As the leading food procurer and distributer in the world, Sysco has a highly decentralized structure. However, information inconsistencies were accumulated from their decentralized IT system. To tackle this, Sysco has already adopted an ERP system and a data warehouse, and is deciding to invest in a Business Intelligence (BI) system. Issues & Problems 1. Utilization: Massive amount of data in the data warehouse are stored, but cannot be analyzed. a. Information cannot be efficiently extracted. Reports take weeks to generate. . Most employees lack the expertise to retrieve the relevant information. 2. Decision Making: Upper management cannot make strategic decisions due to lack of information. c. Difficulty in monitoring and comparing performances across the different units. d. Important events cannot be predicted from the historical data. 3. Coordination: The decentralized structure undermines strategic coordination among the units. e. Each unit has a limited perspective of the market and the industry. f. Some overlapping operations across units may incur additions costs g. Some units have their own business intelligence system.
Whether to invest in the minimum licensing of the business intelligence, which includes query/analysis, performance management, reporting, info infrastructure or, 2. Allow broader access to the business intelligence, and includes analytical module licenses in addition to the first decision or, 3. Allow even broader access, and includes supply chain analytical module in addition to the Decision 2. External Analysis 1. Porter’s Forces a. Medium threat to new entry: the high profits attract new comers, but the distribution networks’ economies of scales create entry barrier. Sysco hould utilize their massive database to achieve economies of learning. (Issue 1) b. High threat to substitute, High bargaining power of buyer: the customers can easily choose to procure food themselves. Thus, Sysconeed to use IT to maintain customer satisfaction and loyalty through understanding more about their customers. (Issue 1) 2. Competitive Strategies: Sysco’s primary strategy is differentiation since they have broad target segments from independent diners to chain restaurants. To maintain their current market share, they need to differentiate through customization and customer service.
They have 8000 marketing associates working directly with the customer, thus the customer information collected has to be stored and retrieved efficiently. (issue 1). Internal Analysis 1. Strategic Grid: Syscois trying to move from the Support quadrant to the Turnaround quadrant. They do not require highly reliable IT system, but they need to enhance information sharing and make better market analysis (issue 3) for strategic decision making from upper management (issue 2). 2. Value Chain: The competitive advantage of Sysco comes from sales and marketing activities.
Sysco is on the right track by creating a data warehouse in terms of aligning IT and their strategy, but now they need to effectively extract and analyze relevant customer information (issue 1) in order to meet and forecast their customer needs. 3. IT Risks: a. Implementation Challenges: some operating units are going to resist the new BI System. Some of them may already have an effective system. Some might be unwilling to share information, or some may have a conflicting view on the value of IT investment with the Director’s Council (issue 3). b.
Overbuying: IT that is not fully adopted and utilized by the employees will not only be a waste of resource, but may even confuse the employees and have a negative impact on the operation units. Recommendation: Short Term: Decision 2 should be adopted for the following reasons: 1. Efficient and effective sales analysis and forecast provided will be highly beneficial for the marketing associates and senior managers. a. By organizing and presenting customer information clearly, BI will enhance CRM, and will complement the competitive advantage of sales and marketing activities in the value chain. . Accessibility to the data warehouse is a valuable resource for Sysco to compete with other companies.
Furthermore, taping into the massive data warehouse will aid the decision making process for senior managers, in terms of strategy, future IT investments, etc. c. Forecasting potential customer needs and sales opportunities will allow SYSCO to further differentiate within the industry, and gain more market power. 2. The 9 months support received from the BO consultants is crucial for overcoming implementation challenges and facilitating change management within the 9-12 months BI licenses. . Decision 3 should not be adopted for the moment because a supply chain analytical module is not the priority of IT investment according to the value chain. Furthermore, the implementation challenges for this module is unknown. Since the BO support only last for 9 months, yet the licensing is for 2 years. 4. Sysco should not make the installation of the BI mandatory. Forcing the new IT system may back fire when met with too much resistance. Long Term & Conclusion: Sysco needs analyze the result of Decision 2 before making the next move.
If the implementation is mostly successful and the return on investment is met, other initially resistance units will be more willing to join. If not, alternatives should be considered, such as incorporating existing local BI into the SyscoBI. The sales analysis and market forecast provided by BI will mostly likely increase Sysco’s market share and allow them to maintain leading position not only within the industry, but also in IT innovation. However, the implementation of BI should be carefully monitored to ensure the desirable end result.