Obstacles Facing Sysco - Case Study Example

Obstacles Facing Sysco Introduction Sysco is a food service organization of North America which was founded in 1969. In addition, the company supplies equipments to various restaurant businesses. This company comprises of 420,000 customers which range from restaurant to small entrepreneurs. The company provides work for almost 45000 workers. They have 9000 workers who handle the delivery and 8000 workers who handle the marketing portion (Robert & Et. Al., “CIS 9000”). For improving the business, Sysco has decided to implement the BI (Business Intelligence) software which provides superior monitoring and analysis capability. After granting the implementation of BI software into Sysco, the company initially decided to customize it according to their business purpose and train their employees to use it properly (Harvard Business School Publishing, “Business Intelligence Software at SYSCO”). What Will Be The Biggest Obstacles Facing Sysco As The BI Implementation Efforts Spread Throughout The Company? Sysco is a big company with 420,000 customers and it had employed 45000 employees in the year 2002. Sysco’s calculated sales in the year 2002 were 23.4 billion dollar. Thus, the company’s biggest obstacle is to determine the amount of software it will need to operate the firm. The company also has to consider the amount of licenses they have to buy for using this software. If Sysco buys a large number of software then the vendor will provide the company a suitable discount. Thus, it was a great challenge for Sysco to take a decision whether it should buy a large number of software or only buy the amount needed for the present time (Mcafee & Wagonfeld, “Business Intelligence Software at SYSCO”). Why Did Sysco Decide Initially To Address Only Two Questions With Its New BI Software Rather Than Use It As A More General Analysis Tool? When the company was determined to implement the BI software and focused on the training of its employees to utilize the software effectively, the company addressed merely two questions: ‘What additional products could we be selling to each of our customers?’ ‘Which of our current customer are we most likely to lose?’ With the help of BI software, the company can create a customer profile and frequently update them. The company compares the customer profile with each other with regard to ordering. After that they can create a report which will show the sales of additional products and help to decide further prospects towards the customer. It would be tough to keep this record manually without the BI software. This way they can keep tracking the customer as they are reducing the use of certain specific products or increasing the order. This also shows whether the customer is satisfied by their service or not. It helps to recognize the fact that whether Sysco is loosing out on their customers to their competitors due to unhappiness with the provided service of Sysco. They can constantly monitor the customer from the report generated by BI software and identify which customer is valuable to them and which customer they are losing. Why Did Business Objects Recommend This Approach? What Are The Tradeoffs? Business Objects is the leading dealer of the BI software. According to Business Objects the major advantages of using BI are ad hoc querying, mapping between various databases, caching, and connectors. Various tradeoffs of BI are Dashboards, Extraction, Data Mining and Predefined Reports, Predictive Analysis, Event Notification and Distribution. Important Challenges from the Perspective of Non-IT Managers The biggest challenge for Sysco in implementing BI software is its budget constraints. The budget for implementing BI is an obstacle for several organizations. The cost and previous implementation of BI systems helped to make new strategy plan for the benefit of the company. Purchasing a right amount of BI software is the core of successful BI budget. Before purchasing BI, the company should consider whether they can use all features of the software, otherwise it will be much expensive and will also be less efficient towards the organization. Sysco has to consider the cost factor as well. A cheap cost is good for company, but it should include everything needed for fulfilling the objective. There are various options for Sysco regarding purchasing of BI software (Cognos, “Seven Steps to Flawless Business Intelligence”). Lance Walter, who is the director of product management, concludes that BI software must involve at least 25 users for a small company. The license fee of setting up this software would be 25000 US Dollar. But in large company there are several departments such as query department, performance management department, IT department and info infrastructure department. Thus, in case of big organization the licensing would cost approximately $ 750,000 to $1 million. If a new analytical model is included, then this figure will be 1 million dollar to 2 million dollar (Mcafee & Wagonfeld, “Business Intelligence Software at SYSCO”). Important Challenges from the Perspective of IT Managers Twila Day, who is the Assistant Vice President of Technology and Applications, has calculated the cost of entire implementation of BI including the training cost and operating cost, which amounted to 2.5 million Dollar to 3.5 million Dollar. Hence, Sysco has come up with various strategies for purchasing the BI software which are: Sysco can purchase minimum number of BI software and licenses. If the company’s result is good after implementing the software, then they can purchase more licenses later i.e. within 6 moths of implementation, but it will cost high price. Sysco can purchase BI software in high quantity which will provide the company suitable discounts. The company must license all software which it has already planned to use within 2 years (Mcafee & Wagonfeld, “Business Intelligence Software at SYSCO”). How Much Software Should Day Buy At This Time? Why? It is difficult to assess for Twila Day about the number of software the company should purchase. Since there are advantages and disadvantages in both the strategies, it would be prudent for Sysco to buy less software during the first time. This will minimize the initial investment and will also allow the company to learn and observe before purchasing additional software. This helps to monitor whether the company is actually progressing after implementing the BI software. This will also minimize the expenses related to providing training and minimizing the time needed to adopt it. Is BI Likely To Be A Competitive Differentiator For Sysco? BI will indeed be a competitive differentiator for Sysco. Implementing BI will certainly provide competitive advantage to Sysco because the BI system simplifies the analysis of data. Company can easily access the data, make a report of it and formulate strategy according to analysis. It maintains client administration and develops an attractive project plan. BI also delivers appropriate data which everyone can understand and extract it. It also guarantees the security of data by protecting vital information of company from unauthorized user. In order to develop the BI system, Sysco should come up with more applications in the BI system; otherwise the competitor will acquire the same technology. The company should develop the BI objective and BI system frequently to maintain the competitive advantage. In due course of time, Sysco will be more familiar with BS and will lead other rival companies. What Does "Competitive Differentiator" Mean? Competitive advantage is a special benefit of an organization’s product which differentiates it from other companies and makes it more competitive and strong towards its rivals. It can possess any thing such as lower prices, unique style and good product or service quality. Different strategies can make an organization more competitive. Michael Porter has illustrated four strategies for differentiating product namely Differentiation Focus, Cost Focus, Differentiation and Cost Leadership (tutor2u, “Strategy - Competitive Advantage”). Conclusion BI software plays an imperative part in Sysco. It helps to evaluate the type of the customer’s order and can identify loyal customers or higher purchasing customers. Thus, company can keep a record of the customers and make a proper strategy. Later they can implement the strategy for enhancing customer satisfaction and rendering good service. References Cognos. “Seven Steps to Flawless Business Intelligence”. February 23, 2011. PDF Files, 2005. Harvard Business School Publishing. “Business Intelligence Software at SYSCO”. February 23, 2011. Harvard Business Review, 2004. Mcafee, Andrew. & Wagonfeld, Alison Berkley. Business Intelligence Software at SYSCO Harvard Business School, 2006. Robert, Roshan. & Et. Al. “CIS 9000”. February 23, 2011. Cisnet, 2007. tutor2u. “Strategy - Competitive Advantage”. 23 February 2011. Strategy, No Date. Read More