Zara Being Left Behind

Zara, a globally recognized clothing retailer that actualized $502 million in net income and $4,554 million in revenues for its 2002 fiscal-year, is finding information technology (IT) challenges within their company. Why is such a successful company affected by IT issues? Xan Salgado Badas, head of IT for Inditex is now questioning Zara’s current processes and equipment. Zara, Inditex’s largest chain of stores still runs on a Disk Operating System (DOS) which is not even supported by Microsoft any more. DOS is a widely installed operating system in personal computers, it was originally known as Microsoft’s MS-DOS (Microsoft Disk Operating System) and was replaced in 1985 with Windows OS. Zara has been working with their POS terminals to continue the use of the DOS system. The DOS system provides Zara with the basic IT applications of inventory control, ordering, purchasing, returning, etc. The system though has its disadvantages as it runs on a modem and all the software and programs do not communicate with each other. Also, store employees cannot view their inventory or other store inventories; they need to call stores when looking for a specific item. The store managers need to walk around the store and determine what to order as replenishment quantities when it comes time to purchasing. These are just a few setbacks that Zara is encountering that has made Salgado rethink their IT components. Salgado even says store managers are asking for their POS application to include more and he is reconsidering their current contracts with their vendor. Even though Zara’s vendor reveals Zara as their biggest customer, they made it clear that Zara is its only customer using the outdated DOS system.  The vendor reassures Zara that they will not be making drastic changes but that has not been confirmed in any written documentation.

Salgado has found four alternatives to solving his IT problem within the company.

• Discard making any changes to Zara’s current systems and let the company continue to run as it has been on the older DOS system.
• Continue using Zara’s current systems but purchasing many extra POS terminals from their vendor to ensure they have for future use in case their vendor stops the selling the older system.
• Upgrade Zara’s current POS terminals to build new capabilities into the software and a more customized system.
• Update Zara’s current POS terminals and software system to Windows, UNIX or Linux.

The first alternative to Zara’s IT is a good for the company as they do not have to worry about changes or adapting to new systems because their current DOS system is certainly stable. Another benefit for their current system is that the software is easy to install and opening a new store involves no IT assistance as store manages simply insert a disk and allow the installation to begin. However, this alternative has a very large disadvantage that will affect Zara in the future when their vendor stops producing the POS terminals with the older DOS system. Even though the vendor promises there will be no changes, the day will come when Zara needs to upgrade to a new version of software. In addition, the current DOS software is not even supported by Microsoft any longer as it has become outdated. Alternative two follows the same advantages and disadvantages as the first but has additional factors to consider. With alternative two the company can continue to keep their current processes and purchase more POS terminals before their vendor stops selling the older DOS system. This however, will cause a financial burden on Zara. Instead of the company allocating such expenses to an older system that will eventually need to be upgraded, why not use the money to invest in a system that will allow Zara to progress and move forward in future endeavors. Holding off on such an upgrade is in inevitable as it will eventually need to occur and Zara will need to find a modernized and accepted software. Alternative three is fantastic and it will give Zara a customized feature. This is exactly what store managers are looking for, more options. Zara can duplicate the system process that already works for their company and in addition add features that will not only benefit them but expand their services. This option will also allow for more quick and efficient services for the stores when inventory records are updated and purchasing becomes improved. This alternative though will entail experienced IT professionals. As Salgado’s technical lead for the POS system expresses, he knows the current system very well and IT is not involved in many store openings as the software is that easy to install. This alternative will require IT assistants to open stores and to troubleshoot all the custom features. This alternative will also come as a pricy option with all those customized features. The fourth alternative is surely the best option for Zara. Zara switching to Windows, UNIX or Linux will give the company an updated and current software to use, unlike the current DOS system that is not even supported by Microsoft. The modernized version will give way to efficient service and allow stores to perform at a higher level by adding functionality, networking capability and more. This alternative will allow all platforms to communicate with each other and be in sync. Switching to Windows, UNIX or Linux will definitely come at a price and will involve IT assistance but will certainly benefit Zara in the future. Zara will stay current with technology, give store managers the right tools to provide much more quality service to their consumers, improve the overall operation and positively increase revenue.