Business Information Systems in Tesco PLC PDF

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Essay about the use of information systems in the business Tesco PLC....

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Business Information Systems in “Tesco PLC” INF07103

Celeste Prussiani, 40327668 2 Business Information Systems in “Tesco PLC”

Table of contents Abstract

3

Introduction

4

Company background and structure

4

An introduction to Information Systems

5

Transaction Processing Systems in Tesco 6 Management Information Systems in Tesco Executive Support Systems in Tesco7 Critical appraisal and conclusion Appendix

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References 9

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Celeste Prussiani, 40327668 3 Business Information Systems in “Tesco PLC”

Abstract In this report the main information systems in use by the company Tesco PLC are analysed and categorized on the basis of inherent book and online resources readings. The report also contains a brief analysis of Tesco’s hierarchical structure, with references to the role of technology in the company’s life. The conclusion reached on the basis of the study in its whole is that Tesco has been efficiently implementing the needed systems so far, but at the same time the risk of those systems quickly becoming obsolete threatens the company’s future.

Celeste Prussiani, 40327668 4 Business Information Systems in “Tesco PLC”

Introduction The aim of this report is analysing which business information systems the well-known organization “Tesco PLC” uses, with a variety of academic works and secondary sources, such as online reports, as the base of the study. After a general overlook on information systems, the report includes a description of multiple specific systems, such as EPOS (Electronic Point Of Sales), also known as “Checkout”, PDCU (Portable Data Capture Unit) and the Mainframe system. What eventually emerges is that Tesco PLC seems to have invested efficiently in technological improvement, standing out among hundreds of organizations targeting the same market: the company’s productivity was considerably increased, allowing workers to provide a better customer service and to perform tasks more rapidly.

Company background and structure Tesco PLC was born in London in the first decades of the 20 th Century and it has been expanding exponentially ever since: as of 2017, the company can count more than 6800 stores with a sales value just under 50 billion pounds per year, and the numbers keep increasing annually. [CITATION Tes171 \l 1040 ]. Throughout the years, Tesco has entered several kinds of businesses, such as banking and fuel, but the brand is mostly known for the chain of retail markets spread across nine countries, employing more than 450,000 workers[CITATION Tes171 \l 1040 ]. It seems that in order to keep the decision making organized and structured companies as big as Tesco PLC achieve better performances while they are their structures are strictly defined in various hierarchical levels. Through these, decision making power flows from the top to the bottom (Stair, Reynolds & Chesney, 2015), and as the lower layers of the structure are reached, more specific tasks are assigned to the employees. Tesco itself counts on a rigid governance structure headed by the Tesco PLC Board, but this primary structure also extends to local hierarchical structures which can change from store to store. An example is shown in Figure 1. Figure 1: Tesco store structure (adapted from researchmethodology.net, 2016):

Celeste Prussiani, 40327668 5 Business Information Systems in “Tesco PLC”

As one feature that distinguishes Tesco PLC from its competitors is its interest in using technology strategically, the company could be placed in the Strategic sector of McFarlan’s strategic grid included in Appendix a. Indeed, Tesco was the first supermarket franchise to acquire the self-service checkout system (EFPOS), thus improving the customers’ experience making their shopping considerably quicker. As a matter of fact, official reports show the organization’s interest in information systems has been growing ever since: if Tesco found keeping up with the world-wide digital transformation challenging three years ago [CITATION Tes172 \l 2057 ], in its “2017 Annual Report” the company states the role of information systems has become vital to the business and constant investments in terms of time and money are (Tesco PLC, 2017). See appendix b for a more detailed SWOT analysis of the company.

An introduction to Information Systems An information system (IS) is a set of components which can be used to gather, store and modify information. These systems must be provided with data as an input and make useful information available, along with a feedback system via which the organization using them can meet desired objectives (Stair, Reynolds & Chesney, 2015). In order to shaped around a different levels of layers’ output as defined as:

provide the user with efficient responses, information systems need to be company’s structure. A hierarchy-based organisation such as Tesco uses information systems, among which the higher layers often take the lower their main source of input (Stair et al., 2015). These three levels can be

Celeste Prussiani, 40327668 6 Business Information Systems in “Tesco PLC” 

Transaction Processing Systems (TPS), which are multiple and take as input simple business transactions, such as orders and payments, and collects the data to provide it to the higher level (Stair et al., 2015). These systems are often only available to the company’s employees, but in some cases the customers can interact with them as well;

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Management Information Systems (MIS), which convert data provided by TPS into information about sales, profits, customers etc. and provide it to managers in order to their decision making and planning [ CITATION Ter05 \l 2057 ];

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Executive Support Systems (ESS), which support higher-level, future-oriented decision making presenting structured and valid information relevant to the executives. They are often made to fit an executive’s particular needs, but offer a broad vision of the entire organization (Stair et al., 2015).

Typically, the three levels of IS are linked to the three levels Anthony divided an organization’s hierarchy in: Operational stands at the bottom, and being larger it is the main source of data, thus being linked to TPS; this data gets processed by MIS in the Strategic level to finally reach the Executive level, in which higher-level managers operate with the support granted by ESS. This structure is pictured in Figure 2.

Fig. 2: Anthony’s hierarchy and corresponding IS (adapted by Stair et al, 2015, page 247)

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Transaction Processing Systems in Tesco TPS in Tesco can vary from digital applications such as Software to physical devices such as EPOS (Electronic Point Of Sales), PDCU (Portable Data Capture Unit). Using EFPOS, an employee or a client can scan items to sell them or buy them, as it takes in the barcode connected to a particular item as an input and uses it to gather data about its price displaying it on screen, while it also updates the stock data removing one unit of that item from the current value. The same process is carried out by a PDCU, a portable device which allows employees to scan items in the shelves to check their price and stock levels. This is useful when it comes to gather information to order more products: the data collected is then presented to a single MIS through which managers can perform the task.

Management Information Systems in Tesco One of the main MIS used by Tesco is the mainframe system, which was first introduced in the 1960s Despite its complexity, it still keeps being used today because of its reliability. [CITATION Tho00 \l 1040 ]. Among its many responsibilities, this systems allows Tesco to order large batches of products, while enabling every single store to communicate with sellers and manufacturers. Being a MIS, mainframe also allows retail stores to generate nightly sales reports for review by regional sales managers (IBM, 2010).

Executive Support Systems in Tesco The most efficient ESS Tesco has adopted is the Credit-to-Cash software, a financial tool developed by Oracle. This provides an organised set of implements via which managers can have access to customer data, standard and online billing and cash application [CITATION Ora10 \l 1040 ], thus being able to evaluate the company’s financial state.

Critical appraisal and conclusion What emerges from analysing some of the company’s business reports is that Tesco is making a profitable use of the information systems, which in the past looked like a risky investment to many. However, as technology is constantly evolving, one of the elements that could challenge Tesco’s leadership in the retail industry is the age of some of the systems used, since many of its competitors are moving towards more recent implementations. At the same time though, since IS has become a core feature in the company’s efficiency, Tesco cannot afford to shut down all of its systems in order to update them or implement new ones. Considering the company’s positive results, though, it seems that further investments in technology could lead to a solution to this issue and to a bright future.

Celeste Prussiani, 40327668 8 Business Information Systems in “Tesco PLC”

Appendix

a.McFarlan’s Strategic Grid According to McFarlan’s work, first published in 1983, an organization can make four possible uses of information systems, which can all be described by using a simple table shown in Figure 3. Figure 3: McFarlan’s strategic grid (adapted from McFarlan’s, 1999)

Strategic The company is critically dependent on IS and its success among competitors depends on IS development Factory IS play a key role in

Turnaround IS development is gradually becoming a priority in the organization’s life

Support The company could

Celeste Prussiani, 40327668 9 Business Information Systems in “Tesco PLC” the organization, but they’re not fundamental to its ability to compete

operate minimally in the event of shortterm IS disruption

b.Tesco SWOT Analysis Strengths: Tesco’s main strength consists in its size itself: as one of the most known retail companies, in the top 100 of the world's most valued brands, slightly below Ikea and well above eBay. Because of their size and facilities, Tesco can buy in bulk, being then able to lower prices to keep prices attractive and be competitive with UK retailers such as ASDA or Sainsbury's [ CITATION Bra14 \l 1040 ]. Weaknesses: As the technology industry grows, the systems implemented by Tesco risk to become obsolete very quickly if not updated properly. For example, the company is still using Mainframe, a system dated back to the 1950s. The main risks related to this topic are a decrease in the company’s productivity, due to the lack of speed of the outdated systems, and the ever-growing threat of data theft: data often cannot be protected efficiently when an old system is used (Tesco PLC, 2017). Opportunities: An opportunity for Tesco stands in perfecting the online sales strategy, since the company’s approach to this side of the business has already been successful (Tesco PLC, 2017). The company could, for example, acquire some more stock locations, using which the delivery costs and times could be reduced consistently. Threats: Since Tesco is currently number one in the UK grocery retail sector, they are the target of consistent competition from Sainsbury's, ASDA, Morrison's, and, increasingly, Lidl and Aldi [ CITATION Ste14 \l 1040 ], which are currently investing more and more in technological development. This constitutes the main threat for this giant in the retailing industry.

References Bergin, T. (2000). 50 Years of Army Computing. Aberdeen: DIANE Publishing. Brand Finance (2014). Global 500 2014: The world's most valuable brands. Retrieved 9th November 2017 from http://brandirectory.com/league_tables/table/global-500-2014 IBM (2010). Mainframe workloads: Batch and online transaction processing. Retrieved 5th November 2017 from

Celeste Prussiani, 40327668 10 Business Information Systems in “Tesco PLC” https://www.ibm.com/support/knowledgecenter/zosbasics/com.ibm.zos.zmainframe/zconc _mfworklds.html Lucey, T. (2005). Management Information Systems (9th ed.). Torquay, Devon: Thomson Learning. McFarlan, F. W. (1992). Corporate Information Management: The issues facing senior management (3rd ed.). Homewood, IL: Business One Irwin. Oracle (2010). Credit-to-Cash. Retrieved 5th November 2017 from Oracle Products and Services: http://www.oracle.com/us/products/applications/ebusiness/financials/053276.html Stair, R., Reynolds, G., Chesney, T. (2015). Principles of Business Information Systems (2nd ed.). Andover: CENGAGE Learning. Stevenson, T. (2014). Tesco share slide has investors catching a falling knife. Daily Telegraph, 29th August 2014. Tesco PLC. (2014, October). Annual Report 2014. Retrieved 6th November 2017 from Tesco PLC: https://www.tescoplc.com/media/392373/68336_tesco_ar_digital_interactive_250417.pdf Tesco PLC. (2017, April). Preliminary Results 2016/2017. Retrieved 6th November 2017 from Tesco PLC: https://www.tescoplc.com/news/news-releases/2017/preliminary-results201617/ Tesco PLC. (2017, October). Tesco Annual Report 2017. Retrieved 6th November 2017 from Tesco PLC: https://www.tescoplc.com/media/392373/68336_tesco_ar_digital_interactive_250417.pdf...