Zara: IT for Fast Fashion - Case Study Example

Strategic Approach to Information Technology Management Executive Summary Information technology management is the management of an institution’s technology resources in regard to its priorities and needs. These technology resources include computer hardware, data, software, data centers, and the information technology staff. Information technology management not only involves basic functions of management such as staffing and budgeting, but also has aspects like software design, change management, tech support and network planning that are unique to the management of information and technology only. Table of contents Executive Summary………………………………………………………………...2 Zara’s Approach to management of information and technology……………….…4 Cisco’s approach…………………………………………………………………… 8 Comparison………………………………………………………………………….11 Conclusion…………………………………………………………………………...11 References…………………………………………………………………………….12 Cutting back on cost is one of the most crucial aspects of the Zara Company’s approach to information and technology. This can be proved by the fact that the company tries as a much as possible to minimize cost in their information technology infrastructure. This can be seen in the way they handle their information technology needs. For example, the company prefers to develop their own programs rather than employing software developing companies to write their program or buying software’s. It is good to develop ones software internally, but it has its limitation. In fact, what most companies do is to buy shell programs and then configure them accordingly to the suitability of their company. They do not develop their programs themselves from scratch. Although developing one’s programs internally like in the case of Zara has some advantages like ownership to rights of the programs, it comes with some disadvantages. Firstly when a company writes its own program from scratch and does not intend to gain from it commercially, they face they risk of being behind in technology. This can be proved by the case of Zara clothing company which as of 2003 the company was still using DOS operating system, which even its manufacturer Microsoft has termed it as well out dated (Macafee & Dessain & Sjoman, 2007). One reason why Zara finds it difficult to upgrade to another current operating system is the fact that it wrote its point of sale (POS) program specifically run on a dos operating system. Thus, as much as any management tries to minimize running cost as much as possible, quality should also be considered. This because in the long run cheap is expensive. Five years down the line, Zara Fashion Company will find itself in a lot of technical problems. This is because it will be left behind by other fashion companies since other companies are moving forward with the technology in regards to point of sale. If we look at Zara’s systems, after making transactions at the end of the day, one needs to back up the data in a floppy disk. However, in modern point of sale systems, information is backed up automatically in real time. This means that a good point of sale system should store information of any transaction in the main server immediately. Saving information each and every day is exceedingly tiresome and time consuming. Another disadvantage of this is that if one forgets to store the information in a floppy disk, then it means that information will never be retrieved hence causing problems in accounting. Zara’s approach to information technology management can be evaluated considering the ten principles of good information management and seeing if it satisfies these principles. Good information management should focus on adoption. This means information management needs active participation of the company’s staff. For example, staff must be able to save important files into the documentation management system. In this aspect Zara’s approach can be considered a good approach. Good information management should manage and recognize complexity. This means challenges that implementing and planning projects in information management should be overcome. Such challenges include meeting the technology needs of different business departments. For example, when Zara Fashion Company was faced with this challenge, it opted to roll out solutions that are standardized across the entire company irrespective of different departmental needs. This is wrong as it creates more problems to the information management system. Another quality of good information management is that it delivers tangible benefits. This implies management of information technology should not be done behind the scenes only, it should deliver benefits that can be seen not only by the managers but also staff and even the outsiders. For example, communication changes should have an impact on sectors such as customer service. When we consider Zara Fashion Company, it does not take advantage of information technology to undertake marketing and advertising like what is done by other big fashion company. In regard to this, then Zara’s approach to information technology management is not good. Good information management prioritizes its resources depending on the business needs. Since there are many needs for information and technology in the various departments in any business, a good information and technology management system identifies which areas are urgent than others. When we look at Zara Fashion Company, it has approached information technology management strategically. This is because the company opted to get personal digital assistants (PDA), to minimize the time wasted faxing documents from different departments and branches. It is essential for Zara Fashion Company to come up with a more strategic approach in their management of information and technology. This is because the current system they have will start creating problems in their operations. This is in line with the technological revolution that is taking the world by storm. New technologies which are reducing cost are coming up every day. But with the approach Zara fashion Company, it will be left out. This is because of their outdated systems and operating systems which are not compatible with these new technologies. A good example is cloud computing. Cloud computing is minimizing cost for many companies including those in the fashion industry. It is reducing cost in terms of both staff and infrastructure. Since Zara is in the fashion industry it would be in its best interest for the company to adopt the PEST analysis in their strategic approach to the management of information technology. The PEST strategy stipulates that when a firm is strategizing its operations, it should analyze the economical, societal, political and technological influences that surround it. It is this factors that will influence if it will make profits or losses, hence they should be considered not only in the management of information and technology but also in making any decision that determine the day to day operations of the company. Here is an example of a pest analysis Political factors Government type Government restrictions Government policies Economic factors Competition Economic situation Investors Social factors Fashion Trends Age of Targeted market Technological factors Technological advancement New Technology Price of Technology Cisco Systems Architecture Cisco is a multinational company from the United States of America that specializes in manufacturing, designing, and selling networking equipment. The company was founded by Sandy Lerner, Leonard Bosack and Richard Troiano in 1984 (Nolan, 2005). Since then Cisco has been on the frontline in the development in communication through networking and the internet. The company focuses mainly on routing technologies in networking. Cisco’s architecture revolved around routing. The company focuses on providing routing solutions. Cisco realized that without routers the internet could not work (Nolan, 2005). It is through routers that huge numbers of networks around the world are interconnected. Cisco realized in order to be major layers in the networking? Internet industry they needed to provide the best routing solutions. The company also made it their goal to provide solutions that would handle the three elements of networks namely, voice networks for telephones, wide area and local area networks for data, broadcast networks that handle video. Cisco realized that digitizing the different networks allowed convergence of video, data and voice into one network, thus being cost efficient. This revolutionized communication around the world as IP addresses were created bringing more competition in the communication industry. This changed communication lines to shift from the traditional phone lines to IP based networks. In January 1994, Cisco systems failed globally (Nolan, 2005). This proved that Cisco’s approach to the management of information technology had a problem somewhere. After losing a lot of money, Cisco’s chief executive officer realized that the management of Cisco needed an urgent makeover (Nolan, 2005). This is because he realized that Cisco had a lot of problems especially when it came to decision making. This hindered the company from venturing new markets. It is because of this fall that the CEO shuffled the management which came up with the following elements in order to make sure that Cisco was on top of the game again. Cisco’s new business strategy was based on a plan that had four elements. These principles are; setting software standards for the networking industry internationally, systemizing acquisitions, creating a broad line of products and finally pick partners that are right for the company. Setting software standards for the networking industry internationally Cisco managers new that if the set the standards very high in the networking industry then they would make it difficult for companies to compete with them. Cisco did this by providing networking solutions that were of good quality. This in turn made them to have an international customer loyalty. In fact, by the mid-late 1990s, 70 percent of the routers that were being used were manufactured by Cisco (Nolan, 2005). Systemizing Acquisitions Cisco ensured its prosperity by buying companies that would take the company forward. The company did not just buy any company, but bought companies that were strategically placed in the networking industry. For example, for example Cisco bought Crescendo Communications, StrataCom, and Clarity wireless in 1993, 1996, and 1998 respectively (Nolan, 2005). These companies were key players in LAN switching, ATM switching, and wireless communication respectively. By doing so, Cisco made sure that they were in the forefront in communication technology hence ensuring their dominance over the market (Nolan, 2005). Creating a Broad line of Products Cisco made sure that they were top of the communication by ensuring that they produced a variety of products that fulfilled each communication needs. It designed communication solutions for every design diversifying them depending on price, amount of traffic and size (Nolan, 2005). This made it possible for their products to be available to the whole world hence putting them in front of the communication industry, since its products were available to all sectors of the economy. Notable managerial changes were also made. The responsibility for information technology reporting was left to the senior VP for customer advocacy (Nolan, 2005). This meant that focus of information technology management was directed to the customer needs. Another change was that the budget for information technology was changed to functions. This meant that budgeting for information and technology was to be given almost urgency hence its move to functions. Finally, committee that was given the task of steering central information technology was disbanded. Information and technology management was purely left to the VP for Customer advocacy. Comparison Zara’s approach to management of information technology has similarities with that of Cisco. Firstly, both companies started by limiting powers of management of Information technology. This caused problems in both companies. However, the main difference with the two companies is that Cisco realized the importance of giving management of information technology priority in the functions of the company. Just like Cisco, Zara Fashion Company should establish permanent solutions for their information and technology needs. The company should also outsource other companies to write for them applications instead of writing their applications themselves. It is important for companies to know the role of information and technology especially internally. Information and technology is an important aspect of any company and its management should be handled with at most caution. This is because if the information technology of a company fails it will result in a lot of losses for the company. For example, if the IT infrastructure of a company fails, the company will not be able to make sales, back up records, and communicate between the different departments in the department. Conclusion Zara Fashion Company has a lot to learn from Cisco Inc. Cisco’s success can be attributed to the good management that has recognized the importance of management of information technology. Cisco moved from its traditional approach to a new approach that put management of information technology to be important. Without IT many companies would be unable to operate due to the high cost that IT helps them save on. References Macafee A, & Dessain E & Sjoman, A. 2007. Zara: IT for Fast Fasion, Harvard Business School, Harvard. Nolan R. 2005. Cisco systems Architecture: ERP and Web enabled IT. International Business School, London. Read More