To OS or Not To OS

Sometimes keeping up with new technologies might not suit your company.  In Zara’s case, they have found themselves in a predicament where a decision has to be made to update their Disk Operating System (DOS) to another Operating System (OS) or just keep it simple as it is.  Known worldwide, Zara was founded in 1975 by Amancio Ortega, and has been a large leader in the fashion world.  They have a very unique business plan which has been their biggest reason for being successful over the years. 

Business Model

•         Fabricate clothing on a demand basis
•         Receive feedback from store personnel on customer wants
•        Allow for little to no inventory in order to decrease costs and sell what you make
•       Create system which specifically directs certain styles to specific stores based on sales and local fashion styles
•        Store personnel create orders and choose what they want to sell based on their own market research within their store

However, with new technologies there could be threat of the company falling behind and not being able to operate any longer using DOS. 

Current DOS Process

•          1 POS connected to the internet per store (total on average 5 per store)
•          Several Personal Digital Assistants (PDAs) per store to allow for ordering and garment returns
•          Employees copy daily sales totals from each POS onto a floppy disk
•          At the end of the day floppy disk is transferred to POS connected to internet to allow for data to be sent to Headquarters in La Coruna
•          PDAs would have to be connected to set POS in order to send orders as well as update with new items available

Zara’s current contract with the POS manufacturer does not state that they will continue to produce the POS terminals which function with DOS and have stated that Zara is their only customer who still uses DOS.  This could be a future risk; if the manufacturer ends production of floppy disk compatible terminals Zara will not be able to open new stores and until they update all the systems as the new stores would not have the equipment and software required to run.

New OS Process

•          POSs would be connected to Headquarters at all times
•          Orders could be filled using new easier used POS with a mouse

The new OS process seems simple enough.  Daily sales are sent directly to headquarters, connectivity to other stores would allow to order items from them instead of headquarters.

Pros

•  Customer demands can be easily met as items can be order quicker from other stores
• Decrease closing time as daily sales will already have been sent to headquarters
• Visual the customer has of the system behind the counter will be attractive to them

Cons

•  Store employees will stand behind the counter looking at new items that could be ordered instead of walking through the store and speaking to the customers and listening to their wants
• Market research feedback can be skewed now as employees requested items might be based on personal choice
• Programing time allocated in corporate will be increased to 20,000 hours required to implement new software

o   Meaning 10 employees out of the 50 IT personnel will have to allocated to this implementation in order to implement it in 1 year

Alternative OS providers

•  Windows first year €170, every year after that €30, per POS terminal
• Unix first year €185, every year after that €25, per POS terminal
•  Linux every year €80

With all the necessary hardware, internet service, programing time and training time required, Zara will be looking at a lower cost with Unix of €19,261,545 for the implementation of a new OS system if attempted to implement in 1 year.  Not including the additional salary of additional employees which might need to be hired in order to facility the transition.

Recommendation

As the process to a new OS system will be costly, I would recommend to perform the transition one city at a time.  This would allow for the cost to be spread out and not hinder current operations.  Yes costs are high for this upgrade but very much so needed.  Without a legal contract stating that the POS compatible with the DOS will continue to be produced Zara is currently putting it’s whole future at risk since at any moment the manufacturer can stop production making Zara vulnerable.