MALC : Case Study
XYZ Ltd is a retail store chain with more than 200 stores in 40 cities across the
country. The company has seen a rapid growth in the past five years with a
dynamic team of board of directors. It has grown from 30 stores to 200 stores
during this period and major expansion plans continue. The team plans to
establish further 300 stores across the country along with expanding the
product range. It also plans to capitalize on the opportunities thrown open by
the internet. The short-term top priority goal is to launch a web-site to sell its
entire range of products on-line also.
Product Range
XYZ initially started its stores mainly focussing on sale of groceries. It slowly
expanded its product range to processed foods, bakery products, dairy
products, books, electronic goods, clothing and furniture. The stores layout
and structure have been carefully planned to accommodate product display
and convenient access to customers. A number of sales promotions are run to
attract customers during festivals, holidays, week-ends and company
anniversaries. The company also runs a loyalty programme to retain
customers. Security systems are in place to take care against theft, breakage,
fire, etc.
Corporate structure
The company has engaged a management consultancy firm a few years ago to
recommend an organization structure that would be relevant in the current
economic and industry environments and also meet the future requirements
of the organization. Based on the recommendations the company has
restructured its organization structure.
The CEO heads the company and is supported by a seven member board of
directors. The following departments have been created and they execute
relevant business processes and support services.
Procurement Department is responsible for procuring all the products,
managing the stocks, replenishing the products in the stores and to
continuously review the product range to match with market trends and
consumer preferences. This department is also responsible for timely disposal
of products that remain unsold for long periods or products that are nearing
expiry dates.
Sales and Billing Department takes care of managing the price lists and ensures
that the billing systems are functioning accurately. It is also responsible for
guiding the consumers by answering their queries and suggesting them
products that suit their requirements and budgets. This department also takes
care of advertising, store decoration and prominent display of current offers,
discounts and promotions.
The Logistics Department manages the movement of all products from the
warehouse to stores located in the cities. It also takes care of delivery of
products to customers’ location as per norms set by the sales department.
Human Resource Department takes care of all aspects of the people part of the
organization. Recruitment of employees, managing their performance
appraisal, payroll, trainings, promotions, disciplinary actions and terminations
are all managed as per laid down processes.
Finance Department is responsible for the complete financial management of
the company. Defining, implementing and verifying adherence to financial
policies, allocation of budgets, accounting all incomes and expenditures,
releasing and managing funds for projects and initiatives are the key aspects
covered by this department.
IT Department plays an important role within the overall organizational
management. An ERP system has been implemented last year. All the
departments use respective modules for executing their processes and
performing their tasks. The other applications used are portals, service
management application and office tools. The required infrastructure has been
deployed with various teams managing the servers, databases, networks, and
websites.
Corporate Governance is executed through the top level management team.
The CEO, CFO, CIO and director of each department are involved in defining
the corporate vision, strategy and policies. All strategic decisions are taken by
this team and progress and achievements are reviewed and measured
regularly.
A separate Customer Service Department exists to ensure that all queries,
complaints and issues are properly addressed. This department is expected to
play a vital role once the online-sales is launched.
Vision, Long-term Goals and Short-term Goals :
XYZ has plans to establish huge retail stores in all the prominent cities and
towns of the country. It plans to provide a new enjoyable experience to its
customers by making its retails stores not just a place to buy products but a
place to shop, dine and play. It also plans to launch its online sales website
within six months. An important aspect of this service is an assurance to
customers that delivery of goods ordered will be made within 6 working hours.
XYZ plans to provide all the products at competitive prices with an option to
refund all defective products with ‘no questions asked’ policy.
Business challenges and market risks :
XYZ has a number of competitors in the country. Social welfare organizations
and forums have been raising concerns that ‘the huge retail organizations are a
clear threat to the small and medium retail players’. Government has been
stipulating some restrictions on the operations of the bigger retail players.
Some products are fast changing in nature and sometimes a huge volume of
such products have to be cleared off at below the purchase price. Retail store
staff turn-over is a major concern for the company.
IT Organization structure
The CIO is the overall in-charge of the IT Department and there are five units
directly under his control. The infrastructure unit takes care of the main
network, sub-networks and servers. The applications unit takes care of all the
software applications and databases. The service management office takes
care of defining, implementing, reviewing and auditing all the IT processes. It
also takes care of resource allocation, preparation of business cases and
securing funds for IT projects and initiatives. The IT projects unit is responsible
for all IT projects that have been approved by senior management or board of
directors. The IT operations unit takes care of day-to-day management of IT
services in collaboration with infrastructure unit and applications unit.
IT infrastructure
The main data centre is in the Head Quarters location and the backup centre is
in another location. A cluster server approach has been adopted to ensure
high availability of services. The main network is from a well-known service
provider and the subnets are internally managed by the company. Each retail
store has a local server and a number of billing systems which are managed by
the local unit of operations team.
IT services
The ERP application is used by all the departments for their respective business
processes and operations. While the functional support is taken care by
respective departments, the underpinning technical support is handled by IT.
The services include application management, infrastructure management,
database management and Service Desk. Application development services are
handled by project teams constituted for specific business requirements.
IT service management
Focus on adopting a structured approach to IT service management started
with the recommendation provided by the Management Consultancy team as
part of the reorganization. Hence, IT service management is still maturing.
Service Strategy : The CIO and service management team have good visibility
of the organization’s business vision and long-term goals. They closely
collaborate and work with various departments to understand their strategies
and requirements.
However, the department heads feel that IT has suddenly become more
important in the organization. They feel that while at a strategic level there is
good information exchange between IT and business, at a tactical level the
links are missing.
Financial management is completely taken care by the corporate finance
department. A dedicated small team is available for IT related financial
management but it is more towards ensuring accounting of IT expenditures.
Service Design : Most of the service designs are restricted to projects and
focused towards application functionality and infrastructure requirements.
Design of management architecture, supporting tools and measurements are
mostly developed only when the need is felt at a later point in time. Availability
and capacity aspects are well designed as part of the overall service solution. IT
service continuity is also aligned to business continuity and the backup data
centre meets the current requirements.
Service level agreements are in place. However, issues and conflicts arise in
service review meeting regarding service level achievements reported.
Service Transition : The project management teams take the overall
responsibility for building, testing and deploying the services into live
environments. Change advisory board is in place to assess and approve both
project changes and operational changes.
Information and knowledge relating to services is not integrated and each
department or unit has its own knowledge repositories.
Change evaluation is not yet adopted. While functional and performance
testing is well planned and executed, there were instances where the services
could not be handled efficiently after go-live. Issues like service desk not
updated with relevant information and insufficient user training continue to
recur for new releases.
Service Operation : A well-trained and organized service desk exists for
handling incidents and service requests. Basic IT service management tool is in
place. However, both incidents and service requests are processed through
incident management process only. This sometimes leads to delay in resolving
critical incidents. Access management is well established and all requests are
routed through respective department leads for approval and ascertaining the
appropriate access rights.
The IT operations unit monitors most of the infrastructure and application
components manually. Monitoring of critical components like servers,
databases and networks have been automated.
Continual Service Improvement : Improvement initiatives are mostly driven by
top management based on updates from industry forums and vendor
seminars. The other source of improvement suggestions is from service review
meetings when business units and internal customers express their
dissatisfaction about certain aspects of the services.
Organization chart
CEO
Procurement
Sales & Billing
Logistics
Infrastructure
Applications
IT
(CIO)
Projects
Finance
Human
Resources
Operations
SMO