Zara

To: Richard Peterson

From: Anna Szperlak

June 30, 2014

Problem/Issue Statement

The problem which Zara is currently facing is the fact that it is using DOS operating system, which is no longer, supported by Microsoft. Should Zara stick with their current system or implement a new one? DOS does not require a lot of computing resources, what makes it easy and cost efficient to maintain, also its been working well enough for the company to do their day to day operations. Since 2003 DOS has not been supported by any vendors, what makes Zara’s operating process less efficient, which will eventually eliminate future growth. Also, if Zara continue using DOS it will be harder to keep up with any new market trends and fast developing technology that customers are looking for.

The symptoms are pretty obvious. Zara is operating with an unsupported DOS based POS terminal system. This results in operational inefficiencies whenever an order is being placed and fulfillment since the POS application does not support a network connection between stores. This very manual process also causes ineffective use of store employees’ time; when placing orders - sales managers would have to actually walk around and physically count what was sold then transmit that information on a PDA. Another issue is the culture of the stores. It seems like that before applying any new initiative Zara’s planning and organizational assessment has to be improved to be effective.

The scope of the problem is that the firm is not supported with enough data and resources even for the management to make effective decisions. This also affects the customer service since Zara is not able to connect and see the inventory availability the neighbor stores have at the moment. The company must decide on their further steps; Zara simply has two choices. The first one would be, to remain with DOS and pay nothing that means no change, or to spend a significant amount in terms of hardware, training and IT work.

Situation Assessment

The company has to decide whether to keep its current system, upgrade what’s required for the modern operating system or completely upgrade their operational infrastructure. How would those decisions affect their future growth? What will be the cost cuts associated with completely upgrading to a new system? Will there be training and maintenance necessary after the new implementation? Those are the decision criteria that Zara is facing and has to analyze.

      List of Plausible Alternative Courses of Action and their Evaluation

    1. Continuing the use of DOS to avoid additional cost and training; however,    no improvement in term of effectiveness.

    2. Purchasing enough of the current POS terminals at the time - will let Zara to continue their operations without worrying about the hardware vendor’s inventory and production. Still doesn’t not resolve the networking between stores problem.

    3. Integrating new operating system such as Windows or Linux - possibility of networking in between the stores and its headquarter, as well as faster PCs for completing returns and orders. This will allow the company to use better reports, which will result in more efficient planning. On the other hand, new operating system will require additional training and financial resources.

  4. Upgrading Software procedures for better functionality will benefit customers and management because processes will be faster and more functional.

   5. Buying modern PCs that will increase capabilities of store management - this will allow the mangers to follow and analyze the market trends and customer demand as well as track the inventory.

Any implementation has challenges, though the key is to know how to addressed those challenges. A new system would eliminate the lack of support issue that Zara is facing and provide other features to help the store managers to more effectively run their operations. Upgrade to more efficient operating system, would also allow Zara‘s mangers to focuse more on customers’ satisfaction, and find what they are looking for to better assist them and set up a long lasting customer base. Of course there is a high cost associated with most of the alternatives so the question is what would bring the most return? Is this the right time to make a change? Since the current POS application is working well, with no IT assistance needed? I believe staying with the old system and not taking any intelligent risks can lead to missing opportunities for growth.

Recommendation

A quality recommendation is to implement the modern OS, upgrade the hardware and enhance the POS application. Although this would be one of the priciest decisions, it seems to be the best alternative for Zara and their long-term expanding possibilities. Even though their current legacy IT system has been working until now its future is just not promising. Innovation and creativity are very important in the fashion world and the opportunity of being able to respond quickly to any new trends is very significant and results in high revenue.  Knowing that there are no guarantees and that the hardware vendor will continue to support Zara’s current legacy system, upgrading it would be the most logical decision.