Executive Summary
This report was commissioned to examine the performance of the IT department of ABC, UK’s retailer with 760 stores across the UK and 40,000 full and part time employees. In addition, the ABC Company has 30 offices across the UK with IT department in each office to support its operations.
For the purpose of analyzing the IT performance, this paper examines the operations of ABC retailer starting with identifying the key findings of current IT performance reports. Next the paper evaluated the performance of the IT operations according to statistics on IT operational costs and total spend on the IT department. This paper is also proposing solutions to enhance the performance of the IT operations and reduce the excess operational costs. In addition, the paper is analyzing the communication with end customers with respective to IT operations.
The findings of the report confirmed that there are many issues in the IT department that needs to be addressed such as the increased operational costs of the IT department due to down times of the system, product waste and overtime in the operations due to the usage of manual alternatives. In addition, the research confirmed that the department is cut off from the customers and has a very basic online shopping system with lower uptakes than the expected.
Introduction
ABC supermarket is ranked among the biggest supermarkets in the UK. The supermarket for a while now has had a very convenient association with its competitors in the UK market, but unfortunately, the recent growth of emerging foreign rivals into the market has caused many concerns for the ABC management team. As explained in the ABC report, the company owns 760 stores across the UK and has 40,000 full and part-time employees. More so, the company has about 30 offices across the UK that supports the company’s operations, with IT departments based in all of these various offices. After a careful analysis of the report, we have concluded that the company needs to be improved in order to keep up with its competitors and be more efficient. This improvement is especially important in the company’s failing IT department. IT issues faced by the company in the previous year has caused them an increase in operational costs of £37m. The inventory management system most especially has been a source of problem to the company and has consequently caused the waste of products worth millions of pounds. This report will focus on improving the issues of company and putting it back on track. Through extensive research, we came about with the solution of using ITIL framework to develop a new IT culture for the company, the use of hybrid outsourcing in order to reduce costs for the company and the cost of the proposed solutions.
ABC Company’s mission statement is “Great products, Great prices”. The statement focuses on offering the best a wide range of quality products with different budget to satisfy different customers.
Financial summary of solutions*
Products and services
Over the past years the ABC Company has grown from strength to strength and gained customer’s loyalty by providing wide range of products. The company has created powerful brand and competitive advantage in a price competing environment by catering different budgets. ABC has diversified from food retail to selling wide range of other products such as electronic good, clothes and home wares. ABC has always provided quality and services that differentiate it from other competitors in the market.
The market
ABC Company is continuing to grow in the market as it offers a great quality and value compared to other competitors in the market. The wide range and sheer number of stores has been a significant factor in driving sales growth for the company
Financial highlights
In 2014, ABC total sales was ABC total earnings had increased by 5.8 percent in year 2015 with total sales £19,287 million compared to year 2014 where the total sales were £18,227 million this shows the continuous growth of ABC company. However, ABC’s earnings per share decreased from year 2014 with 19.2 pence to 19.1 pence in year 2015 which could decrease the number of potential investor. The profit of ABC before tax has grown from £380 million in year 2014 to £480 million in 2015.
SWOT analysis
S.W.O.T Analysis (Strength, Weakness, Opportunities and Threats) is a tool/technique used in identify a company’s standing. This technique will aid in the decision –making process of a company and help understand how to go forward. The swot analysis helps in identifying what is helpful and harmful to an organization and if these features are internal or external. The strength and weakness of a company is an internal factor, one is helpful, while the other is harmful, while the opportunities and threats are external factors with one helpful and the other harmful.
Strengths – the key strength of ABC is the loyal customer’s base and brand image that inspires trust of customers. Statistics on operational performance shows that the number of customer is in continuing growth and reached 18 million transactions per week. The continuous growth of ABC the company has given it a string financial growth which is shown in the like for like sales growth. Statistics has shown that there is a growth on the like for like sales during the last 15 quarters. ABC Company always makes sure of having a loyal customer base by satisfying customers needs. Thus, ABC offers a wide range of products with high quality and different budget. The ABC Company secured its place in the market by the continuous investment in the product quality and having a price competitive advantage compared to its rivals.
Weaknesses – The weaknesses in the ABC Company is the IT department. IT department in ABC Company is not well organized and disconnected from the customers. The disconnection from the customers is due to faults in the IT departments caused by some employees. In addition there are no target or tackling for the problem resolution. ABC Company tried to implement new technologies however; the implemented solutions are not supported effectively and needs a lot of improvements. Moreover, there are problems in the resources management of the IT department, as the staff is replicated across several sites causing increase in operational costs. Another weakness in the IT department is related to the systems migration as some systems are coming to an end such as the inventory management system which resulted in the loss of millions of pounds due to the products waste. Other weakness in the IT department is concerned with the online shopping as it is very basic and the uptake from it is low accordingly.
Opportunities – There are different growth opportunities for ABC Company according to the recent reports. The creation of property joint venture with the British land will give ABC retail an opportunity to develop many stores and offer new services to the customers. In addition, the joint venture with the British land will help in increasing the capital value through the development of the stores. The increased like for like sales to
Threats – The threats ABC supermarket is currently facing includes the new foreign competitors emerging into the UK Market and according ABC report, they are winning the market by being aggressive and dynamic towards their customers. More so, the economic environment has not been easy on the company and they expect this to continue till 2016, although the company has faith in its investments in price and wide customer base.
PESTLE Analysis
P.E.S.T.L.E Analysis (Political, Economic, Social, Technological, Legal and Environmental factors) is a tool used in understanding the macro factors that affect a company. The company cannot control these factors, unlike SWOT.
Political – ABC supermarket has to consider the political factor in the UK, and abide by them. These factors include the tax rate,
Economical – The rise of the fuel cost is one of the biggest economical factors that could affect ABC. The rise of the fuel’s cost means that products prices will increase accordingly. Another economical factor is the credit crunch, which means the sudden reduction in the availability of money or loans will make the customers more careful about their spending. The customers are less likely to buy luxurious products, which could result in less profit for ABC.
Social – It is important that the company maintains a good image and reputation because
Technological – The use of technology in a business in 2015 is very important. The Internet can be used as a market place for the company as well as an advertising platform. The introduction of a strong online shopping presence and home delivery services will bring more profit to the company. More over, to make shopping/checking out easier for the customers, the company can install a self-service checkout point. This will be a way to cut down some of the cost the company has to pay, for instance, labor cost. A social media presence can also be used to strength customer relationship, it can be used to interact with the customers. More so, integrating the system with a good ERP will cut down the cost of operations in company and make it more efficient and effective.
ITIL® Analysis
ITIL (Information Technology Infrastructure Library) is a practice framework that describes how IT resources can be implemented to add value to a business, documenting the processes, function and roles of IT Service Management (ITSM), (ITILtraining.com, 2015). ITSM addresses the delivery and support of IT services made to cater to the needs of an organisation (Books et al., 2015, p.21). Due to the rapid pace of technology advancement, regulation, and services that must be delivered, IT services and systems within the company must be organized and manage itself more effectively. There are numerous examples of organisations that have successfully used the ITIL framework to strengthen their companies. For instance, “In 2000, the target response time for resolving IT incidents at Caterpillar IT was 30 minutes — but the goal was only achieved 30 percent of the time. Then Caterpillar implemented ITIL. Now its IT providers meet the target more than 90 percent of the time — and Caterpillar has been able to grow its business exponentially in the past five years with only 1 percent increase in its IT budget”. Another good example of an organisation that used the ITIL framework is, “Proctor & Gamble — with 5,000 people employed in IT — implemented service management processes outlined by ITIL and saved $125 million, according to company officials”. ITIL compresses of five processes in its lifecycle, which includes:
• Service strategy, which makes sure that the IT strategy, is mapped to the overall business aims and expectations.
• Service Design where solutions are specially designed to meet specific changed or new business requirements.
• Service Transition which looks at managing change, risk and quality assurance during the implementation of the service design to manage serve operations and support the infrastructure in a controlled manner.
• Service Operations this involves the usual day-to-day business activities of keeping services running smoothly when transitioning into the new implemented system.
• Continual Service Agreement (CSI) provides an overview of all the elements suggested by the other books and looks for alternative ways to improve the services provided and overall process.
It is clear that ABC’s IT department is causing the company to digress. The implementation of the ITIL framework will provide business, personal and monetary benefit (ITSM Advisor, 2015). By employing ITIL as a framework, ABC will improve the alignment of their IT to the business, which will in turn better the services provided to the customers (Rance, 2015). With ITSM, there will be an increase in business productivity due to reduced downtime, workload will be distributed and manage properly, especially with the introduction a various Point of Sale system, such as Self-service and the ROI to stakeholders will be easily identified (ITSM Advisor, 2015).