Business Smart IT Applications - The McDonald's Case


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  • Impressive presentation of 'Business Smart IT Applications - The McDonald's Case'. You've shown your credibility on presentation with this slideshow. This one deserves thumbs up. I'm John, owner of . Hope to see more quality slides from you.

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  • outstanding slideshow..convinced me to have a hardlook at my company model..brilliant
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  • May be we should add: A clear project evaluation system with a cut off point for dropping the project if critical values on result parameters are not achieved by the time or event. Many businesses seem to rush in without a complete definition of needs,requirements and delivrables and then rue it when the damage is done.
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  • Goes only to prove big is not always better. The thrragedy is businesses rely on reputation (tr. size) bcz they do not have the knowledge or expertise to assess the advisory firm's capabilities. An independent rating of agencies is needed.
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  • IM Group 3 Analysis of the cases: Nestlé's ERP Odyssey McDonald’s: McBusted Team Members: Vinayak Rao (42) Vinaya Honavalli Sathyanarayana (54) Ashima Bajaj Seth (57) Vatsa Trayambkeshwar Nath (64) SP Jain Institute of Management & Research Andheri (West), Mumbai
  • Business Smart IT Applications - The McDonald's Case

    1. 1. McDonald’s: McBusted Business-Smart IT Applications
    2. 3. McDonald’s: McBusted IM Group 3 “ Over and over again, companies take a monolithic approach to these implementations, telling themselves that they're going to spend a lot of money without seeing any real returns until that magical day when they flip the switch and go live five years down the road.” - Andrew McAfee, Harvard Business School
    3. 4. McDonald’s: McBusted IM Group 3 “ No one wants to talk about this project.” “ If you're doing business with McDonald's, you're not going to talk. And if you're not, you're not going to talk because eventually you're going to want to do business with them.” - Former McDonald’s Information Systems Manager
    4. 5. McD’s Core Objective IM Group 3 “ Our Plan To Win is designed to deepen our connection with customers by delivering great McDonald’s experiences in every restaurant, every time. This Plan revolves around five customer-focused business drivers - People, Products, Place, Price and Promotion . Through the ongoing alignment of our owner/operators, employees and suppliers, we will continue to capture our opportunities and drive long-term profitable growth.” Source:
    5. 6. Agenda IM Group 3 1. The Scene In 2003 2. The “Innovate” Project 3. The CONsultants 4. Lessons Learnt
    6. 7. The Scene In 2003 <ul><li>Investor's confidence at an all time low </li></ul><ul><ul><li>1 st unprofitable quarter ever in the company's history </li></ul></ul><ul><ul><li>Absorbed $810 million in charges </li></ul></ul><ul><ul><li>Out of which $170 million or 21% was the write-off of a real-time digital network called Innovate , which represented the most expensive and extensive information technology project in the company's history </li></ul></ul><ul><ul><li>Confirmed closure of 719 restaurants worldwide </li></ul></ul><ul><ul><li>Share price at a nine-year low of $12.38 </li></ul></ul>IM Group 3
    7. 8. The Scene In 2003 <ul><li>Customer satisfaction at an all time low </li></ul><ul><ul><li>Motto was &quot;Right order to the right customer in the right amount of time“ </li></ul></ul><ul><ul><li>But customers began to wait more and more and then began to defect </li></ul></ul><ul><ul><li>Customer Satisfaction Index - the lowest in its industry (customer expectations, perceived quality, perceived value, customer complaints and customer loyalty) </li></ul></ul>IM Group 3
    8. 9. &quot;Innovate&quot; - The Golden Goose or Pandora’s Box? IM Group 3 Internet-based network to link 30,000+ restaurants and 300+ approved vendors, 24x7 , to the back-office system Spend $1,000,000,000 Over a period of 5 years To build
    9. 10. &quot;Innovate&quot; - The Golden Goose or Pandora’s Box? <ul><li>Innovate - A &quot; MUST DO &quot; IT project </li></ul><ul><ul><li>Use technology to return to the company's roots - the speediest, most consistent service in the fast-food industry </li></ul></ul><ul><ul><li>Existing IT infrastructure was incapable of achieving these critical success factors. </li></ul></ul><ul><ul><ul><li>It took weeks instead of minutes to act on operations data </li></ul></ul></ul><ul><ul><li>Build a real-time enterprise by working closely with suppliers and store managers </li></ul></ul>IM Group 3
    10. 11. &quot;Innovate&quot; – Lofty ( Impossible? ) Goals IM Group 3 Strategic Supply Chain HR Ops Esoteric
    11. 12. &quot;Innovate&quot; – Lofty ( Impossible? ) Goals <ul><li>Strategic </li></ul><ul><li>To create a real-time enterprise </li></ul><ul><li>Work closely with suppliers and store managers to improve the consistency of the product </li></ul><ul><li>To check if service goals were being met at individual outlets </li></ul><ul><li>Supply Chain </li></ul><ul><li>To monitor the exact usage of food and packaging supplies </li></ul><ul><li>To see consumption by SKU at any store at any time of the day and to act on the observed results </li></ul>IM Group 3
    12. 13. &quot;Innovate&quot; – Lofty ( Impossible? ) Goals <ul><li>Operations </li></ul><ul><li>To monitor the temperatures of cooking, freezing, and other appliances and to apply corrective measures </li></ul><ul><li>To automatically generate historical temperature logs for food safety reports required by the FDA </li></ul><ul><li>Human Resources </li></ul><ul><li>To streamline the delivery of employee training and benefit data and to control attrition </li></ul><ul><li>To allow the store manager to pick and choose the specific employees he or she wanted working at the different spots on the burger assembly line </li></ul><ul><li>The automation of one job could save $900 million a year system wide </li></ul>IM Group 3
    13. 14. &quot;Innovate&quot; – Lofty ( Impossible? ) Goals IM Group 3 To downright crazy! Executives wanted to know: “ Are potatoes being baked at the right temperature in that corner McD outlet on Elm Street?” “ Has the CO 2 fizzled out in the soda tower in that money spinning McD outlet on Wall Street?”
    14. 15. Implementation – What went WRONG ? <ul><li>Innovate scrapped after $170 million was gutted </li></ul><ul><li>Innovate did not address the most pressing needs viz. Speedy Customer Service, Quality of Food </li></ul><ul><li>Big-Bang Approach in the very first major </li></ul><ul><li>IT project </li></ul><ul><li>No Feasibility Checks </li></ul><ul><li>No stakeholder buy-in </li></ul>IM Group 3
    15. 16. Implementation – What went WRONG ? <ul><li>Inexperience in IT </li></ul><ul><li>Cultural Issues </li></ul><ul><li>Pushed IT to the LIMIT </li></ul><ul><li>Miscalculated ROI </li></ul><ul><li>The only RIGHT thing – MPower Group, a Sourcing system to negotiate rates with professional services (40% down) and tech vendors (60% down) </li></ul>IM Group 3
    16. 17. The CONsultants – Bearing Point <ul><li>Set up McDonald’s for a BIG fall right from the start </li></ul><ul><li>Initial analysis and scoping for the project </li></ul><ul><li>Viability study for the project </li></ul><ul><li>Estimated ROI – although undisclosed </li></ul><ul><li>Known for suggesting MEGA solutions </li></ul><ul><li>Core strength in Strategy Consulting </li></ul><ul><li>Profit driven engagements </li></ul>IM Group 3
    17. 18. What could have been done? <ul><li>Appropriate Scope and Milestone Definition </li></ul><ul><li>Feasibility Check </li></ul><ul><li>Change Management Plan </li></ul><ul><li>User Buy-In; Business People on board </li></ul><ul><li>Phase-wise Implementation </li></ul><ul><li>Risk Management </li></ul><ul><li>Checkpoints </li></ul>IM Group 3
    18. 19. Lessons Learnt <ul><li>Points to be considered before diving into a mega </li></ul><ul><li>IT implementation project: </li></ul><ul><li>Does the project have the right scope for which it was envisaged in the first instance? </li></ul><ul><li>Does the project address the current pain points? </li></ul><ul><li>Are the returns worth the investment? </li></ul><ul><li>Are the users convinced about the benefits they would derive out of the project? </li></ul><ul><li>What were the outcomes of the POC? </li></ul>IM Group 3
    19. 20. Lessons Learnt <ul><li>6. Are we asking IT to wash our butts? </li></ul><ul><li>7. Who’s the sponsor and who owns the responsibility on a day-to-day basis? </li></ul><ul><li>8. Is there an efficient Change Management in place? And have the users accepted the foreseen changes? </li></ul><ul><li>9. Do we have real data for pilot tests? </li></ul>IM Group 3
    20. 21. IM Group 3 Q & A