDP But I also answer the phone, support sales and act as a receptionist. When something new comes up, everyone gets involved, which means we all grow and learn together. This bias for action and focus on results, plus the leading edge nature of the products, was especially attractive to young IT graduates. AlertDriving was able to offer greater challenge and opportunity to recent grads than most other ¿UPV6RZKLOHWKH\ZHUHXQDEOHWROXUHQHZ,7 staff with higher wages and stock options, they were able to offer comparable wages along with an exciting work environment. FINANCES Up to the current time, AlertDriving has been ¿QDQFHG PDLQO\ E\ WKH 0DUWLQ EURWKHUV DQG PRUHUHFHQWO\IURPLQWHUQDOFDVKÀRZ1RZWKDW $OHUW'ULYLQJZDVVKRZLQJDSUR¿WPRUH¿QDQFLDO resources were available for product development and market expansion. Yet the brothers continued WREHZDU\RIH[WHUQDO¿QDQFLQJSUHIHUULQJWR continue their bootstrapping approach. On the other hand, Gerry now wondered if their conser- YDWLYHDSSURDFKWR¿QDQFLQJPD\EHKDPSHULQJ growth of the business. 659 Developing an Online Fleet Management Service 5HO\LQJRQIUHHFDVKÀRZOLPLWVRXUDELOLW\WRDGG staff, which in turn has a negative impact on our capacity to develop new products and grow our top line. We need to consider our options to overcome this situation without giving away the farm. Appendix F shows a common size historical income statement for the past four years (the company prefers not to disclose actual sales and H[SHQVH¿JXUHV MARKETING AND SALES Gerry and Rob took a very systematic approach to customer prospecting, making their pitch and closing the sale. It was both labor and time in- WHQVLYHDQGLWKDGSURYHQLWVHOIRYHUWKHSDVW¿YH years. Today, clients included many Fortune 50 companies, state governments, universities, and even churches (for 15-passenger van courses). AlertDriving’s customer retention rate approached 100% and their user satisfaction measures con- tinued to be very high. Gerry felt their focus on systematic and structured sales techniques was a competitive advantage in the industry. It included such detail as always sending a thank you note to a prospective customer immediately after a sales presentation (and before leaving the customer’s city). One of the account managers provided an overview of the current sales process: )LUVW5RESURYLGHVDFDOOOLVWRIÀHHWULVNDQGVDIHW\ professionals that he generates using information from the various industry associations that Alert- Driving has joined. This list is passed on to our telemarketing people, who contact the prospects and ask if they’d be interested in having the demo link to our sample training program e-mailed to them, so they can play around with it. The on-line activity of these demo trials is monitored using our Web site tracking tools. The business day after WKH\¿UVWORJLQDQGYLHZWKHGHPRDQDFFRXQW manager calls to determine their level of interest and qualify them while obtaining their feedback. Although we already know they’ve looked at the demo we ask them if they’ve had a chance to check it out because it gets the conversation going, and may even give us the opportunity to answer any questions that the prospect may have. Our goal is to get them to agree to have a free pilot program VRWKH\FDQUHDOO\HYDOXDWHLWDQGVHHWKHEHQH¿WV for themselves. The conversion rate on pilots is very high. Alternatively, if the prospect does not log in within two weeks, our system automatically sends them a reminder e-mail with their username and password to access the demo. This happens every week until the prospect either logs in or requests to be removed from the demo reminder list. The automated reminder is essentially a silent sales- person that has proven to be extremely effective at getting our training in front of a large number of prospects. 5HÀHFWLQJ EDFN RQ WKH GHYHORSPHQW RI WKLV approach and its importance, Gerry acknowl- edged: In the beginning it was easy to concentrate on the sales process since there were no clients to service. However, as our customer list grew some of our selling efforts were diverted away from lead generation, prospect-qualifying, and closing new business to ongoing account management. But given the length of our sales cycle, the upstream end of the pipeline is critical to our continued success. Consequently, at the beginning of 2005 we rededicated ourselves to our successful pros- pecting system. To support this initiative, AlertDriving hired WKHLU¿UVWLQVLGHVDOHVSHUVRQ+LVMREZDVWRFXOWL- vate relationships with prospects before handing 660 Developing an Online Fleet Management Service them over to the outside sales team. His other as- signment was to build relationships with existing clients to ensure annual repeat business. INFORMATION TECHNOLOGY Information and communication technology (ICT) has played a pivotal role in the development of AlertDriving. While not an entirely virtual company, they had many characteristics of one. As a Web-based e-learning business, technology remained crucial to both running and growing the company. Much of their marketing and adminis- tration relied upon various software applications. Consequently, their Technology Group was large, second in size only to Sales. At start-up, Alert- Driving had a single developer. Now there were six people, including four developers. Additional hires were planned. AlertDriving’s initial software platform evolved over a period of years, with new ap- plications appended from time to time. This led to an unstructured, dated system that was LQFUHDVLQJO\GLI¿FXOWWRH[SDQGRUWRFXVWRPL]H for client needs. Consequently, in late 2004, a complete redevelopment was undertaken. Termed DIIHFWLRQDWHO\ DV WKHLU ³$ERPE´ SURMHFW WKLV was to provide a springboard for future growth, enable AlertDriving’s global initiative, and pro- vide clients with more customization ability. A developer explained: 2XUSDVWRQHVL]H¿WVDOODSSURDFKGRHVQ¶WZRUN anymore. Customers want customization. While we now do this through hard coding, the new platform will have a sophisticated “plug ‘n play” preference system, allowing customers to select the look, feel, and features they want. $VLGHEHQH¿WRIWKLVFDSDFLW\WRFXVWRPL]H was the potential for customer lock-in, making it less attractive for customers to move to another competitor. If switching costs, or at least perceived switching costs, became high, there would be little incentive for a customer to leave, as long as current costs and services were not excessively different from a competitor’s. As AlertDriving matured, a more systematic approach to IT projects developed. Standards and best practices were introduced to software development. Where once the approach was to start coding and then go back to add additional IHDWXUHVRU¿[DQDSSURDFKWKDWZDVQRWZRUNLQJ well, now a formal development process was in place. Industry practices were followed for both IT project planning and management. This was paying off in terms of product quality and delivered functionality, and projects were much more likely to be completed on time and on budget. From start-up, the company went with com- mon system and application software. As much as possible, open source software was used (e.g., Linux, 4 PHP, 5 CVS, 6 and MySQL 7 ). Initially, the reason for going the open source route was solely to save money. However, these products were found to be robust, with improvements regularly forthcoming. Their operating system was Redhat Enterprise Linux, so there was the EHQH¿WRIUHJXODULPSURYHPHQWVIURPWKHRSHQ source development community, along with the security and other enhancements and ongoing technical support provided by Redhat. MySQL suited AlertDriving’s needs, and they had no plans to replace it anytime soon with any larger, much more expensive proprietary database management system such as Oracle or DB2. The business would KDYHWRJURZE\RUGHUVRIPDJQLWXGH¿UVW On the hardware side, AlertDriving was lean. Everyone had the ubiquitous desktop microcom- puter (with more powerful platforms for their Tech- nology Group). Web site and other development work was done on an off-line in-house server. This had several advantages. First, developers were not delayed by a slow Internet connection. Second, the system was physically isolated and hence 661 Developing an Online Fleet Management Service secure from external attack. Third, it prevented WKHEDGSUDFWLFHRIPDNLQJFKDQJHV³RQWKHÀ\´ to the live production system. Finally, installing and maintaining development tools (such as the volume control system) was much more easily handled on site. Rather than host and maintain their own Web site server, they outsourced this to IBM. Under the arrangement, AlertDriving paid a ¿[HGPRQWKO\IHHIRUDEDVHOHYHOEDQGZLGWK service, plus an additional variable amount for DQ\:HEWUDI¿FYROXPHPHDVXUHGLQJLJDE\WHV per second) that exceeded this base. 8 The pricing was such that it was in AlertDriving’s interest to periodically adjust the base level upward as the average monthly demand increased. Yet they did not have to forecast and pay for potential demand peaks that were subsequently not needed. This was important, as there were usually sudden, large increases in Web site demand whenever a new client was signed up – typically many of WKHFOLHQW¶VHPSOR\HHVZDQWHGWR³FKHFNRXW´WKH Web site. After a few days demand leveled off to a new steady state point. Applications developed by the Technology *URXSSURYLGHGRSHUDWLRQDOHI¿FLHQFLHVIRUWKH administrative side of the company. AlertDriving needed no full-time accounting department with an account receivables clerk, as client billing was done automatically each month using a Web-based system. While minimizing the amount of effort UHTXLUHGLQWKHRI¿FHWKLVV\VWHPZDVDOVRDS- preciated by customers, many of whom preferred (or even required) EDI or Web-based billing. So this billing system also provided competitive advantage over competitors without such capabili- WLHV$QRWKHUDGPLQLVWUDWLYHHI¿FLHQF\FDPHIURP outsourcing the payroll work to Ceridian. Sales and marketing relied on another impor- tant application – the lead tracking system. Sales used this to see who visited the Web site, how long they stayed, and what pages they looked at (as described previously in this case by an account manager). Knowing which prospects had viewed the Web site, and which, if any, demos they tested, sales personnel knew with whom to concentrate their sales efforts. AlertDriving did not believe any of their competitors had such a sales tool in place yet. And there were other custom applica- tions used by sales to assist in managing an ever increasing customer list. Still other applications had been developed by the Technology Group for their own use. The new client setup process, which used to require extensive personal effort, had been streamlined. Now standard scripts were run, with particular options enabled. Compared to the past, the time requirement now was small. Of great assistance was the Incidence Log used for technical support. This was a database of past customer problems and solutions, along with a user tool set. Quickly searchable, a Help Desk person could immediately identify whether or not a particular problem had KDSSHQHGEHIRUHDQGLIVRZKDWZDVGRQHWR¿[ it. New problems and solutions were added as they occurred. Overall, with the improvements in application design and practice, there were fewer customer launch problems and less maintenance of applications. And with the Incident Log, not RQO\FRXOGPRVWSUREOHPVEHTXLFNO\¿[HGEXW IUHTXHQWFOLHQWSUREOHPVZHUHLGHQWL¿HGDQGVXE- sequent improvements made to the system. While the number of IT employees continued to grow, this was in decreasing proportion to the increase in sales and number of clients supported. CURRENT CHALLENGES/ PROBLEMS FACING THE ORGANIZATION Wanting to continue the growth rate of their ¿UPWKH0DUWLQEURWKHUVIDFHGERWKH[WHUQDODQG internal challenges. They felt AlertDriving was clearly the leader in Web-based driver training DQGÀHHWULVNPDQDJHPHQW<HWWKHFRPSDQ\ZDV still small, and there were several older, much larger, competitors in the market space. How 662 Developing an Online Fleet Management Service fast should the company continue to grow, how would this growth come, and how could internal resources be added or better utilized to support such growth? Growth could come from greater penetration of the current market, from geographic expansion, and/or from new products and services (to either current or new markets, or both). The development of online training for European countries came about as a result of requests from current custom- ers. Yet, to really capitalize on this, new European customers would need to be found. This would require considerable resources, and the Martin brothers were not yet comfortable with whether or not to proceed, or how to proceed. While the U.S. market seemed to be driven to a considerable extent by negligent entrustment concerns, this was not expected to be a major selling factor in Europe. Even the initial approach used to gain credibility in the U.S. seemed to be inappropriate for Europe. Gerry explained: /DVW\HDUZKHQZHZHUH¿OPLQJRYHUWKHUHZHZHQW into a local pub for lunch. While we were there, WZRWUDI¿FSROLFHRI¿FHUVFDPHLQKDGDFRXSOH of beers, and then left. Rob and I looked at each other, and said, “This sure isn’t North America.” :HFDQ¶WWDNHWKH7UDI¿F6DIHW\0DUVKDOODSSURDFK there, as we have here. Europeans seem to place more admiration and respect on racing car driv- ers than they do on police. Maybe that’s one way we gain credibility. I don’t know. Even servicing European customers in their own language would present major challenges. While AlertDriving now had their training avail- able in a dozen languages, they did not have in- house employees who could speak any of these languages (other than English). Bringing a new client onboard, or even setting a prospect up for an online demonstration, required communication between the two organizations. AlertDriving cur- rently did all its business in English and provided support during regular North American business hours. Expanding the business to Europe would require changes. Channel development could be used to in- crease current market penetration through the use of resellers and third-party distributors. Even insurance companies were possible partners. AlertDriving had made two unsuccessful attempts in the recent past to develop relationships with RWKHULQÀXHQWLDOFKDQQHOPHPEHUVEXWKDGEDFNHG away in each case because they became appre- hensive about losing control over their business to these much larger partners. Nevertheless, any such initiative could have the effect of changing the industry dynamic, and if AlertDriving could remain in the lead, competitors would be relegated to follower roles. As Gerry noted: We don’t just want to be a cute little company do- ing something unique. We are diligently working on changing the industry paradigm. New product development was another option to consider, both in existing and new markets. :LWKLQWKHWUDI¿FVDIHW\PDUNHWWKLQJVOLNH background checks, drug testing, tracking, and truck driver training could be introduced. Beyond AlertDriving’s current market, other e-learn- ing programs (hazardous goods training, work safety programs, etc.) could be introduced. Each would involve a substantial development effort, and there was a real risk of failure if the product was not accepted in its market. Perhaps product development programs should be restricted to those made at the request of existing clients, which would seem to enhance their likelihood of success. One new enhancement AlertDriving was already developing was the capability to provide WUDI¿FVDIHW\PDQDJHPHQWWUDFNLQJDQGUHSRUWLQJ on a global basis for clients, along with custom components as required. $OHUW'ULYLQJFHUWDLQO\GLGQRWKDYHVXI¿FLHQW resources to pursue all growth opportunities. Nor was it in the company’s best interest to spread LWVHOIWRRWKLQ<HW¿QDQFLDOUHVRXUFHVZHUHDNH\ 663 Developing an Online Fleet Management Service constraint on growth and the brothers wondered ZKHWKHU RU QRW WKH\ VKRXOG EULQJ LQ ¿QDQFLDO partners. If so, how much should be raised, and at what cost (in terms of giving up ownership)? An immediate challenge was the foreign exchange rate between Canada and the United States. As a Canadian company, reporting results in Canadian dollars, and yet realizing almost all sales in U.S. dollars, the soaring Canadian dollar hurt. A few years ago, the exchange rate differen- tial hit a high of Cdn$1.62 to US$1. Now, as the Canadian dollar had rapidly increased in value, it was close to a two decade low at Cdn$1.16 to US$1. This year’s sales would have to grow by some 20% just to maintain the 2004 level. Finally, the hands-on style of Gerry and Rob, which was such an integral part of AlertDriving’s past success, was now potentially an impediment. The brothers recognized they needed to move from doing to managing, and had started this process. It was not easy giving up what they knew so well DQGZHUHVRJRRGDW$QGLWZDVYHU\GLI¿FXOWWR ¿QGDQGGHYHORSVDOHVSHRSOHWRWKHSRLQWZKHUH they could reasonably approach Gerry’s closing ability. Furthermore, if the Martin brothers’ growth aspirations were attained, within a few years they would need to be capable of manag- ing other managers, removing themselves even further from day-to-day operations. REFERENCES Brockbank, B. J. (2002). E-learning, the emerging juggernaut. Innovative Leader, 11(5). Retrieved from http://www.winstonbrill.com/bril001/html/ article_index/articles/551-600/article553_body. html Moore, G. A. (1999). Crossing the chasm: Market- ing and selling high-tech products to mainstream customers. New York: HarperBusiness. Moore, G. A. (2003). Living on the fault line: Managing for shareholder value in the Age of the Internet (Rev. ed.). New York: HarperBusiness. Nagy, A. (2004). E-learning. ACTeN e-content re- port 6. Retrieved April 23, 2006, from http://www. acten.net/uploads/images/423/e-learning.pdf Porter, M. E. (2001). Strategy and the Internet. Harvard Business Review, 79(3), 62-78. Rayport, J. F., & Sviokla, J. J. (1995). Exploiting the virtual value chain. Harvard Business Review, 73(6), 75-85. Timmons, J. A., & Spinelli, S. (2004). New venture creation: Entrepreneurship for the 21 st century. New York: McGraw-Hill/Irwin. ENDNOTES 1 All quotes in this case are taken from in- terviews conducted by the case writers with the owners and employees of AlertDriving. com. 2 AICC and SCORM were acronyms used to refer to the leading industry standards for interaction between an online course and a Learning Management System (LMS). The Aviation Industry Computer Based Training Committee (AICC) standard dated to 1988, and had been used as a standard for Computer Based Training since that time. While it was created by the aviation industry, it had always been intended for use across all industries. The Shareable Content Object Reference Model (SCORM) was a standard built upon the work of several organizations including AICC, IEEE, and others targeted directly at the Web-based training market. (Retrieved December 16, 2005, from http://www.pure- safety.com/public/library_aiccscorm.asp) 3 Retrieved December 12, 2005, from http://www.publicencyclopedia.com/tech- HQF\FORSHGLDÀHHWBPDQDJHPHQWKWP . ordering and purchasing vehicles, arranging for vehicle delivery and administration of the title and registration process, tax and insurance require- ments, pursuing warranty claims and remarketing. actual sales and H[SHQVH¿JXUHV MARKETING AND SALES Gerry and Rob took a very systematic approach to customer prospecting, making their pitch and closing the sale. It was both labor and time. Recently Rob and I had to put a large amount of time and energy into training two new salespeople on our products and the market. We worked very hard to get them comfortable and knowledgeable