Express Stores Inc Express Stores Inc is a regional retail super store chain tha
ID: 3722260 • Letter: E
Question
Express Stores Inc
Express Stores Inc is a regional retail super store chain that is exploring a
major expansion to a national competitor. Currently ESI has 15 stores in 6 southern
states and employs approximately 3500 employees with an annual cash flow of
$150 million dollars. ESI’s goal in 5 years is 90 stores in 30 states all east of the
Mississippi River with a cash flow of 2.1 billion dollars. Additional information
on ESI:
Stores located in: Florida, Georgia, South Carolina, Alabama, Mississippi and Tennessee
Operations: All stores are open 24 hours a day except Thanksgiving and Christmas
Merchandise: General merchandise and complete grocery operations
Footprint: All stores are approximately 100,000 sq. ft.
Current Technology: ESI’s 15 stores are a product 4 mergers of smaller local chains.
One legacy of this is a disparate technology infrastructure that
does not meet the needs of a national chain of fully integrated
stores.
Pursuant to the corporations expansion plans a 6 month study was conducted
to select a technology strategy for the future. Creating and building the system in-house
is being considered despite the lack of resources and expertise. Outsourcing is also
considered and the following summary of requirements were sent out for bids.
Expected Yearly Budget: 15 million increasing to 20 million at the end of 10 years
Infrastructure: WAN/LAN system available 24 hours a day with a
weekly 2 hour maintenance window.
Database/Storage: Mainframe based for capacity and reliability
Work Stations: PC Windows based
Retail Stations (Checkout): Fully integrated cash/sales stations split between 70% cashier manned and 30% unmanned.
Additional Info: EIS has need for complete integration for sales,
Inventory, payables, receivables and human resources.
After extensive review of bids from 6 outsourcing firms All Computer Systems
was selected to make an initial statement of work on the technology solution.
Please, this is question 2, not question 1.
2)Based on the information in the case write a one page summary on why it is best to outsource the technology solution. Make the best case for this option without any reference to the in-house option.
Explanation / Answer
The strategy behind outsourcing is to move some of the functions/processes/decision responsibilities of the organization to outside providers. The deal is negotiated with a vendor on contractual agreements, with the vendor taking the responsibility of process management, people management, quality and customer service. The benefits that ESI group can reap from outsourcing their technology solution are discussed below:
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