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Zara Case Study - Group 4 - Coggle Diagram
Zara Case Study - Group 4
Stakeholders
Castellano
Salgado
Employees
Managers
Sanchez
IT at Zara
Relevant Facts
IS Department wrote it own accounting software
France were their largest international market
46% of their group sales were in Spain
Managers had great deal of freedom in decision making
They had no CIO
Store layout were changed every 4 to 5 years
Merchandize were changed every 3 to 4 weeks
Problems
Outdated POS system
Why does the problem exist?
The current software (DOS) is old and discontinued, but Zara's own proprietary software is optimized to it and is very stable.
What is the cause?
Zara has had no good reason to update until now, their methods are getting them by without any outrageous technical issues.
How did it happen?
Zara does a good job of staying agile and can easily pivot their business needs, and has developed technology to support this. However, they are reluctant to change because the outdated OS does not heavily impact their operations at this time.
How did it impact the IT group?
If they upgrade the IT group will need to work on developing new software/optimize current software to work on the new operating system. They are also worried about support tickets for newly developed software/new hardware.
How did it impact the organization?
Inventory can't be looked up, and inventory reported may not be totally accurate due to limitations on the current ordering process. Zara does not keep excess stock so this process is vital to them.
What is the consequence?
Zara may not be stocking items correctly as it relies on management canvasing stores and not actual numbers. In addition, staff cannot look up nearby stores stock of items, and struggle with returns on small screens.
Who is responsible?
Zara executives who are in charge of technologies/purchasing to determine cost/risk analysis.
Lack of dedicated IT Department/CIO
Why does the problem exist?
Zara has maintained IT operations without an IT department but lacks long term planning and dedicated department for growing IT needs.
What is the cause?
Zara has determined that they wanted highly customizable software so they deployed the IS department for the corporation that umbrellas Zara and other chain stores in lieu of a dedicated dept
How did it happen?
Salgado (head of IT for Inditex) says only 95% accuracy is needed, and a general "if it isn't broke don't fix it" mentality
How did it impact the IT group?
The IT group for Inditex maintains the workload of multiple store chains, although this isn't seen as an issue due to high staff retention but 50 employees were responsible for all IT operations
How did it impact the organization?
As Zara grows and inevitably will have to upgrade their software/hardware, they may find that the IT department is overwhelmed by support tickets and projects
What is the consequence?
Zara may fall behind technologically and from a sales perspective. Because a formal budget is not allocated for a nor cost/benefit analysis from a dedicated IT department this may lead to issues long term.
Who is responsible?
Zara and Inditex executives - company restructuring may be necessary in the future to include an IT department for Zara
Poor Inventory Management
What does the problem exist?
Relies on manual and outdated systems
What is the cause?
No networking or live database access
How did it happen?
Resistance to change and limited infrastructure
How did it impact the IT group?
Hinders operations, and inaccurate inventory numbers
Who is responsible?
Executives resisting tech upgrades, and lack of IT leadership
How did it impact the organization?
Lost of sales, and creates a disconnect from the reality of the situation.
Timeline
Inditex was formed as a holding company atop Zara in 1958
Castellano became Inditex's CEO in 1997
Jose Maria Castellano joined the company in 1985
Inditex operated 1558 stores in 45 countries in 2003
Zara switched to another PDA manufacturer after Apple's Newton device discontinued in 1998
PDA's were used primarily for ordering in 2003
Solutions
A. Full steam ahead with what currently is working.
pros
There is no cost involved to upgrade the already existing system.
It is a largely known system where employees and management are able to train efficiently and utilize the system easily.
This system already works, with minimal issues, and can handle expansion.
cons
They are behind the curve as it is an ancient system already and support might not be received at any time now.
If something mandatory to use comes out and does not include backwards compatibility, it could be catastrophic for the company.
It has very minimal features to enhance productivity.
B. Translate the system into a more modern platform but keep what works already.
pros
Enhanced scalability
Ease of conversion as it retains current levels of system usability.
This can reduce the chance of future hardware being incompatible and can still receive support.
cons
Large upfront cost to get started.
New training for all will be needed.
Using a newer system can introduce bugs that are not commonly seen in the current iteration.
C. Full system upgrade and heavily lean into modern features
pros
Improve efficiency by reducing manual inventory checks
Creates a resilient framework to build off of, generating the opportunity for new methods of revenue.
Can vastly enhance the productivity by introducing modern features and increasing potential revenue.
cons
This will be a huge cost to get off the ground compared to other options.
There is a potential for some areas to experience outages as the improvements rollout.
Potential to introduce a large number of setbacks, issues, and the need for a more complex training plan.