Strategic Information Systems Continuous Assessment-DT365/4-

Lecturer: Audrey JenningsDue date: 21st April 2010

Student Names Exam Numbers

Magee, Bryan C05498392O’ Brien, Laura C05624029

O’ Brien, Kenneth C05468507

Power, Sarah C05378656

DECLARATION

We hereby certify that this material, which we now submit for assessment as a continuous assessment project in Strategic Information Systems on the course DT365/4, is entirely our own work and has not been submitted in whole or in part assessment for any academic purpose other than fulfilment for that stated above.

Signed:

Bryan Magee …………………………………………...

Laura O’ Brien …………………………………………...

Kenneth O’ Brien ...................................................................

Sarah Power ...................................................................

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TABLE OF CONTENTS

Executive Summary…………………………………………………………………...1

The Hierarchical Perspective Pyramid: Identifying the various systems in use at Tesco

at each level of the pyramid. ………………………………………………………….2

How the Value Chain Model is used to identify opportunities for strategic information

systems and how IS/IT enabled Tesco to extend its Value Chain. ……………………4

How IS/IT has changed the way Tesco does business and enabled the company to

compete. ………………………………………………………………........................7

How IS/IT has changed the Supermarket Industry…………………………………....9

Potential areas where strategic IS/IT would enable Tesco to create a competitive

advantage……………………………………………………………………………..10

The IS/IT solutions that enable Tesco’s Customer Service Life Cycle.

………………………………………………………………………………………..13

Conclusion……………………………………………………………………………14

Bibliography …………………………………………………………………………15

Individual Reports

Kenneth………………………………………………………………………………18

Bryan…………………………………………………………………………………19

Laura…………………………………………………………………………………20

Sarah………………………………………………………………………………….21

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EXECUTIVE SUMMARY

This group assignment analyses the major aspects involved in IS/IT for the purpose of identifying and explaining the strategic role and overall contribution of Information Systems in an organisation. Our chosen organisation is the well renowned supermarket giant ‘Tesco’. For our analysis, we covered topics relevant to IS/IT such as the hierarchical perspective ‘pyramid’, Tesco’s value chain and the customer life cycle. We also examined other relevant elements such as the effect of IS/IT on the supermarket industry, how IS/IT has changed the way the organisation does business and how it has enabled the company to compete, and also how strategic IS/IT could create a competitive advantage for the organisation. From our analysis it is evident how important IS/IT is to Tesco, and how beneficial it has been to those operating within the supermarket industry overall. We also show, towards the final section of the project, how IS/IT solutions can help Tesco in enabling their customer service life cycle. The last four pages of the project consist of our individual reports on the process involved in carrying out this assignment, and the learning points that we each took from it.

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Identifying the various systems in use at Tesco at each level of the hierarchical perspective pyramid

Many different types of information systems exist simply because there are many different interests and levels within an organisation (Laudon and Laudon, 2002 p.38). These systems can be categorised and viewed from a hierarchical, functional and process perspective.

According to Piccoli (2007 p.50) the hierarchical perspective recognises that decision making and activities in organisations occur at different levels. At each level the individuals involved:

- have different responsibilities- make different types of decisions- carry out different types of activities

The following diagram shows the Hierarchical Perspective Pyramid (Piccoli, 2007 p.52) with the organisation divided into three levels:

According to Piccoli (2007 p.50) the operational level of the organisation is mostly concerned with short term activities, typically those that occur in the immediate term. Decision making at the operational level is typically highly structured with detailed procedures carried out by front-line employees who have little discretion. According to Piccoli the objective here is effective transactions processing under a limited degree of uncertainly.The information systems that support this organisational level are called transaction processing systems (TPSs). These are used to automate recurring activities and ensure that they are performed both speedily and accurate (Piccoli, 2007 p.51).

At operational level Tesco uses electronic data interchange (EDI) to manage daily stock control, cash tills, sales per region, and also to automatically reorder stock from its suppliers which are in well in excess of over 1200 different suppliers (Baxter and Lisburn, 1994). TPSs are used to ensure that the day-to-day activities and transactions are performed speedily and effectively. Two of the main concerns for Tesco at operational level are regarding inventory management and transaction processing, both of which are aided greatly through the use of information systems. Inventory management systems assist Tesco’s operational managers with all aspects of stock

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control. Radio frequency identification (RFID) technology keeps accurate count of the quantities of each product and other systems ensure that shelves are kept stocked.Speedy checkout systems coupled with Tesco’s self check out scanners ensure efficient transaction processing. Tesco have a system in place that monitors the number of customers in store at a given time and predicts when extra checkouts need to be opened before queues begin to build, the supermarket chain has also began using heat-sensing technology to monitor lines at the tills. (www.computerworlduk.com)

The Managerial level deals with mid-term, middle management decision making and activities. According to Piccoli (2007 p.51) the activities performed tend to be semi- structured, having both well-known components and some degree of uncertainty. Decision making at this level is typically semi-structured but characterised by repeatable patterns and established methods. The focus is on tactical decision making characterised by some discretion. The objective is to improve the effectiveness of the organisation, or one of its functions, within the broad strategic guidelines set by the executive team.At Managerial level, decision support systems (DSSs) help functional managers in the monitoring, controlling, administrative and decision making activities (Laudon and Laudon, 2002 p.39).

Decision support systems help middle level Tesco managers with their tactical decision making. There is a system in place that provides managers with stock cards, showing weekly sales figures for every product in the store. These identify both strong and week performers, assisting managers to forecast future demand and sales figures, therefore enabling the manager to make effective decisions on what stock to purchase and what lines should be discontinued. During promotional cycles, in times where sales are harder to predict, exception reports alert managers to exceptional sales performance that may be causing stocks to run low, allowing managers to place an order and prevent a stock out. In Tesco the information systems also greatly aid the HR function. Clocking systems calculate the hours worked by an employee which assists with payroll calculations. Information technology also enables Tesco to store soft copies of employee data, moving away from the traditional, space consuming filing systems.

The executive level is involved with the long term company strategy. According to Piccoli (2007 p.51) the executive level of the organisation is concerned with high-level, long-range decisions. Executives are focused on strategic decision making and on interpreting how the firm should react to trends in the marketplace and the competitive environment. Decision making at this level is highly unstructured and reliant on internal as well as external data sources. The objective is, as much as possible, to predict future developments by evaluating trends, using highly aggregated data and scenario analyses. Little structure and formal methodologies exist at this level. Information systems supporting this level are referred to as executive information systems (EISs).

Information systems, at executive level, assist top-level Tesco management with long-term strategic decisions. Information systems on the previous two levels are very much focused towards management within a particular store, on the executive level; they assist Tesco’s team with decisions on an organisation wide basis. These EIS’s influence Tesco’s strategic planning regarding locations of new stores and the

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possibility of closing down any underperforming stores. Information systems are the key to Tesco’s international success with their “Tesco in a box” IT package now

helping them to break into the US market. This comprehensive model covers everything from planning and building stores, deciding on markets, selecting products, getting products through the supply chain to selling to customers in Tesco stores (computerworlduk.com).

According to www.computerweekley.com, as of 2008, Tesco planned to centralise IT applications across its stores worldwide, after signing a £100m network and voice contract to support its overseas expansion programme. It plans to open 505 international stores by the end of 2008 and will replace 10 separate voice and data networks with a single network from Cable & Wireless in June. Nick Folkes, IT director and UK head of infrastructure and operations at Tesco, said the company plans to use the network to boost productivity by standardising key finance, human resources and sales applications across its overseas operations.

Tesco plans to manage the applications centrally from its IT service centre in Bangalore, rather than running separate applications in each country. Folkes said “The network will enable us to run IT applications such as Oracle Financials uniformly across the group within the next three years. Rather than have every country implement their own instance of Oracle Financials software, for example, we can start to centralise and consolidate how we run our finance applications and processes across the group”.

The project is the next step in Tesco’s global standardisation strategy which began five years ago. Tesco plans to centralise its Oracle Financials software, used for invoicing, its PeopleSoft HR software, and Terradata Management Information Systems, used for measuring budgeting targets. The move would deliver standard reporting functions for the company, allowing executives to manage Malaysian and Japanese stores as they would a store in the UK.

Identifying how Tesco may have used the value chain model to identify opportunities for strategic information systems and, subsequently, how these

systems have enabled Tesco to extend their value chain

To better understand the activities through which a firm develops a competitive advantage and creates shareholder value, it is useful to separate the business system into a series of value-generating activities referred to as the value chain. In his 1985 book Competitive Advantage, Michael Porter introduced a generic value chain model that comprises a sequence of activities found to be common to a wide range of firms (NetMBA.com). Porter identified primary and support activities, as shown in the following diagram:

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By critically examining each activity that a firm engages in it allows the firm to identify any areas which are weaker than others, or, stated otherwise, any areas which could be greatly enhanced through the effective implementation of relevant information systems or technologies. Once the value chain is charted, executives can rank order the steps in importance to determine which departments are central to the strategic objectives of the organisation. Also, executives can then consider the interfaces between primary functions along the chain of production, and between support activities and all of the primary functions. This helps in identifying critical points of inter-departmental collaboration (Pant & Hsu 1995). Thus, value chain analysis:• Is a form of business activity analysis which decomposes an enterprise into its

parts. Information systems are derived from this analysis.• May help in devising information systems which increase the overall profit

available to a firm.• May help in identifying the potential for mutual business advantages of

component businesses, in the same or related industries, available from information interchange.

The main aim of every firm, including Tesco, is to service their customers as best they can, and by analysing these activities it enables them to further each activities value adding potential (Piccoli 2007). Although the implementation of these various new systems may initially be costly to the firm, the principal purpose is that they will create added value for the firm in the long term. These benefits that are achieved as a result normally outweigh the initial costs of implementation, depending of course on whether the correct and appropriate systems or technologies have been chosen. This is because, in most cases, the more value you create, the more people will be prepared to pay a good price for your product or service, and the more they will keep on buying from you.

Once the analysis has been completed, and the opportunities identified, the firm can then implement the different information systems or technologies into the various activities. Tesco has made valuable use of value chain analysis and has, as a result, integrated IT and IS enormously into their business transformation process. For the purpose of this assignment, we will be looking at each of Tesco’s business activities individually and, subsequently, we will identify each of the associated systems and technologies that have enabled Tesco to create added value for both the company and

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the customer. As detailed in the above diagram, Tesco’s primary activities are divided into inbound & outbound logistics, operations, marketing & sales, and service.

Inbound Logistics

Inbound logistics involves relationships with suppliers and includes all the activities required to receive, store, and disseminate inputs (IFM.uk). Tesco have made excellent use of information systems and technology in this area of activity and as a result have created added value for the company. Tesco make use of an innovative supply chain management system that begins in store and links up with their suppliers. This system is known as their continuous replenishment application and is used to monitor in-store inventory efficiently and effectively. Tesco adopts this common operating model across its businesses worldwide, allowing it to deploy and support key systems like supply chain and replenishment applications when it expands into new countries (computingnews.com). The use of this system enables valuable time and cost savings for Tesco; stock is ordered as is needed which reduces wastage and inventory costs, employee’s jobs are made easier as the task of stock checking is computerised, suppliers are made aware immediately of the exact amount of stock that is needed, and, most importantly, customers are kept happy as their favourite products are always available.

Outbound Logistics

These are the activities required to get the finished product to the customer. In the case of Tesco, this would include actual delivery of products to the consumer. Tesco have stated on numerous occasions that one of their largest expenses is that of distribution costs. Tesco found that they were spending huge amounts of money on fuel for the trucks that were used in delivery and decided to change their methods. They increased the number of products that each truck could carry, subsequently reducing the amount of trucks needed for each journey. In conjunction with this, they also updated Tesco’s transport management software to Isocracy software. (computingnews.com). This therefore enabled them to be more effective and efficient in their distribution activity, as the software strictly monitors the amount of fuel consumed by each truck. It initially aimed at reducing fuel consumption by 30% which inevitably would reduce costs enormously for Tesco and helping to create added value for the firm. Tesco also began incorporating the use of an RFID tagging system into their distribution centres in 2004 (computingnews.com). This system was installed in order to monitor inventory levels within stores and allowed Tesco to remain aware of which products were running low. Staff at the distribution centres could then order products before they ran out, rather then relying on guess work.

Marketing and Sales

This is essentially an information activity - informing buyers and consumers about products and services related to the company (benefits, use, price etc.). Tesco engage heavily in various marketing strategies, with their well-known slogans such as ‘Every little helps’ and ‘Ireland’s biggest discounter’. One of the major marketing strategies that was enabled through the use of IT was the Tesco clubcard. This card was given to consumers who shopped at Tesco and offered them money-off their purchases after they spent a certain combined amount at the store over time. This impressed

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consumers, causing them to return to Tesco therefore adding value to the company. Another way in which this system aids Tesco in creating added value is that each card stores information about its consumer. This information can be collected and combined to establish different shopping patterns and trends relating to Tesco shoppers. Marketers for Tesco can then use this information to base their marketing tactics on, for example by establishing that the majority of 16-24 year old girls shopped at Tesco between 3.30 and 5p.m, it would be beneficial to have in store sampling on items such as makeup or cosmetics between these times.

The remaining areas of the primary activities, such as operations, as well as aspects of the supporting activities will be discussed in the following sections. This is because many of Tesco’s other activities may be discussed under the headings of providing competitive advantage as well as those that help to extend the customer lifecycle. Operations include areas such as online shopping, and so are discussed further on in the project.

Identifying how IS/IT has changed the way Tesco does business and enabled the company to compete.

A business information system is a group of interrelated components that work collectively to carry out input, processing, output, storage and control actions in order to convert data into information products that can be used to support forecasting, planning, control, coordination, decision making and operational activities. (Bocij et al., 2008)

Tesco have been very quick to adapt to technological advances and were the first supermarket to market in online grocery shopping in the U.K. The company has benefited highly from implementing information systems and information technology in their stores and online. Tesco is a highly innovative company that has information systems and technology right throughout their stores, these systems and technologies have enabled Tesco to revolutionise the traditional shopping experience through initiatives such as;

• POS and self service checkouts

• Tesco.com (Online Store)

• Tesco Clubcard

• Inventory Management

• GPS systems for drivers

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POS and Self Service checkouts

Using EDI (Electronic Data Interchange) technology at the point of sale Tesco is able to record and replenish stock levels much more efficiently than before, it also helps management determine which products are selling better than others. The self service checkouts increases customer choice for payment, they can use the standard point of sale where they are assisted by staff or use the self service where they can scan and pay for their goods themselves. This development in point of sale operations frees up time for employees to carry out other tasks improving efficiency in the store.

Tesco.com

Tesco.com is the world’s number one online grocery store and it’s the market leader in internet retailing. As stated previously Tesco.com was the first online grocery store in the U.K. and this innovation shown by Tesco has helped the company stay ahead of competitors in this sector. Tesco.com became so successful that in 2000 it became a subsidiary to its parent company Tesco, who still remained in 100% control. The decision to carry out this organisational structure change was influenced by the need for Tesco.com to be able to change and adapt to market conditions quicker which wasn’t possible while under governance of the parent company. One of the critical success factors of Tesco.com has been the consistent presence of innovation and the never ending drive towards pioneering ideas, Tesco.com describe this process as “we have continually added an unrivalled blend of new products, new services, and new functionality to the site. Our competitors are forever playing catch-up.” (Tesco’s Online Drive)

Tesco Clubcard

(Laudon and Laudon, 2000) define an information system as a set of interrelated components that collect, process, store and distribute information to support decision making and control in an organization. The Tesco Clubcard personifies this definition as it captures as much information about a customer as possible such as name, address, preferences, shopping frequency and recency and average spending, it also promotes brand loyalty for Tesco as the card offers a standard 1% discount on all products, holiday vouchers and other extras. According to (Humby et al. 2003) loyalty can be measured using three elements; recency, frequency and value, and any shopper using a loyalty card can be measured by monitoring how he or she behaves according to a mix of these criteria. (Humby et al, pp. 99)

Inventory Management

Tesco’s management and control of stock and stock levels is aided massively by the EDI system in place at the POS. Stock takes are still carried out regularly but are much more efficient and accurate as a result of the inventory control gained by the EDI system. The stock takes are much less tedious and time consuming for staff also, which increases Tesco’s all round productivity.

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GPS

When a customer places an order on Tesco.com they are delivered their order right to their doorstop, to increase the range and customer base that can avail of this service Tesco use Satnav (Satellite Navigation) technology that drivers can access on their mobile phones to allow them to reach this wider region of customers. This technology came from “ALK Technologies”.

Tesco have responded in an extremely positive fashion to technological changes and developments in the business world, the company as a whole have embraced the changes and reaped the subsequent benefits as they have found themselves as the number one online grocery seller and the market leader in internet retailing in the world. They have displayed innovative traits and have gained a large customer base from their commitment to pioneering thinking.

Showing how IS/IT has changed the Supermarket Industry

The business world is constantly changing with developments in technology as well as changing consumer needs. Strategic information systems change the goals, operations, products, services, or environmental relationships of organizations to help them gain an advantage over competitors. (Laudon and Laudon, 2003) The major trends that are affecting the supermarket industry are expanded service requirements, mass customisation, customer loyalty, private labeling and delivery options (Kumar, 2008)

The supermarket industry has become extremely competitive in the past twenty years with major competitors trying to gain any type of advantage over one another using many different methods and tools. This continuous push towards creativity and innovation has had a major influence on the development of information systems and information technology. Companies have tried their utmost to create better and more efficient information systems and information technology and as a result the industry has been majorly affected, in a positive way. The development of IS/IT in the industry has created better ordering systems, improved HR applications, developed supply chain software and improved electronic point of sale operations for companies.

In more recent years the major companies in the industry have been using their improved IS/IT to focus on two key areas, Operations and Customer Focus. From an operational standpoint there has been massive development in software which has led to more efficient systems such as replenishment systems which monitor stock levels, they all now work instantly without any human interaction, (Except for scanning at POS) once stock levels reach the reorder point an order is instantly sent to suppliers to order more of this product.

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On the basis of customer focus the larger supermarkets have been aiming to satisfy all customer needs rather than just what was available from a traditional grocery store standpoint, they have done this by extending their range of products and services e.g. Tesco have introduced telecommunication services as well as financial services like insurance.

Supermarkets are introducing new services and improving systems for the benefit of customer, the more satisfied the customer the more likely they will return, customer retention or loyalty is key in the supermarket industry as 75% of a supermarket’s profit comes from just 30% of its customers, this 30% are loyalty card holders of some description. The supermarkets use the information gained about these customers to cater to their needs and provide them with quality service and products. This would be impossible without IS/IT, further highlighting how important IS/IT has been to the supermarket industry and how it will help to evolve the industry in years to come.

Identifying potential areas where strategic IS/IT would enable Tesco to create a competitive advantage.

The goal of much of business strategy is to achieve a competitive advantage and if possible make it sustainable, highlighting the importance of a competitive strategy that strives to achieve this advantage. A competitive strategy is a broad-based formula for how a business is going to compete, what its goals should be, and what plans and policies will be required to carry out those goals (Porter, 1985). Michael Porter identifies three generic strategies, which are cost leadership, differentiation and focus, which can be implemented across the business to create a competitive advantage. ‘A resource-based view emphasizes that a firm utilizes its resources and capabilities to create a competitive advantage that ultimately results in superior value creation’ (quickmba.com). This value creation ultimately translates as value for the consumer and profit for the company.

Strategic IS/IT is one of many ways that companies can gain a competitive advantage. IS/IT supports changes in business processes that translate to strategic advantage which it does by providing efficient communication tools, streamlined product design time with computer-aided engineering tools, and better decision-making processes by providing managers with timely information reports (Turban et al, 2004). Tesco has been one of the most effective users of technology and implementers of system processes in the world. Now, in 2010, that Tesco has 4,331 stores located across 14 very different countries, it has become crystal clear that they will need to remain top of their game in implementing IS/IT strategic initiatives to attain competitive advantages over their rivals (tescoplc.com). At the moment they remain one of the major innovators in the area of IT in the supermarket industry, which can be seen in various aspects of their business operations as outlined below.

1) Tesco stores: Tesco has utilised most innovations in IS or IT to increase the efficiency of its stores. It introduced a system where by floor staff and managers

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could use a database, usually set up by customer service desks, to check whether certain items were in stock or not, which otherwise would involve staff going to the actual stock room to search for the item that the customer enquired about. This saved huge amounts of time and energy on the staff’s part and made it far quicker for the customer too. This database was apart of the bigger IS/IT strategy of electronically monitoring all stock in the store, as detailed earlier.Tesco was also the first supermarket to introduce the self service checkout system in each of its locations. This also resulted in lower staff costs and improved the efficiency of each of its stores, thus gaining a competitive advantage. Although this did translate as lower costs for the customer, it cannot be considered a sustainable competitive advantage as it is no longer unique to Tesco, like the stock database system.

2) Tesco online: The Company has aimed at revolutionising the way people shop online with the launch of an interactive desktop that links customers directly to Tesco.com, taking advantage of the modern fact that ‘customers value the time savings of not having to drive to the store, manually pick the groceries, queue up to pay, drive home and unload the car.’ The application is designed to be a message board and communication point within the home and enables users to sync calendars, notes and recipes with Tesco.com, to basically enable the customer to place their order and arrange the delivery without the need to open the browser. Will Cooper (Cooper, 2007) cited how Tesco is looking to user-experience and social media to help consolidate its position as the leading grocery retailer, this will be done through its main site Tesco.com and affiliate site Tescoplc.com. When users join the site as members they can put up digital photos and messages to the screen. These photos can then be printed at your local Tesco, cleverly linking the virtual with the real world of Tesco, or just shared with other customers.

The aim of the digital marketing agency, ‘Conchango’ who worked on the redesign of the Tesco web-site, was understood to be a focus on social media as the key driver to replicate the in-store experience. They successfully did this through enabling users to interact with all aspects of Tesco and across all product ranges especially through their ‘Talking Tesco’ section on Tescoplc.com where they can interact with the whole Tesco family from the suppliers to other customers and the community at large, with the ability to leave messages, use various web 2.0 applications and gather countless amounts of information. The Tescodirect.com enables them to look at every type of product imaginable highlighting the point to the customer that Tesco can serve your every need. The only drawback is that they haven’t incorporated the social networking sites, Facebook and twitter, into their online experience but other than that they offer such an array of options & experiences that it almost bombards the customer’s senses. There are Tesco profiles on Facebook but they seem to be set up by individual stores or by people for fun.

The online set-up is a key example of how to utilise IS/IT in an innovative manner and it literally becomes another major cog in the massive marketing machine behind Tesco, highlighting all they can do for the consumer and reminding them what initiatives they take to help the environment, its aim to become completely carbon free by 2050, and how they help fund charities, this year being about helping children with cancer.

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3) Supplier/customer relationships: IS/IT can be used to lock in suppliers and customers, or to build in switching costs, making it harder for suppliers or customers to change to other competitors, depending on influence and strength of Porters five forces. When it comes to suppliers, Tesco monitors every step of the replenishment process to increase inventory turns and keep operational efficiency streamlined. The goal is to create greater and more efficient relationships with suppliers and offer customers a consistently good shopping experience. As of 2007, Tesco will begin to introduce radio frequency identity technology into operations throughout its supply chain, after years of testing it. (Hingley et al, 2006) The implementation of these new systems will lead to increased information for decision making, cost savings, increased stock availability, time & inventory efficiencies, improved traceability and improvements in customer service & customer targeting but will involve high costs to implement across the board. Overall it will translate into cost savings for customers (Tesco unveils RFID strategy). If Tesco PLC can translate the increased efficiency in logistical operations created as a result of the introduction of RFID into more competitive prices for customers, the company will succeed in creating a sustainable competitive advantage.

When it comes to customers, Tesco direct has offered consumers an array of choice of non-food items which has been bolstered by the supermarkets online channels. The supermarket giant aggressively entered the furniture market in September with the direct online channel, helping to boost Tesco’s non-food sales in the UK by 11.6% to £76billion (Direct boost for Tesco sales, 2007). Terry Leahy, Tesco chief executive, said of Tesco direct that ‘Customers like the service. They particularly like the opportunity to order goods via the internet and then come in and collect it in their local Tesco store, and I think that’s an innovation’ (tescoplc.com).

The Tesco loyalty ‘clubcard’ scheme is arguably one of Tesco’s most noteworthy IT advancements. ‘The technology of loyalty cards allows retailers to transform cold data on consumer behaviour into warm relationships and eventually into a genuine customer loyalty founded on mutual understanding and trust’ (Mauri, 2003). Humby et al (2003: 244) state that ‘by making the Clubcard an inherent part of the shopping online with Tesco, a strong link was forged between the click and brick sides of the business.’ (Strategic direction) It was highlighted in this article how Tesco’s scheme gives it an immediate competitive advantage over its competitors in eleven areas, including consumer trends, negotiating power and site locations. Tesco’s clubcard is now the world’s most successful retail loyalty scheme with some 11 million active users in Britain alone and many millions more abroad including places as far away as Malaysia.

4) Strategic initiatives & plans: Tesco have recently implemented their ‘Tesco in a box’ system. This system is a complete end-to-end set of business processes built on a standardised IT package. The system integrates all of Tesco’s existing applications into one large application incorporating its store and supply-chain (Shifrin, 2007). This has lead to greater efficiencies in their supply chain and other benefits too.

They have implemented this in the US in recent years and have been highly successful. Tesco has achieved this as a method of ‘underpinning (their) giant push

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into the US’ (Shifrin, 2008). It has been tested in places like Turkey as well. Shifrin continues to say that the key purpose of the system was to roll out the best ‘best of breed IT systems’ and to ultimately ensure the best procedures for all Tesco operations.If Tesco were to implement this all inclusive system into the UK and Ireland, it would give them a strong base for a competitive advantage, enabling them to generate substantial cost savings. Currently this application is unique to Tesco, therefore putting it in a position where they have a sustainable competitive advantage.

Identifying the IS/IT solutions that enable the organisation’s Customer Service Life Cycle

The Customer Service Life Cycle (CSLC) was first proposed by Ives and Learmonth in 1984. The CSLC involves four stages that a consumer passes through: the requirement sate, the acquisition stage, the ownership stage and the retirement stage (Piccoli, 2001). The cycle is based on the premise that customers follow a ‘birth to death’ trend in their purchasing behaviour of a product or service (Benbasat & Cenfetelli, 2002) following on from consumer behaviour theories & research.

The four stages of the life cycle can be further broken down into thirteen sub phases. These are, beginning at stage one, requirement, specify, select a source, ordering, authorize and pay for, acquire, evaluate and accept, integrate, monitor use and behaviour, upgrade, maintain, transfer or dispose and the last phase account for. Benbasat and Cenfelli (2002) state that IT can be used to influence customer’s behaviour across the breadth of the life cycle and in doing so provide the company with a competitive advantage in terms of the relationships that are made between the supplier and customer, as is partly detailed in the previous section. By observing customers from pre-purchase to post-purchase, companies are able to satisfy and retain clients by providing them with the products and services that they want.

The ‘requirement stage’ is when the consumers recognise a need. For Tesco customers this need would be the kind of product or service they are searching for, whether it is a food or non-food product. With the implementation of cost cutting IT services, like the self-service checkouts, that enable Tesco to reduce staff costs, Tesco have been able to offer a wider variety of products, at cheaper prices, to suit the changing needs of its customers. Tesco also offer a number of other services to satisfy customer needs from banking, insurance and phone services, all of which avail of Tesco’s IS/IT initiatives, to continually motivate the customer to acquire their goods/needs with Tesco. In December 2009, Tesco launched their new and innovative Wine app for the iPhone which enables customers to photograph a bottle of wine and then receive vital info & credentials of that wine from a database of some 1000 Tesco stocked wines.

The ‘acquisition’ stage is where the customer pays for and acquires the product. Tesco’s IT development has implemented online deliveries to make it easier to do this. The whole IT network has been revitalised to ensure customers can acquire their goods with ease and no hassle. CIO draws attention to further systems that Tesco aim to have in place in the near future, ‘The networking deal is also key to many

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innovative new technology based customer-facing investment the retail giant will work on during the next 12 months. These include in-store information kiosks that are able to direct customers to items, market in-store offers and provide other self-service information’ (CIO).

The ‘ownership’ stage involves the customer evaluating the efficiency & effectiveness of the product or service. Tesco knows customer care is essential to its business so it has various ways of ensuring customers’ complaints or compliments about a product or service are dealt with correctly and that Tesco, more importantly learns from this. As explained in the last section, their web-sites are designed to be interactive so customers can evaluate their products online thus giving Tesco more data.

The ‘retirement’ stage, the final stage, is where the customer disposes of the product or service and considers whether or not to repurchase. Through the implementation of the clubcard scheme that encourages customer loyalty, Tesco is able to encourage this repurchase. This again is explained in the previous section. Most major supermarkets are offering this service so Tesco needs to continually innovate and offer different services to the customer to ensure their customers life cycle lasts as long as possible with them.

CONCLUSION

This Assignment has demonstrated how crucial IT/IS systems are to Tesco, and to the supermarket industry as a whole. By exploring the hierarchical pyramid and Tesco’s value chain, it allowed us to identify the various areas where Tesco may have noticed opportunities and capitalized on them via the use of information systems and technologies. It also brought to light just how important IT systems are when looking to create competitive advantage, as well as the role it plays in creating added value for both the company and the customer.

Overall, our analysis established that Tesco makes great use of information systems and technologies and has successfully incorporated the best possible practices into their business process. Their innovative and up-to-date systems are reaping the rewards for Tesco, as can be seen by their large, loyal and every-growing number of shoppers.

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BIBLIOGRAPHY

• Baxter, S and Lisburn, D. (1994) Reengineering information technology:

success through empowerment Prentice Hall, New York; London

• Benbasat, I and Cenfetelli, R (2002) ‘Measuring the E-Commerce Customer Life Cycle’ Proceedings of the European Conference on Information Systems, Gdansk.

• Bocij, P., Greasley, A. and Hickie, S. (2008) Business Information Systems: Technology, Development and Management, 4th ed. Pearson Education Limited

• CIO Business Technology Leadership (2008) ‘CIO 100: The United Kingdom’s largest users of IT’ [Online] Available: http://www.cio.co.uk/cio100/tesco/4137/ [Date Accessed: 17th April 2010]

• Cooper, Will (2007) “Tesco to bring in-store experience online with major website revamp” New Media Age, 1(3):3

• Direct boost for Tesco sales (2007) Cabinet Maker, Issue 5534, p4-4, 1/4p

• Humby, C., Hunt, T., Phillips, T. (2003) Scoring Points: How Tesco is Winning Customer Loyalty. Kogan Page Publishers.

• Hingley, M., Taylor, S.; Ellis, C., (2007) ‘Radio frequency identificationtagging Supplier attitudes to implementation in the grocery retail sector’ International Journal of retail & distribution management, volume: 35, issue: 10, pg: 803-820

• http://archives.tcm.ie/businesspost/2004/03/07/story128430904.asp [Date Accessed: 17/04/10]

• http://www.computerworlduk.com/management/it-business/it-organisation/news/index.cfm?newsId=11265 [Date Accessed: 17/04/10]

• http://www.computing.co.uk/computing/news/2185338/tesco-upgrades-supply-chain [Date Accessed: 17/04/10]

• http://www.oracle.com/corporate/press/2006_jan/tesco%20news%20release_final2.htm [Date Accessed: 17/04/10]

• http://www.computerweekly.com/Articles/2008/05/30/230880/tescos-it-strategy-to-support-international-expansion.htm [Date Accessed: 17/04/10]

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• IFM.uk [Online] Available at:

http://www.ifm.eng.cam.ac.uk/dstools/paradigm/valuch.html [Date Accessed:

13/04/10]

• Kumar, S (2008) A Study of the Supermarket Industry and its Growing Logistic Capabilities, International Journal of Retail and Distribution Management, Vol. 36 Iss. 3

• Laudon, K.C. and Laudon, J.P. (2000) Management Information Systems: Organization and Technology in the Networked Enterprise 6th ed. Prentice Hall, New Jersey

• Laudon, K.C and Laudon, J.P (2002) Management Information Systems: Managing The Digital Firm, 5th ed, Prentice Hall, New Jersey

• Mauri, C. (2003), “Card loyalty: a new emerging issue in grocery retailing”, Journal of Retailing and Consumer Services, Vol. 10, pp. 13-25.

• NetMBA.com [Online] Available at: http://www.netmba.com/strategy/value-

chain/ [Date Accessed: 13/04/10]

• No author (2007) ‘Tesco leads the way in the loyalty program stakes: UK supermarket succeeds where so many others fall foul’ Strategic Direction, Volume: 23, issue 2, pg: 18-21

• Pant, S and Hsu, C (1995) Strategic Information Systems Planning: A Review

[Online] Available at: http://viu.eng.rpi.edu/publications/strpaper.pdf [Date

Accessed: 13/04/10]

• Piccoli, G. (2008) Information Systems for Managers: Texts and Cases John Wiley & Sons Inc, Hoboken, NJ

• Quickmba website: http://www.quickmba.com/strategy/competitive advantage/ [Date Accessed: 18th April 2010]

• Shifrin, T. (2007) Tesco IT in a box at heart of US drive, [Online], Available at: http://www.computerworlduk.com/management/it-business/it-organisation/news/index.cfm ? newsid=6147 [Date Accessed: 17th April 2010]

• Shifrin, T. (2008) Tesco storm the US with Box offering, [Online], Available at: http://www.computerworlduk.com/management/it-business/it-

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organisation/case- study/index.cfm?articleid=1085 [Date Accessed: 17th April 2010]

• Turban, McLean and Wetherbe (2004): Information Technology for Management, 4th Edition

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Kenneth O’ Brien

After the group lists had been circulated amongst the class we met up as a group to

discuss the project in depth. We had all previously worked together on projects and

we felt comfortable working together again on this project. When we met up initially

we discussed the requirements for the project. This was done in order to avoid any

inconsistencies that may have occurred once the individual elements of the project

were put together. After analysing the task at hand we engaged in a lengthy debate

and it was agreed that we would analyse Tesco for the purpose of our assignment.

We then divided up the project into individual parts but we constantly kept in touch

through phone calls, meetings and e-mails. We found that Tesco really embraced and

benefited from using Information Systems and Technologies and that Tesco were a

really apt choice for the assignment.

After each member had completed their individual parts we again met up to carry out

the editing process. We put all the parts together and ironed out any issues that arose.

From carrying out this assignment we have realised how important IS/IT is in the

working world and especially how positive they have been for Tesco.

This assignment has definitely widened my knowledge and deepened my

understanding of Strategic Information Systems and its importance to industry, but

not only the supermarket industry. I found that the project has been a very useful form

of revision for topics and issues covered in class which will hopefully aid me when it

comes to the end of year exams.

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Brian Magee

When the assignment groups were uploaded, we contacted each other fairly quickly as

we all knew each other already and we had worked in groups on other projects before.

We discussed the topic in question for sometime and after a lengthy discussion and

analysis, we agreed Tesco was the company for us. I had been an employee of Tesco

Rathfarnham for some three years which was one of the main reasons why we choose

this company. During my time there I worked in various departments from the

butchers, tills, floor staff, fruit n Vega to the stock room. I was part of the stock

control team for nearly six months which gave me an insight into how the systems

worked for keeping an eye on stock, the reordering process, etc. So, in general, I

already had an inside view into how a Tesco operated.

We then divided the project up into different parts but we remained in contact

continuously so we didn’t overlap information or if someone needed help with their

section. We soon realized just how important IS/IT is to large supermarket chain and

how Tesco had come to not only embrace these systems and technologies but to

become an innovative leader in developing & implementing them across their

operations and across their stores globally. One main point that we all agreed on was

the extent of which Tesco has benefited from the use of IS/IT. It has changed and

modernized their operations across every function and level within the organization,

ultimately improving their performance. Information systems not only assist

management with the day-to-day in-store tasks but at a corporate level, they are

driving Tesco’s executive strategy, such as the Tesco in a box’.

This assignment opened my eyes to the intricate systems that keep a company ticking

over and to the technologies that keep up with the fickle nature of the consumer. It

also gave me a different perspective on the way their stores are run, as I did work

there for quite a while, but I never fully appreciated the scale and sophistication of the

operations that were going on around me. Now I look at the company in a whole new

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light. This project also gave me a lot of new knowledge into how IS/IT initiatives are

developed and run, and in general what Strategic information systems are all about.

Laura O’ Brien

After being given this assignment to do, myself and my group were initially

apprehensive. We thought it would be a difficult task trying to choose a company that

we could relate each of the required areas to, and also it was felt that we would have

trouble finding enough relevant information that we could use for the purpose of the

assignment. However, on meeting for the first time to discuss the task at hand, it came

to light that Bryan had worked in the supermarket Tesco for a lengthy period of time

and had lots of knowledge on its structure and the use it made of information systems

and technology. With this in mind, and after a long discussion on several alternatives,

we decided Tesco would be a good choice to carry out our analysis on.

We initially divided the project into sections, each group member was responsible for

their own part but they also had to ensure they knew which areas the other members

were examining in order to avoid as much overlap as possible. This said however, we

still found it difficult not to repeat ourselves in certain areas, mainly those activities

that Tesco engaged in that were relevant to numerous sections of the project. As I felt

was not very familiar with Tesco, there are no branches in my local area, I decided to

pay a visit to one of their larger stores in Clarehall to get an overall impression of the

sores activities. One of the on-duty managers was kind enough to give me a brief tour

of the shop, and showed me the various systems they have in place, including their

self check-in tills. I asked her if she felt technology played a huge role in Tesco’s

success and, although she is not an IT expert, she did not hesitate in telling me that

systems, such as the self check-ins, provided huge benefits to the company including

reduced staff wages, reduced waiting times for customers and overall increased

effectiveness of the stores operations.

I personally found this project one of the most interesting I have participated in to

date, as it relates to real-life operations in a real-life company. I enjoyed learning

about the various systems and the benefits they provided, and I think I have learned

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valuable information about a topic that is becoming crucial for businesses and

companies to be engaging in worldwide.

Sarah Power

On receipt of the assignment, we decided to stick with our familiar group of four

people that we have worked with successfully before for numerous assignments. We

know that we can work well together and we all have similar time tables, making it

easy for us to meet up to discuss the assignment.

We initially analysed the given assignment and decided we would use Tesco as our

chosen company. IS/IT contributes to Tesco’s operations at every level so we thought

it would be an appropriate choice, coupled with the fact that one of our group

members had actually worked for some period of time for Tesco previously. We

divided the assignment up into four parts to be completed separately after they were

discussed by the group as a whole. To complete these individual sections we

researched the area assigned to us and explored how it applied to Tesco’s operations.

After we had completed each of our sections we came together to work on our

conclusion as a group.

We met up to construct the conclusion and went through our individual work to

discuss the findings. From here we put the final pieces of the bibliography together,

drafted our table of contents and put the assignment together as a final draft.

Overall, we found that Tesco has benefited greatly from IS/IT. It is involved in each

level of the hierarchical ‘pyramid’, operational, managerial, and executive levels. The

assignment helped greatly with our understanding of the course material and helped to

discover how the material applies to a real life situation, within Tesco’s IS/IT

operations.

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