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Zara Company: IT Projects Justification and Evaluation

Based on the classification of IT projects in the Ross and Beath article, what kind of project is Zara’s upgrade of Point-of-Sale technology? Justify your answer.

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Zara’s point of sale technology can be classified as a renewal of the existing systems. The common or traditional technologies used when IT infrastructure goes through innovations eventually render the older system obsolete. To sustain the IT system’s functionality and ensure its costs remain relevant to the organization, the Zara Company should attempt to renew its point-of-sale systems. The potential advantages of renewing a system are comprised of decreasing the need for support and training, sustainability, and enhancing the capability of the current system. In the case of Zara, there is a threat that their information technology vendor may terminate the support provided to the DOS operating system, which may force them to renew their point-of-sale systems.

The Zara Company may be opting to improve or upgrade their business leverage through the acquisition of advanced technological equipment, which is capable of enabling the business to attain short-term and long-term profitability by enhancing the efficiency of the current systems. However, the improvement of a business system needs to have a potentially low-risk to the operations of the venture. This is because unlike the transformation processes, it lays emphasis on the operational results from the current system. For instance, when Delta made an improvement of its boarding systems, the leadership of the company was fully aware of the costs involved in upgrading and supporting the new system. They were also aware of the consequences of the upgrade and what value the upgrade would inject into the company’s operations. For Zara to attain this level of predictability, the upgrade processes should strengthen the current systems. In the case of Delta, the upgrade of the boarding system leveraged the consolidated customer and flight systems. It also leveraged a section of the middleware offering access to the information and common interoperable system databases.

Zara was using point-of-sale systems, which were running on the outdated DOS operating system. The Microsoft Corporation which developed the software and offered support services had terminated the production of the OS in 2003. They have continued to use this system in their operations because it has proven to be efficient and reliable to the organization. However, since Microsoft has stopped the production and provision of support for the DOS operating system, it is advisable for the company to upgrade its systems to the new Windows version from Microsoft. The Windows OS is compatible with the DOS system; however, it is much faster, reliable, and more efficient compared to the older system. The existing infrastructure does not have to be changed since it can be upgraded to run the new Windows operating system.

What is your opinion is the right criterion for Zara to decide whether to upgrade their Point-of-Sale technology?

During 2003, POS systems were predominantly used to place orders and other duties such as managing the returns of commodities to DC and relaying information from the HQs to the various outlets. Each of the outlet stores had several PDAs and POS systems which encouraged redundancy and the division of duties while placing orders. It was a regular custom for the management of Zara to upgrade the IT infrastructure and devices in the chain stores usually due to the advancement in technology, or when the devices became obsolete. These systems remained in existence in the stores for more than 10 years. Unfortunately, the PDAs and the POS systems are not directly linked to the HQ of the organization or any other chain store.

Sales data were transmitted through a modem at the end of business transactions. This information was sent to La Coruna. However, another drawback about the current system is that none of the POS was connected to the other in any given store. This meant that the employees had to use cumbersome methods of transmitting data. Data had to be copied onto various floppy disks. They would eventually be transferred to the single terminal which has a modem so that the information can be transmitted. The same terminal also received placements of specific orders and the communication of the information relating to the order. The Zara Company had not installed any desktop computers in the stores. As a result, the PDAs and POS were not able to share any data related to the running of the store operations. This meant that the PDAs and the POS systems could not be used to provide any information to the other store whether they had in their stock certain SKUs. This forced the employees to make telephone calls to other outlets to clarify this information.

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The upgrading of the POS systems should be guided by various factors, which include the advantage that the improvement will bring to the Zara organization, whether the upgrade will have any negative impacts on the current operations, and how reliable the new system is compared to the existing one. Other factors may include the reliability, efficiency, and cost implication of changing to the new system. In the case of Zara, the new proposed upgrade to a Windows operating system will be beneficial to the organization. The current system does not allow the sharing of information and data between the PDAs and the POS. However, this can be made possible by upgrading to the Windows system. Based on the current system, the outlet stores do not have a direct link to the HQ or any other store. The communication between stores is made through phone calls; critical sales data and order placements have to be copied to a floppy disk before they are sent at the close of business. An upgrade into the new Windows system which is compatible with all hardware running DOS will provide efficiency and multitasking of duties. Sales data and order placement messages can be sent through emails which are more efficient. Employees are able to carry out various functions from the same computer; it also allows the stores to have a direct link to the HQs and other neighboring stores via the internet. Most of the functions slowing down the operations of Zara can be solved by upgrading to the new Windows system.

Based on these criteria, make a recommendation on whether Zara should upgrade (or not) their Point-of-Sale technology, with thorough justification.

Based on the argument in favor of the new Windows system, I would recommend that the management of Zara should not only consider but upgrade their systems at the earliest time possible. Their stores are faced with a significant inter-connectivity challenge which can be solved by the new software. The management is skeptical about trying out new technology. However, in the fashion industry competition is very high. If their competitors embrace and upgrade to the new technology before they do, they will lose their competitive edge in the market. The new system will give them access to modern marketing strategies such as the use of social media and the internet in advertising their merchandise. A lot of companies have benefited from upgrading to the new Windows operating system. Consequently, in the event of a breakdown in the old system, they would not have any support to repair the system since Microsoft stopped its production more than ten years ago. I would strongly advise the management of Zara to upgrade their systems to the new Windows operating system if they are to remain relevant in this highly competitive fashion industry.

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