Zara as the POS application was working just fine

Zara is the flagship brand of the Spanish retail group, Inditex SA, which offered a 23 percent stake to the public in 2001. At the end of 2001, Zara operated 507 stores around the world. Zara has a unique business model which varies from its competitors in the same industry beginning with its production strategy and ending with its supply chain management. Zara’s three main competitors are Gap, H and Benetton.Xan Salgado Badas and Bruno Sanchez are discussing the POS terminals used by Zara’s, Inditex’s largest chain of stores.  Inditex is a multinational clothing retailer and manufacturer headquartered in La Coruña, Spain. Inditex is concerned about its IT infrastructure becoming out dated and also about the possibility that hardware vendors will upgrade their machines leaving them incompatible with DOS. Zara’s core business model is vertically integrated allowing it to specialize in speed and efficiency in keeping a step ahead of the latest fashion trend. Salgado was the head of IT for Inditex and Sanchez was the technical lead for the POS system.  They cannot agree on whether or not to change their POS terminals.  Both have strong opinions regarding their position on the debate.  Salgado believes it is time to upgrade the POS application while Sanchez believed that there wasn’t a need to fix what wasn’t broken as the POS application was working just fine for them. The problem that is being discussed solely concerns whether or not to change the POS terminals used by Zara. Salgado believes it is time to upgrade and is risky to let them get so far behind current technology.  Sanchez, on the other hand, believes it is riskier to make a change as the existing software works just fine. The symptoms per Salgado begin with the need to upgrade the POS as they currently run on DOS, which is no longer supported by Microsoft.  He believes there is a possibility that the hardware vendor could upgrade their machines and could potentially change it so that it would no longer be compatible with DOS.  Salgado also pointed out that managers were asking for the change so they would be able to look up inventory balances in their stores and other stores.  An upgrade would allow them to have a well-rounded system which would allow them to interconnect with other stores. According to Sanchez there are no symptoms that warrant the need to upgrade Zara’s POS terminals.  The software is working for Zara and there is no need to change it.      This problem involves all Zara stores, approximately 550.  The resolution to this problem will impact all operations related to the Zara stores.  If Sanchez gets Salgado to agree with him, the POS terminals at the stores would all have to be upgraded. Situation Assessment     In order to decide which alternative is most suitable for the company, Sanchez and Salgado must consider the cost of both alternatives which involves software, support, and training. There are risks associated with both of the alternatives. There is a risk of continuing to run on DOS and it becoming obsolete (no longer supported by Microsoft) by staying with the current system and the risk of data loss and/or the risk of messing up a process that is currently seamless with making a change to an upgraded system. There are benefits to each alternative that must be considered. If no change is made and Zara just maintains the process that is currently working for them, there is a huge cost savings – employees already possess knowledge of the current DOS terminals and no IT is required when new stores are opened. If Zara moves forward with the upgrade then the company will have added functionality such as real-time inventory access across all locations and networking capabilities.AlternativesThere are two options for Zara – 1) to upgrade its POS terminals or 2) keep everything status quo. Sanchez recommends keeping everything status quo at this point without making any changes.  Given Salgado’s concern related to DOS compatibility, Sanchez recommends purchasing a bunch of the current terminals which would provide them with breathing room should such a case arise. Salgado recommends upgrading to a more modern and technologically advanced operating system.  An upgrade would allow them to add functionality and networking capability for all the Zara stores and would enable store managers to look up inventory for their stores as well as other stores without having to call anyone – they would simply be able to do a quick search on their terminal.By keeping everything intact, Zara would continue to operate using their basic POS application.  Zara’s would save money and would be able to instead invest in new locations as opposed to incurring costs for new software and training related to upgrading the POS terminals.  By continuing operations as currently in place, IT’s involvement would not be required when opening new stores and in-house support would be available for any IT issues that arise related to the DOS terminals.A software upgrade for Zara’s POS terminals would enable the company and stores to interact with one another.  It would also facilitate the store operations, particularly the ordering process.  Store managers would be able to process orders online versus having to use the digital handheld devices. Having forms available online would facilitate the process as they would be able to see the pictures of the garments more clearly since the handhelds currently being used are very compact and do not provide the same level of display as a computer would if the POS terminals went through an upgrade.  The upgrade would also allow managers to look up their inventory on the computer without having to do a visual inspection.RecommendationGiven the insight on Zara’s operations, I believe it would be best for Zara to continue using their current POS terminals and forego the upgrade.  I agree with Sanchez, it is not worth fixing what is not broken.  The implementation of an upgrade would be added cost for Zara at this point.  It would also be added effort to designate a team dedicated to rolling out this upgrade.  Following implementation would be training to introduce the new software.  All these added costs are not necessary at this time when Zara could focus its attention on growth initiatives and investing in opening up additional locations instead.