Zara, It for Fast Fashion
The decision to upgrade the current POS software system from the DOS is of strategic importance for Ezra to continue delivery its rapid replenishment strategy while fulfilling future growth in new markets. I believe we need to act proactively to ensure Ezra is able to continue growing steadily without any serious problems impeding continued success. Even though our current POS system is not broken, we need to be prepared for what can happen. We need to focus on what and how to adjust the IT aspect of Sara’s strategy in order to keep Sara’s approach of rapid replenishment and new product velveteen a focal point of the corporate strategy.
I recommend the upgrade of the current operating system to the new Microsoft SO without purchasing additional DOS terminals while the upgrade is in progress. I recommend we take the opportunity during the upgrade to add new functions and networking capabilities requested by store personnel to allow us to continue to cultivate our competitive edge though our rapid replenishment strategy in the fashion markets. Specified IT personnel will be appointed for Ezra at La Corona and new strict policies and procedures regarding conical advancement will be distinguished.
Once the new SO is programmed and installed in each store, the new appointed IT personnel will handle all troubleshooting calls, if any, and monitor success and feedback surveys that findings will be reported back to you. This report will be the basis off presentation to the technology steering committee that currently discusses IT systems for Inedited. Can Salad Bad Head IT Inedited August, 2003 Issue Identification Part 2: Immediate Issue The main issue to address is whether or not to upgrade the POS software from the traditional, glitch free, obsolete DOS.
Microsoft has stopped supporting its DOS technology and therefore Sara’s vendor may stop production of the DOS machines at any time. This issue is important since Ezra relies on its overall computing infrastructure. Since no commercial application would fit Sara’s needs, a new system would take fifteen thousand hours redesign and implement without any added functionality. If the vendor changed its hardware immediately, Ezra would be unable to open new stores and take advantage to their ‘ample room for growth’.
Current stores would also be at risk if they ever needed replacement terminals or system overhauls. If Ezra purchased extra terminals now, the extra terminals would not last forever, and Ezra would be even further technologically behind. Part 3: Systemic Issues As Ezra is quickly growing, the functionality and networking capacity of its infrastructure should be as well. The larger the company grows the greater the need to share information within the company is essential in the fast evolving industry of the fashion industry.
As Sara’s size expands, the organizational hierarchy will as well, therefore having more people and greater impacting decisions to be made without trick policies and procedures regarding infrastructure. An important long-term issue would be the lack of Job specification of an IT specialized team to monitor and control future infrastructure issues. Technology is advancing daily, and Ezra could continue to fall behind or miss out on technical advancing opportunities that support Sara’s rapid replenishment strategy.
Environmental and Root Cause Analysis Qualitative analysis: As Ezra is the only customer to the hardware vendor of the DOS operating system, it could be beneficial for the vendor to upgrade their machines to all non DOS- compatible machines. It would eliminate a product line that is not used by other customers therefore reducing production costs, increasing production capacity and reaching economies of scale. It is also likely that since Microsoft doesn’t support the DOS machines anymore, it would be difficult for Ezra to find another vendor of the DOS machines, giving the vendor greater control over Ezra.
The only threat to the vendor would be losing Ezra as a customer to another vendor selling the upgraded machines. Since the vendor would not include assurances in Sara’s contract regarding not upgrading the machine, the vendor may in fact have plans to upgrade even though they claim not to. All of these factors point to a change of the DOS machines in the future, however, when is unknown. Quantitative Analysis: If Ezra purchased extra terminals instead of upgrading as insurance against the vendor upgrading, based on information in the case, it would cost approximately ?¬2,655,000 to buy one for each existing store, but not new stores.
The total onetime cost of upgrading the software and proactively protecting Sara’s operations would be ?¬3,671 ,030, a great investment to protect against the uncertainty. Alternatives Short Term Alternatives: Alternative 1: Decide not upgrade the current software or functions and purchase extra terminals immediately. Purchasing extra terminals would mitigate some of the risk of the chance of the vendor changing its machines. Pros: No time or money would be invested into a problem that doesn’t exist presently.
Cons: Buying extra terminals for insurance again the vendor changing does not align with Sara’s corporate strategy of low inventory levels. Inventory holding costs and space in the stores will be allocated to the dormant terminals. Alternative 2: Decide to upgrade he current software with the additional functions and purchase extra terminals immediately. Purchasing the extra terminals immediately will mitigate the risk of the vendor changing its machines while programming and implementing the new systems. Pros: This alternative eliminates all of Sara’s short term risks regarding the software.
The additional functions will be an asset for information sharing, it would reflect efforts towards Sara’s rapid replenishment strategy, and would please store managers and personnel. Cons: It is the most costly option. Ezra would not only incur the cost of the new system, but also the purchase of extra terminals on an insurance basis not knowing if they are going to be used does not align with Sara’s efficiency. Alternative 3: Decide to upgrade the current software with the additional functions and not purchase extra terminals.
Pros: By upgrading the system before the vendor, Ezra will be prepared if the vendor decides to stop supporting DOS within the next year. Sara’s technology will be updated to match the industry. Ezra will not incur any extra costs from unused terminals. Cons: The vendor may change its machines before Ezra is finished upgrading. Long Term Alternatives: Alternative 1 : Ezra may decide not to upgrade the current technology or applications and continue trying to negotiate a contract with the vendor or a new vendor to ensure the flawless system stays in place. Pros: This alternative would be of no cost to Ezra.
If Ezra could negotiate a long term contract with a DOS compatible vendor, Ezra would be able to continue growing substantially without having any IT interruptions. Cons: As stated in the case, the vendor has not agreed to a contract in the past so it is unlikely to agree to one now. It would take time to find another ender that is capable of handling Sara’s large scale requirements and that would be DOS compatible since Microsoft had stopped supporting DOS. Alternative 2: Choose Microsoft after as the new SO provider and appoint an IT team from the IS department to become the official IT team in which you will lead.
Microsoft is the creator of the DOS application therefore you would be familiar with the software. Your new IT team would handle all troubleshooting as well as monitor the new POS system. Pros: All the store personnel will be very happy with the new applications and networks. Cons: Microsoft is not the most cost effective SO. Recommendation The decision to upgrade the current POS software system from the DOS hardware with the new applications and networking is of strategic importance for Ezra to continue delivery its rapid replenishment strategy while fulfilling future growth in new markets.
As stated in the case, it is risky to let technology fall behind. Purchasing extra terminals on hand would create inventory holding costs on items which may not even be used if the upgrades happen before the vendor changes its machines of before the current systems fail. The fashion industry is one that is continually changing and updating styles, fabrics and colors. Therefore, it is essential for Ezra to transmit new information as efficiently and timely as possible to continue to be a leading competitor.
New applications and networks would allow more time for store managers to focus on customers and customer trends rather than physically counting inventory. It will allow for quicker inventory trades between stores or even recommend customers to another store to find the item they are looking for. This team would have budgets and policies and procedure to follow. Accountability must be taken by this team and upgrading decision would be made and planned out by his team. Implementation I will begin by contacting our vendor immediately and inform them about our decision to upgrade the DOS machines and place as order for the new hardware.
Based on the case, it will take Indies’s IT team of fifty people approximately 10 weeks to port and expand overall programming of all Ezra stores (Exhibit B). The installs would be completed during store off hours and training would take place over one eight hour day with employees. It will take 8. 5 weeks to install and train employees on the new POS systems. It will take 18. 5 weeks in total and cost an initial ?¬3, 671 ,030 o have the new POS terminals programmed and installed in each Ezra store.
Annual maintenance and connectivity in total for all stores will incur Ezra ?¬207,090 annually (Exhibit A). Monitoring and conclusion Key performance indicators for upgrading Sara’s infrastructure include implementation dates, the amount of additional help, in hours, required by store managers. The number of troubleshooting calls made to La Corona IT members. Feedback surveys will also be conducted every 3 months for the first 2 years of using the new POS system. The table in contains the key short term and long term reference indicators.
The focus is specifically on whether waiting for the vendor to change its machines and react to the change when it happens is riskier than upgrading the system now but possibly having glitches and/or troubleshooting with the new system. I believe taking the risk of upgrading to new technology in order for Ezra to continue its rapid replenishment strategy is essential in an industry that is ever changing. By fulfilling the requests of store managers also reinforces Sara’s strategy of decentralized decision making, showing the managers that the new networking capabilities were their ideas.