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15.571 Generating Business Value from Information Technology
Spring 2009
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Class 6: 7-Eleven Japan and the Replication Operating Model
15.571
15.571
Generating Business Value
Value
From Information Technology
Technology
Jeanne W. Ross
Director & Principal Research Scientist
Center for Information Systems Research (CISR)
MIT Sloan School of Management
Center
Center for
for Information
Information Systems
Systems Research
Research (CISR)
(CISR)
©
© 2009
2009 MIT
MIT Sloan
Sloan CISR
CISR- - Ro
Ross
ss
Different Standardization Requirements
of the Four Operating Models
Source: Enterprise Architecture as Strategy: Creating a Foundation for Business
Center
Center for
for Information
Information Systems
Systems Research
Research (CISR)
(CISR) Execution, J. Ross, P. Weill, D. Robertson, HBS Press, 2006.
©
© 2009
2009 MIT
MIT Sloan
Sloan CISR
CISR -- Ross
Ross
1
Center
Center for
for Information
Information Systems
Systems Research
Research (CISR)
(CISR)
©
© 2009
2009 MIT
MIT Sloan
Sloan CISR
CISR- - Ro
Ross
ss
Tokyo, Japan, January 18, 2006
2
Center
Center for
for Information
Information Systems
Systems Research
Research (CISR)
(CISR)
©
© 2009
2009 MIT
MIT Sloan
Sloan CISR
CISR- - Ro
Ross
ss
Tokyo, Japan, January 18, 2006
3
7-Eleven Japan
Financials
Revenue from operations
Operating income
300
1,890.0
1,500
1,000
500
0
474.2
384.4
03/2
04/2
05/2
200
150
Ordinary income
148.5
153.7
170.0
178.2
197.5
50
02/2
03/2
04/2
05/2
06/2 E
125
(Billions of yen)
(Billions of yen)
03/2
04/2
170.7
199.0
05/2
06/2 E
Net income/Net income per share
100
0
02/2
150
250
150
165.6
100
0
06/2 E
300
200
149.9
155.8
50
502.5
424.0
02/2
250
100
75
98.3
81.7
100.6
82.8
115.7
120.1
132.9
93.1
96.3
106.5
150
125
100
75
50
50
25
25
0
02/2
03/2
04/2
Net income (left scale)
05/2
06/2 E
(Yen)
2,000
(Billions of yen)
(Billions of yen)
2,500
0
Net income per share
(right scale)
Figure by MIT OpenCourseWare.
Center
Center for
for Information
Information Systems
Systems Research
Research (CISR)
(CISR)
©
© 2009
2009 MIT
MIT Sloan
Sloan CISR
CISR -- Ross
Ross
4
7-Eleven Japan
Average daily sales per stores
700
(Thousands of yen)
Average daily sales per store of new stores
700
600
600
500
500
400
400
300
300
200
610
470
100
0
(Thousands of yen)
200
515
404
Seven-Eleven Japan
Competitors
100
Seven-Eleven Japan
Competitors
0
Figure by MIT OpenCourseWare.
© 2009 MIT Sloan CISR - Ross
Center
Center for
for Information
Information Systems
Systems Research
Research (CISR)
(CISR)
© 2009 MIT Sloan CISR - Ross
Adapted from: Seven Eleven Japan
5
7-Eleven Japan
Financial Data of Major Retailers in Japan
Total store sales
Millions of yen
Gross margin
2,500,000
34
2,000,000
32
1,500,000
30
1,000,000
28
500,000
26
0
FY2002
FY2003
FY2004
FY2005
FY2006
24
FY2007
FY2002
(%)
FY2003
FY2004
FY2005
FY2006
FY2007
Seven-Eleven Japan
2,114,013
2,213,298 2,343,177 2,440,853 2,498,754 2,533,534
Seven-Eleven Japan
30.4
30.5
30.6
30.7
31.0
30.9
Lawson
1,282,369
1,291,030 1,285,018 1,329,077 1,360,495 1,377,842
Lawson
30.3
30.3
30.7
30.8
31.2
31.3
998,491 1,031,736 1,068,821
FamilyMart
28.5
28.3
28.5
28.4
28.8
29.0
700,094
Circle K Sunkus
_
_
_
28.8
29.1
29.0
FamilyMart
Circle K Sunkus
898,651
931,808
954,445
_
_
_
898,741
872,844
Figure by MIT OpenCourseWare.
Center
Center for
for Information
Information Systems
Systems Research
Research (CISR)
(CISR)
©
© 2009
2009 MIT
MIT Sloan
Sloan CISR
CISR -- Ross
Ross
Source: Seven & i Holdings, Corporate Outline 2007
http://www.7andi.com/en/ir/tool_co2007.html
The 7-Eleven Japan Platform
ƒ Store level (franchisee)
– POS technology and systems
– Scanning and ordering technologies
– Processes for ordering, store operations, and inventory
management (training provided by Operation Field Counselors)
ƒ Corporate level (franchisor)
–
–
–
–
–
Networks connecting stores to headquarters
Shared infrastructure with links to partners
Analysis system
Order and sales data from each store
Multimedia data (e.g. weather)
Center
Center for
for Information
Information Systems
Systems Research
Research (CISR)
(CISR)
©
© 2009
2009 MIT
MIT Sloan
Sloan CISR
CISR- - Ro
Ross
ss
7
7-Eleven Japan
Information System Innovation
POS system
introduced
Computers
using color
graphics
introduced
GOT, ST
ISDN put into Introduced a weather
and SC
information system
introduced operation
New POS
registers
introduced
New POS
registers
introduced
Store system
introduced
Started EOS
Started EOB
Interactive POS
registers introduced
New POS
registers
introduced
Fifth-generation
total information
system
Installed
satellite
antennas
Installed
optical
Sixth-generation fiber
total information network
system
Ticket sales
using multifunctional
copier
77.2 78.2 79.2 80.2 81.2 82.2 83.2 84.2 85.2 86.2 87.2 88.2 89.2 90.2 91.2 92.2 93.2 94.2 95.2 96.2 97.2 98.2 99.2 00.2 01.2 02.2 03.2 04.2 05.2 06.2 07.2
Figure by MIT OpenCourseWare.
Source: Seven & i Holdings, Corporate Outline 2007
http://www.7andi.com/en/ir/tool_co2007.html
Center
Center for
for Information
Information Systems
Systems Research
Research (CISR)
(CISR)
©
© 2009
2009 MIT
MIT Sloan
Sloan CISR
CISR -- Ross
Ross
7-Eleven Japan
Overview of the sixth-generation total information system
Back room
Router
Sales area
Wireless antenna
Multi-function
copier
ATM
GOT
20.50
Store computer
ST
Center
Center for
for Information
Information Systems
Systems Research
Research (CISR)
(CISR)
©
© 2009
2009 MIT
MIT Sloan
Sloan CISR
CISR -- Ross
Ross
POS cash registers
Figure by MIT OpenCourseWare.
Source: Seven & i Holdings, Corporate Outline 2007
http://www.7andi.com/en/ir/tool_co2007.html
7-Eleven Japan
Development of Payment-Acceptance Services
7-Eleven Japan has been offering payment-acceptance services since 1987. The services are used widely,
gaining popularity among customers for the convenience that allows them to use various payment services
24 hours a day, 365 days a year.
250,000
2,500
200,000
2,000
150,000
1,500
100,000
1,000
500
50,000
0
Number of payments
Cash volume of payments
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
104,942
125,712
144,429
166,994
195,525
226,995
259,127
813
990
1,154
1,390
1,682
2,010
2,384
Source: Seven & i Holdings, Corporate Outline 2007
http://www.7andi.com/en/ir/tool_co2007.html
Center
Center for
for Information
Information Systems
Systems Research
Research (CISR)
(CISR)
©
© 2009
2009 MIT
MIT Sloan
Sloan CISR
CISR -- Ross
Ross
Cash volume (Billions of yen)
Number (Thousands)
Growth in volume of payment-acceptance services 7-
0
Figure by MIT OpenCourseWare.
Debate Question
ƒ 7-Eleven Japan recently purchased 7-Eleven U.S. and its
6,000 stores. This purchase provides a good opportunity to
replicate its systems and processes in an acquisition.
Center
Center for
for Information
Information Systems
Systems Research
Research (CISR)
(CISR)
©
© 2009
2009 MIT
MIT Sloan
Sloan CISR
CISR- - Ro
Ross
ss
11