Head of It for Inditex - New Technology Purchase Case Study

Part 1: Executive Summary

As head of IT for Inditex I recommend to the steering committee to replace our current DOS based software with a new Windows operating system and also to purchase new POS (Point of Sales) terminals, without the need of hand held PDA, which will be user friendly, cost effective and up to date. This is a decision that is based solely on the simple fact that DOS is obsolete, and the risk of continuing to use this system could really jeopardise our organisation.

This development of new technology will start in January and will take approximately 9 months to complete. We will develop this new software with some of our IT staff but also outsource some development to professional software developers. We shall pilot the new software with our new POS terminals in about 20 stores closes to our distribution center in Spain with some of our top managers. This will allow for a quick transportation of goods in the event the system malfunction.

The total cost of to replace our DOS software and our POS terminals will be around €14,621,170. This new system will allow real time inventory management which will help to increase the overall service level and help the cross-selling between stores and thereby provide better service to our customer.

We all know that we have an extraordinarily well performing value chain that is by far the most responsive in the industry. Therefore, we can now say that change is unavoidable because we can not continue to run an obsolete and unconnected technology. This report will be used as a basis for discussions on August 31 monthly meeting with our steering committee.

Part 2: Immediate Issue

The problem that we face at Zara right now is that our POS (Point of Sales) terminals runs on DOS software which Microsoft does not support anymore and any hardware changes to the POS terminal will not be compatible with the current DOS software that we have as our operating software.

Part 3: Systemic Issues

1 Current DOS Operating Software

Nature: Strategic Timing: Short term and long term

DOS operating system is no longer supported by Microsoft. They have stop supporting it several years ago. To change this operating software we have no contract in place that will assurance us that our supplier would not change its machine so that they could no longer run DOS

2 Current POS Terminals

Nature: Strategic Timing: Short term and long term

Using the current POS terminal store managers determined replenishment quantities by walking around the store determining what had been selling by counting garments and talking to salespersons. POS terminal are not connected