Case Study of Zara It for Fashion

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Case: “Zara: IT for Fast Fashion”

Student ID: U00235538

Issue

Zara, the flagship chain of Spanish based holding company Inditex, has grown to great prominence in the international retail fashion industry. It has done so by advantage in recognizing and responding to changing fashion. Recognizing and quickly responding to the changes in fashion trends is largely achieved through a collaborative system of store managers and mid-management level commercials. The exponential growth of Zara has been upon the backbone of a reliable but increasingly antiquated IT system that begins to counterproductively threaten the speed by which the majority of the 32,535 employees operate. At the center of the technical issue is the Point of Sale (POS) system commonly used in each of Zara’s stores.

Focal Stakeholder Opinion
It is an open issue frequently in the mind of Xan Salgado Badas, the head of IT for Inditex. The current POS system exists in each store as a non networked terminal operating upon the outdated Disk Operating System (DOS). Though incredibly stable and familiar to Zara’s employees, it proves to be increasingly lacking in functionality across the current and future needs of the expanding international chain (McAfee, Dessain, Sjoman, 2). The heart of the issue is not a debate over whether to upgrade the operating system and the POS application itself, but rather when and how to facilitate such a large modernization. Salgado’s advisor Bruno Sanchez Ocampo expresses, “We could mess it up in the process. We could turn it from an application that we never have to worry about into a real headache, for us and the stores.” (McAfee, Dessain, Sjoman, 2). Zara depends so much upon speed and service by both its store managers and commercials. Its fast focus on shifting fashion up and down the chain of operations leave it especially ill able to handle IT system risk, yet Zara must find a way to achieve current technological objectives. The antiquated latency of the current system puts the workload excessively onto the staff to manually accomplish, creating its own indirect cost to the company. Salgado’s overriding though is to, “wonder what approach would be most in keeping with how Zara developed and exploited its overall computing infrastructure” (McAfee, Dessain, Sjoman, 2).

Organizational Issue and Initial Short Term Action
Salgado’s dilemma should not be entirely left to the IT department. The IT department has fallen victim of, “being treated as if it were different from the rest of the firm” (Feld and Stoppard, 74). In terms of Inditex corporate structure (McAfee, Dessain, Sjoman, 21); the IT department is classified under Administration & Systems. This is surprising, given that Jose Maria Castellano, current CEO of Inditex, began his career with Zara as an IT manager. The direct link to senior management is implied in the organizational chart, but not formally defined. This organizational disconnect has resulted in a lack of incentive for the IT department to proactively talk to senior management about the concerns with modernizing Zara’s aging information technology infrastructure. To overcome Sanchez’s concern regarding culpability for IT initiative, Salgado must engage senior management to actively involve them in planning, budgeting, risks to expect, and sharing responsibility for setbacks or failures that might occur. CEO Castellano is stated to believe, “computers (are) critically important in enabling (Inditex)” (McAfee, Dessain, Sjoman, 3). By engaging senior management in these IT decisions, Salgado stands to, “help them generate real value from their IT investments” (Ross and Weill, 86). Though Inditex’s long term IT goals are not particularly aggressive, engaging senior management in this modernization would be the groundwork for Salgado to establish IT Portfolio Management within Inditex.

Mid Term Contingency

Regardless of whether when and how is determined in conjunction with senior...
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