Background
Variety Food Company (VFC) is a large supermarket chain in the UK with shops
across the country varying in size. They are one of the industry leading supermarket
chains and have enjoyed significant market share for several decades by targeting
customers who wants to purchase groceries in physical shops and pay a premium
price for the excellent service. VFC received the best customer service award several
years ago. Recent pressure from online rivals, click and collect hybrids and low cost
supermarkets has forced them to re-visit their corporate strategy.
At a recent board meeting it was announced by the CEO that VFC needs to reduce
its operating costs to avoid falling further behind its competition. It has been left to
the executives to establish how costs are going to be reduced, whilst maintaining a
premium quality of service to its customers.
Mike Higgins, the CIO of VFC has been trying to create a single global approach to
compete with rival supermarkets online. His aim is to create a unified online system
across the entire group. He plans to review the current IT strategy and provide a cost
effective solution to regain market share.
Variety Food Company
Recently, VFC acquired Finom Food to continue their expansion into the mainland
European market. Besides expansion, one of the main reasons for obtaining Finom
Food was an industry-leading cloud-based shopping system which many, including
the CEO of VFC, believe to be a source of competitive advantage.
At present the online shopping systems within the group are disparate. This is as a
result of a series of acquisitions across the UK and South Africa. Previous strategy
has focused upon broad and rapid acquisition with little effort to integrate the newly
bought Supermarkets with the global VFC brand and systems. All of the VFC
supermarket acquisitions have a loyalty card system, which are run from independent
servers, each having its own customised loyalty program and software solutions
adjoined.
After recently hearing about the success of cloud computing in other industries, Mike
has been thinking how he could utilise cloud technology to build a universal shopping
system with a single loyalty card scheme. The biggest challenge facing Mike is to put
together a persuasive argument in order to gain the necessary support and backing
required.
Mike is already experiencing some resistance with his challenge from within the
company. Some employees are worried by the threat of new technology and possible
redundancies that a new online shopping model might cause. A further challenge is
that technological development within the organisation is viewed with negativity.
This impression was created after a catastrophic leak of data from a new loyalty card
system by a rival Supermarket chain. This system collected customer information for
marketing purposes.
The implications of the incident were not only financial, but also reputational as
outlined in the newspaper article below.
“Premium Food Consortium’s customer data is as available as groceries”
One of the oldest supermarket chains received a substantial fine from the
Information Commissioner’s Office when hackers breached an incorrectly
configured firewall. To make matters worse, numerous loyalty card holders were
contacted by hackers via phone and email to confirm their personal and card
information. Suspicion arose when the company received a many hundreds of
customer complaints regarding the unwelcomed correspondence. This untimely
incident comes as another hit to Premium Food Consortium and to the Supermarket
industry, yet more proof that our personal data is not handled with the care we
deserve.”
Mike is aware that the public will not react well to another scandal of any nature. In
an attempt to gain buy-in from within the Company Mike recently sent the below.
To the Board of Directors,
During my tenure we have faced and will continue to face challenges from
competitors and from a changing marketplace. One of the changes that we must
address immediately is creating a global loyalty scheme to understand our
shoppers, their shopping patterns and purchases related back to a postal address.
The wealth of data this joined up approach will bring will ensure that we can
meaningfully target our customers bringing intelligence to the marketplace.
I look forward to providing you with a Strategy Paper in the near future.
Kind Regards,
Mike
Mike faces one final challenge; the CEO has identified IT as one of the areas in which
Variety Food Company must cut back. After the disastrous consequences caused to
the industry by Premium Food Consortium’s data breach, the CEO of VFC sees IT as
an unnecessary expense which is costing the business too much money and putting
the success of the Company at risk. He would rather focus on redundancies and other
traditional cost cutting techniques rather than investing in technology.
The communications below are from Gary Andrews, the CEO of VFC and were last
week published on the Company’s intranet.
Statement received from Gary Andrews (CEO of Variety Food Company)
As most of you know I was appointed CEO of Variety Food Company from the
Position of CFO in 2006. During my time as CFO I learnt that regardless of the
innovative strides that are made, shareholders and others with vested interests are
still driven by profit. Over the years I have had an army of consultants offering
me new ‘fads’ and promising the next ‘big thing’ to deliver unseen results. I
have always acted for the good of the company and its employees. To date the
consultants ‘fads’ have indeed proved unobtainable.
The previous few years have been particularly hard for Variety Food Company.
These factors have affected the whole industry, not just VFC. The economic slow
down of 2008 being chiefly to blame. Tough cost cutting choices are ahead to keep
maintain the profitability of our business.
I trust my employees, the values we instil in each and every one of our employees
makes VFC a unique place to work. Difficult choices will need to be made in the
coming months. Employee consultations will begin next month regarding potential
cost cutting measures.
Your Task
You are a consultant employed by Mike Higgins of Variety Food
Company. Your objective is to deliver your recommendations regarding the
implementation of a new cloud based system into the organisation by discussing the
following:
• Identifying key business and technical challenges of transitioning to a cloud
computing strategy.
• Provide a view as to whether an investment in technology is justified over
more traditional methods of cost savings within the food industry.
• Identify both the short-term wins and long-term strategies for VFC
You will have a maximum of fifteen minutes to cover all the points you want to make.
It will not be a formal presentation, however you will need to deliver a professional
image of Capgemini and leave the interviewer with documentation outlining your
observations.
You are not expected to develop full solutions, the technology, or the processes that
may be employed. Your task is to offer guidance towards Variety Food Company for
possible future strategic decisions.
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