A Case Study On Nestle Lanka Plc Information Technology Essay

The chief intent of this study is to carry on a survey of cloud computer science, its different constructs, the benefits and costs associated with it and how it can suit in to or better Nestle Lanka ‘s bing IT substructure.

The range of this study includes an debut to the company and the industry, its mission, corporate construction, concern procedure, concern scheme and relationships with external parties. This is followed by an analysis of the organisation ‘s IT substructure and the issues and challenges confronting the direction of IT.

Then cloud computer science is explained, and the benefits and costs related to it are discussed. After which, the solutions that can be recommended to be adopted are discussed. Relevant decisions are so made based on these findings.

The methods used in garnering information for this study include both primary ( interviews ) and secondary research ( on-line diaries, newspapers, magazines and publications ) .

From the analysis it was revealed that Nestle Lanka has already adopted a portion of cloud calculating through the storage of its SAP related informations at the Globe Data Center in Sydney.

However, it besides showed that certain non-core applications are carried outside of SAP which requires the informations to be stored locally and brings with it other costs as good.

Another interesting determination was the fact that Nestle Lanka did non possess any internet related substructure as they do non hold a local web site.

The recommendations that were made based on these findings were to follow Software as a Service theoretical account to happen out similar applications for the procedures which were done out of SAP.

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If this was non possible, the recommendation was to follow the Platform as a Service theoretical account which would ensue in Nestle developing the application online and it being hosted by the seller. The concluding behind this was to take down that substructure costs on waiters and care.

In add-on, a recommendation was made to utilize the Platform as a Service theoretical account to make a local web site for the company as it will necessitate no capital investings. Further, this will enable the company to acquire closer to the consumer and supply greater satisfaction and carry out promotional activities without any cost.

Nestle came to Sri Lanka over 100 old ages ago with the debut of milk and infant nutrients to the local market. Over the old ages, the globally celebrated multinational has extended its committedness to Sri Lanka at every chance, emphasizing the Nestle corporate proposition Good Food, Good Life.

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Nestle Lanka ‘s corporate caput office is situated in Colombo, whilst fabrication takes topographic point at a state-of-the-art installation in Kurunegala. The Company employs over 1000 people straight and estimates its indirect employment coevals to be in the part of 40,000.

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About 90 per cent of the Nestle merchandises retailed in Sri Lanka are processed locally. Through the quality merchandise scope of trade names such as MILO, NESTOMALT, MAGGI, CERELAC, NAN, LACTOGEN and NESCAFE, the Company has built trust and emotional bonds with consumers of all ages and from all walks of life. Many of the Nestle trade names have become household names and for the most portion are the market leaders. Furthermore, Nestle Lanka endeavours to play a function in advancing healthy life styles by integrating a nutrition and wellness dimension into the bulk of merchandises.

Carry throughing its societal and environmental duties to the state, Nestle Lanka is an built-in portion of the national community. The virtuousnesss of attention and fostering inherited from the parent company remain at the bosom of the manner it does concern.

Of peculiar pride is the Company ‘s part to the sustainability of the dairy industry and the rural economic system since its early old ages. Today, as the largest private sector purchaser of fresh milk and coconuts, Nestle Lanka spends about LKR 1.5 billion each twelvemonth, impacting the lives ofA farmer households island-wide.

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Nestle Lanka went public in 1983 with around 9 % of the shareholding now held locally. Currently market capitalization is about LKR 37 billion ( Colombo Stock Exchange, May 2011 ) . Over the past few old ages the portion has been amongst the market ‘s top performing artists with an exceeding dividend screen. Committed to outdo patterns, Nestle Lanka strives to keep the highest criterions of ethical and societal behavior throughout the administration and to make long-run sustainable value for all stakeholders.

1.2 Industry Background

Nestle operates in the Food and Beverage industry which is turning at around 12 % yearly. It competes with both local and other transnational companies in the market. With the authorities aiming a GNP per capita of $ 4000 by 2014, demand will lift and competition for market portion will be more intense. ( Leading Edge, May 2011 )

1.3 Mission

The Annual Report for 2010 provinces that ‘Our mission of “ Good Food, Good Life ” is to heighten the lives of Sri Lankan consumers with great tasting and alimentary merchandises at low-cost monetary values. ‘

1.4 Corporate Structure

Pull offing Director

VP-Commercial

VP-Supply Chain

VP-Technical

Company Secretary/Legal Officer

VP- Finance

VP – Human Resources

Head of Nestle Nutrition

Head of Nestle Professional

AVP – National Gross saless

AVP – Food ( Marketing )

AVP – Beverages ( Marketing )

AVP – Dairy ( Marketing )

Production Manager 1

Production Manager 2

New Product Development Manager

Recruitment Manager

Training Director

Payroll ManagerThe above diagram depicts the organisation hierarchy.

1.5 Business Procedure

The chief maps in the organisation are Marketing, Supply Chain, Production and Gross saless. They are supported by the Finance, Human Resources, Information Systems and Legal maps.

The selling section works closely with supply concatenation ( be aftering ) to place the right demand which is so planned to be produced and the natural stuffs and packing stuffs purchased based on the demands. As per the agreed programs, production produces the needed stocks to run into the demand forecasted and that is distributed by the client service and distribution map. The gross revenues map ensures that the merchandises are received where required and provides the needed trade publicities to guarantee that the merchandise is selling. Marketing conducts its ain trade name publicities to make consciousness of the merchandises and guarantee the attempt made by the gross revenues squad is supported. Further, the New Product Development map performs a vital of presenting new merchandises or developing bing merchandises in coordination with Marketing and Supply Chain.

1.6 Business Strategy

Nestle Lankais dedicated to vouch consumer satisfaction by marketing the highest quality nutrient merchandises that meet the diverse and altering demand of consumers, using Nestle ‘s acknowledged worldwide engineering & A ; experience. To our stockholders, we guarantee a just return on their investing.

1.7 Relationship with external parties

Nestle has strong relationships with external parties such as the Sri Lanka Customs, Inland Revenue, Port Authority, freight send oning companies, logistic companies, national governments ( for publishing licences for imported merchandises ) and other service suppliers such as for telecommunication.

The corporate ( group ) web site is www.nestle.com.

2.0 IT substructure: issues and challenges

2.1 Organization ‘s IT substructure

Figure 5-10 ‘The IT Infrastructure Ecosystem ‘ ( Laudon and Laudon, 2010 ) is used to discourse the substructure as follows.

Computer Hardware Platforms – all machines provided by Hewlett Packard ( HP ) .

Operating System Platforms – all machines use Microsoft Windows platform.

Enterprise System Applications – Sap for all nucleus activities in Marketing, Supply Chain, Finance, Gross saless and Production and non-core activities are mentioned below ( subdivision 2.2 ) in item.

Networking/ Telecommunications – networking hardware provided by IBM and Cisco, internet entree is provided through British Telecom ( BT ) and telephone services are provided by four local operators ( Dialog Axiata, Mobitel, Suntel and LankaBell ) .

Advisers and System Integrators – this is carried out in-house from our informations centre located in Sydney, Australia.

Data Management and Storage – all SAP related informations are stored in IBM waiters at our informations centre in Sydney ; whilst the non-SAP system informations are stored locally in SQL severs.

Internet Platforms – there exists no cyberspace related substructure at Nestle Lanka as there is no localised web site.

2.2 Issues and Challenges faced in the direction of IT substructure

With mention to the interview with the IT director ( mention appendix 7.1 ) the following provides a treatment of the issues and challenges confronting the direction of IT substructure.

Due to Nestle being a big multinational, standardisation of IT substructure is a demand across all markets ( states ) . It is no different in Sri Lanka, where the substructure is much advanced than you would happen in any other local company. This policy brings about many advantages and restrictions.

First, since all markets have to hold the same substructure irrespective of its size, it will be more modern and up-to-date with the latest engineering in topographic point. This will intend enhance security steps for the company, which is critical to stay competitory in this fast-paced nutrient and drink industry.

However, the advanced substructure does non come cheap as contracts are negotiated globally in dollar footings but when converted to rupees it is much higher whereas the substructure available in the market is although non of the same criterion, will run into our local demands and be less expensive. Hence, managing costs increases in line with this standardisation policy is a challenge for the company.

Training or user instruction is another job the IT map faces when keeping and upgrading this current substructure. Although, system and security updates take topographic point through the informations centre in Sydney, the users do n’t follow with the alterations until the last minute or delay until a job arises to happen out about the alteration.

Further, the company has adopted applications outside of SAP for certain maps. They are for paysheet, milk procurance, and garnering secondary gross revenues informations ( from distributer point to end-customer ) . The information from these systems are stored locally in Lankaand along with waiter cost the company incurs annually maintenance outgo and licensing fees.

3.0 Cloud Computer science: its concern benefits and costs

3.1 Benefits of cloud computer science

As Mell and Grance ( 2011 ) defines, ‘cloud computer science is a theoretical account for enabling omnipresent, convenient, on-demand web entree to a shared pool of configurable calculating resources ( e.g. , webs, waiters, storage, applications, and services ) that can be quickly provisioned and released with minimum direction attempt or service supplier interaction ‘ .

There are three chief service theoretical accounts in relation to overcast calculating as mentioned by Mell and Grance ( 2011 ) . They are:

Cloud Software as a Service ( SaaS )

Cloud Infrastructure as a Service ( IaaS )

Cloud Platform as a Service ( PaaS )

The first theoretical account is one that distributes applications hosted by a service supplier over a web such as the Internet. Cloud calculating based constructs such as SaaS take the demand for organisations to separately keep a big sum of local waiters, alternatively they would wholly be using a shared resource. Further, Hayes ( 2008 ) shows that SaaS allows users to entree the application regardless of clip and location, giving them greater flexibleness in transporting out their undertakings. Saaksjarvi et. Al. ( 2005 ) besides shows that another one of the cardinal benefits of SaaS is that version direction is more convenient to the client, since the seller would be implementing ascents on a regular footing. Other benefits cited by Saaksjarvi et. Al. ( 2005 ) includes the impression that it enables the client to acquire entree to so name “ best-of-breed ” applications that might otherwise hold been excessively dearly-won for them to buy.

The following theoretical account ( IaaS ) is where a service supplier ‘outsources the equipment used to back up operations, including storage, hardware, waiters and networking constituents. The service supplier owns the equipment and is responsible for lodging, running and keeping it. The client typically pays on a per-use footing ‘ ( SearchCloudComputing.com, May 2011 ) .

The concluding service theoretical account is one where hardware, storage and web capacity can be rented over the Internet. The theoretical account permits the client ‘to rent virtualized waiters and associated services for running bing applications or developing and proving new 1s ‘ ( SearchCloudComputing.com, May 2011 ) .

3.2 Hazards of cloud computer science

Despite such an array of benefits, and as with any other such theoretical account, SaaS besides comes along with a scope of hazards to both the client and the seller. On the client ‘s side, one of the primary concerns is on privateness and security. Hayes ( 2008 ) outlines how leting a 3rd party control over your files could potentially make a helter-skelter legal issue, particularly in respect to what rights the seller will hold to the information on an juncture where the organisation violates the contract.

Hayes ( 2008 ) discusses a scenario in which a authorities bureau serves a subpoena or a hunt warrant to the seller. Had the organisation had control of its informations, it may hold contested the order in tribunal. But it is dubious whether the seller would travel to tribunal on the organisation ‘s behalf, and alternatively they might merely manus over the informations over to the governments. As such, harmonizing to this scenario, a company could hold its informations released to other parties without even being informed of it. Whether or non such a scenario is likely to happen, its possibility should non be ignored and it would be advisable for IT directors to dig into such gray countries with the seller prior to making an understanding.

Another key concern mentioned by Saaksjarvi et. Al. ( 2005 ) is that SaaS offers little in the manner of custom-making the package to accommodate the organisation ‘s specific demands. Customization of the package to accommodate the intricate concern procedures of the organisation is indispensable if it hopes to accomplish a competitory advantage. However, Jacobs ( 2005 ) points out that supplying a relevant degree of customization, although hard, is surely non impossible and in add-on it would be advantageous to the seller to travel this excess stat mi since they can ‘lock-in ‘ clients.

Hoch et. Al. ( 2001 ) voices the inauspicious consequence from the restrictions in the organisation ‘s internal webs. Bandwidth of the web will hold to be increased to suit the changeless connectivity demanded by the SaaS theoretical account. Any issue with the web can adversely impact the public presentation of the applications, and impede dependent organisational undertakings. Such a major concern should be meticulously examined and addressed by the organisation so that they can guarantee the handiness of needed substructure before following the SaaS theoretical account.

Apart from the proficient troubles of SaaS, there could be inauspicious organisational effects every bit good in the signifier of employee opposition as they are really familiar with what they have now and to re-train them, will necessitate tactful alteration direction.

3.3 Costss involved in cloud computer science

When implementing cloud calculating there will be limited capital outgo on IT substructure. Waiters required to hive away and run the applications will be provided by the seller. However, the client should hold the equal web and package ( such as web browsers ) capablenesss to run into the application ‘s demand. The client can salvage on the bing waiter, care and licensing costs.

The client will be charged on a subscription footing based on the figure hours/days/months used depending on the service degree understanding signed by both parties.

4.0 Recommendation

Due to the being of our Globe Data Center located in Sydney, the option of following the Infrastructure as a Service ( IaaS ) theoretical account is non practical as we possess our ain private cloud.

However, what can be recommended is to follow cloud calculating for the non-core applications that was identified in subdivision 2.1 of this study. The ground that we can non follow SaaS for the bing ERP systems which covers our nucleus processes is that Nestle requires that all parts have the same system, procedure and fundamentally speak the same linguistic communication.

The non-SAP applications that have been developed as they can non be customized in SAP to run into local demands, for illustration the paysheet system has to take into history the alone local employment jurisprudence demands. The milk procurance system had to be designed in a manner to ease information garnering from all Nestle milk chilling centres across the island and as a consequence could non be done by SAP. Gathering secondary gross revenues informations besides involves holding SAP at all the distributer locations which would hold been excessively dearly-won.

For the above mentioned applications it is possible to seek for on-line versions that support cloud calculating such as through SalesForce.com or NETSUITE. If no such applications exist so, we can look at developing a similar application utilizing the Platform as a Service ( PaaS ) theoretical account utilizing platforms such as Microsoft Azure and Google ‘s App Engine. The obvious benefit here would be salvaging hardware costs every bit good as care costs in the long tally but Nestle will hold to pass on the development costs in the short-run.

From the IT substructure theoretical account analyzed in subdivision 2.1 it is apparent that Nestle Lankadoes non possess any internet related substructure as there is no local web site. Having its ain web site, will let Nestle to acquire much closer to its clients and be in its ego a promotional medium. Conventionally holding an cyberspace related platform would intend cost incurred on waiters every bit good as package licensing fees. But, through the usage of PaaS service theoretical account, Nestle Lankacan construct its ain web site without incurring any capital outgo and meet is vision of vouching consumer satisfaction. For illustration, Kia Motors in North America launched its ain web site utilizing the Microsoft Azure platform ( Microsoft.com, May 2011 ) .

5.0 Decision

The findings of this study reveal that there are non-core applications that are being used along with SAP. These applications cost the company in footings of waiter, care and licence fees. This can be reduced or avoided in the long-run if the company adopts cloud calculating in the signifier of either package as a service or platform as a service.

Further, it was found that the company does n’t hold any cyberspace related substructure as it does non hold a web site. A less dearly-won and capital intensive manner of making such a web site would be to follow the platform as a service theoretical account. The creative activity of a web site will enable the company to acquire closer to its consumers and better prosecute them. It could besides be a free beginning of publicity for the company ‘s many trade names.