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Zara Case Analysis

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Introduction
Zara is an international apparel company founded by Amancio Oretga, who opened the first store in La Coruna in 1975. Ortega was driven by the belief that retailing and manufacturing need to the closely linked. Inditex, a holding company for Zara, other retail chains and internally owned suppliers was formed in 1985. In the same year, Jose Maria Castellano Rios joined the company, bringing with him his experience at an IT manager and belief that computers were integral to the business model they wanted to create.
The case study introduces us to two men, Xan Salgado Badas and Bruno Sanchez Ocampo, who are having a discussion about Zara’s POS (Point of Sales) system. Salgado is the head of IT for Inditex, and Sanchez is the technical lead for the POS system. The discussion between the two was to whether the POS system ought to be upgraded, instead of continuing to run on technology that is becoming increasingly outdated. A point that Salgado tries to argue for. Sanchez, on the other hand, argues that the POS systems are working well, and that there is no need for an upgrade that could be more of a headache.
The case analysis begin with identification of stakeholders problems, goals and concerns, followed by identification of problems, then an analysis of alternative solutions and end with a summary of difficulties posed and relevance of recommended solutions.

Stakeholder Problems, Goals and Concerns
Salgado
The two principal stakeholders in this particular case are the two men having a discussion about Zara’s POS system. Salgado argues for and upgrade to the system because he fears that there is some risk in letting them get to far behind current technology. The system runs on DOS which is being phased out and replaced with a newer Windows-OS system. The hardware vendor for the POS terminals has made assurances, though not contractual, that no changes will be made to the current DOS operating system that the machines run on. Salgado considers this a problem, not only because there is a risk of the POS running on outdated technology, but also because the new one could add functionality and networking that is currently done manually. Salgado assumes that upgrading the systems will be nothing but a step in the right direction. He wants the POS systems upgraded to run on Windows OS and at the very least, an upgrade of the POS application to include more functions that store managers think will help workflow. Salgado seems to want these changes because of his concern for Zara’s overall computing structure. He fears that keeping the company mired in old technology that would probably become harder to find and manage would be a stumbling block in opening new stores. He is also aware that if this does in fact become the case, as head of IT for Inditex, he would be culpable for not being able to foresee the problem and address it. The possibility that Zara is growing on old and outdated software could put the company at avoidable risk.

Sanchez
Sanchez is vehemently against upgrading the systems and his entire argument revolves around trying to replace a very good system with very little faults for one that is yet untested and could prove to become a problem in the future. Hs does not believe that dependency should be sacrificed for the sake of staying current. His solution to the event that the vendor upgrades their hardware to Windows-OS is that they buy current terminals and slowly upgrade the POS application to support the new OS. His suggestion is only compromise that would see the POS application made for Windows-OS but running on the older DOS. Sanchez is very passionate about the discussion and insistent that things stay the same, he mentions himself that the POS system was mostly his creation and that it had little to no problems up until then. He obviously takes pride in his creation and the fact that it is bug free. This probably contributes to his insistence that things remain unchanged, and if they do change, as minimally as possible. Since all bugs or errors to the system are reported to him, his familiarity with the current system might have something to do with his point of view. A new system and application with further enhancements might be out of the realm of his expertise and have bugs that he would have to deal with. He might think that going from having no little to no bugs reported to him versus the possibility of having any would be a headache not worth having an upgrade for. Sanchez believes that the vendor that produces the hardware will keep its word and make no changes to a big customer that provides a large part of its revenue.

Identification of Problems
There key problem in this case is whether or not to upgrade the POS terminals. In agreement with both Salgado and Sanchez, possible problems exist with both options. Not upgrading could result in Zara continuing to operate on outdated software that becomes increasingly harder to maintain, might end up becoming a weakness as far as competition with other large clothing stores is concerned, and remedying this problem sooner rather than later might end up being a more expensive expenditure. On the other hand, upgrading a very good and proven system with one that is yet to be tried and tested could prove to be a cost not worth the returns. Bugs in the new system could slow interactions between stores and headquarters and jeopardize Zara’s computing infrastructure. Understanding the way that Zara operates is key to grasping the significance of the Salgado’s suggested upgrades. As stated in the profile, Zara does not have a formal process for setting an IT budget, and no framework for analysis as to the effectiveness for any proposed changes being made. Furthermore, the applications that the company uses are written by Salgado and his colleagues to suit the uniqueness of Zara’s business operations. The work on the applications were done by a small group of locally educated individuals. The way Zara’s infrastructure operates poses a series of problems that would require attention at some point in the future. The current POS terminals are easy to use and manage by store employees to the point that opening a new store required to IT personnel to set up the terminals. An upgrade to the new operating system that did not utilize the easy to use start up procedures as the DOS would require IT personnel to set up whenever a new store is opened. This would mean that stores opened in other countries would need their own IT people, which would cost the company more money. After all, it would even be less cost effective to continue to send locally based IT people to help with setting up a new store, or help troubleshoot a terminal that had any errors. The POS terminals lack internal connectivity and only one unit would be able to transmit data to La Coruna at the end of each day. Salgado’s suggested improvements to the applications currently running on the terminals might probably include the ability for each terminal to transmit information to La Coruna. Considering the present structure of the business, having to deal with such a much faster level of incoming data might require hiring more people to sort through.

Analysis of Alternative Solutions

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