21.6 RetailCo Going Digital RetailCo began in France with one store selling mobile phones and related products. They bought used mobile phones, repaired, upgraded and made them look like new. The refurbished phones were sold in countries where such items were expensive to purchase when new. They began their business with mobile phones but today work with TVs, laptops, computers, notepads, iPads, washing machines, and any other electronics they can fix and sell. RetailCo began their business with one store in Paris, France. They have successfully expanded their stores to all major cities in France. Although they are doing quite well, they are concerned about the recent digitalization trends in the market and feel that they need to adapt. To be in line with the technological developments, they want to use the emerging possibilities to their advantage. RetailCo realize that they will need to make changes to their current business model but not necessarily completely replace it. Rather they see their present stores as a point of strength. The CEO of the company is very interested in knowing what digitalization could do for them and wants to investigate it further. To take such a decision, they need more information as to what aspects of the business can be improved or changed with the help of digital technologies, whether it would be valuable or not, and how much it would cost. RetailCo has hired a business analyst to help with this. The analyst had a chance to meet some of the other people that would potentially be involved in the project. One of them was Mary, the CIO. Mary said that they used an ERP system which had been acquired from a bankrupt startup company many years ago. The system administrator and the main developer expressed doubts that the system would be able to cope with additional requirements in its present condition. It is too heavy and difficult to work with. They both expressed the opinion that the old system needed replacing. Carl, the head of stores, noted that some of the store managers should be involved in the work as they have valuable front-line information and experience. As the ERP is quite old and difficult to work with, many of the staff have found ways to work around the system. Janette is someone who should be involved. She is the head of logistics and along with her key team members Dan and Lisa, works very closely with the logistics issues and all are subject matter experts. Exercise 1: Develop your initial business analysis plan considering mainly the objective, the activities required to meet the objectives, aspects that could make the analysis work, and stakeholder engagement plan (identification, analysis, communication plan). During the analysis work, John, the process owner, explained that they mainly sell their products overseas. Asia, Latin America, and Africa are very big markets for them. RetailCo also sells their goods in their own stores. The profit margin on the products is low so shipping is an issue. John explained that the shipping costs need to be as low as possible and currently, they dont have a good solution. Costs on outbound logistics, are challenging and inbound is not free of problems. Many parts are needed to repair the items, but not all items are needed as much as others, so, stocking a large inventory of parts is perhaps not the best strategy. Anna, head of marketing, continued explaining that the main customers are actually not the end users. It is the retail sellers in the Asian, African, and Latin American markets. Today, we basically rely on our historical data and gut feeling when deciding what items to send to where. We know that a certain phone is more popular in India, so we send it there as the probability of selling it there is higher. Perhaps we can do something here to make this more efficient? It would be good if we could target the end customer as well. We would see better product margins if we do so. Today we get about 40% of the final selling price. Exercise 2: Given the information above, define the problems, business needs and list a set of high-level business requirements. The current IT structure is fairly simple. Each store has its own system called BOS which is connected to ERP. All sales are registered in BOS and the data is transferred to ERP every night. We only have seven stores, so the interface between BOS and SAP is one-way. ERP has all the data about inventory, products and so on as it gets it from BOS. However, BOS does not hold that information, nor can it get it. If we want to know if another store has an item, we have to call the main office and they will look into ERP and tell us. The main office also has another system for accounting and sales called SAL. ERP and SAL do not have a good interface. We have three persons taking reports from ERP and entering the required data in SAL. SAL is the main source for accounting and making projections but as it is inefficient, it is only used for simple accounting. This is a limitation today. There is an online portal called ONLI, but it is very basic. Although it is bad, every week we still get a few orders from it. These are processed manually. However, as we dont have access to the inventory, we just have to tell the customer that the product is out of stock. On ONLI, we only put our most common items, those that we know we have in stock. Exercise 3: Given the data above, model the current state IT structure. Exercise 4: What alternative solutions can you identify given the information above (and perhaps with making reasonable assumptions)? Exercise 5: How could you evaluate if the solution is successful after it has been deployed (a hint is to think of metrics and the actual business needs)? Exercise 6: Would you recommend a predictive or adaptive approach? Please motivate your recommendation and discuss the risks as well.