Evaluating the investment in mobile and wireless technology: a Case Study of a Bistro
When looking at Bistro’s investment in mobile and wireless technology, it is important to look at their information technology (IT) portfolio which comprises of the informational, transactional, infrastructure and strategic systems which are initiated by objectives in the form of the four management objectives, mainly transactional, infrastructure, informational and strategic (Broadbent 1998). It can be seen that Bistro’s information systems is implemented to achieve multiple management objectives and there has been good evidence of better payoff when these objectives are closely aligned with business strategies (Broadbent 1998).
By evaluating how much of these management objectives the new information system has achieved, we can assess the benefits and prominent business values derived from the new system. The foundation upon which IT capability is built on is IT infrastructure (Broadbent 1998) and in the case of Bistro, it is the current system which comprises of 8 handheld mobile devices with wireless capabilities, a wireless base station, a central system and printers.
It is hard to gauge the value derived from infrastructure investments or measure how well infrastructure objectives are met. These investments made are often large and with the long run in mind, however, having necessary, scalable infrastructure in place provides a basis and starting point whereby new applications can be built upon (Broadbent 1998), therefore increasing Bistro’s ability to faster implement applications when executing new strategies accordingly.
Additionally, the IT infrastructure allows waiters to utilize the physical mobility of devices (specifically their small size and wireless connectivity) to connect to a network system with the capability to recognize different devices and adjust the content and rendering mechanisms according to the device (Lyytinen 2002b) and thus enabled user activities of computing unlike traditional computing uses (Ngwenyama 2006).
A communications backbone employing switching technology allow users to be perpetually connected and quick access at cheaper overheads/better performance via a rapid access network which provides over-theair interface (Kulatilaka 2002). The objective of strategic IT investment here is to increase market shares or sales (Broadbent 1998) and hence gain a competitive advantage for Bistro against its competitors by investing in a new unproven technology.
This case study was done shortly after the implementation of the new system and therefore it is hard to see the long term strategic advantages derived from the system but the owner did reported observing better profitability after only two months of operating the new system. This can be attributed to the prompts by the system to remind to waiter to suggest specials, side dishes, and additional toppings for pizzas etc, thus aiding the waiter in up-selling. Up-selling is a concept where the customer is being offered more expensive options or upgrades which he or she may not have considered previously (Wikipedia 2007).
This results in a more profitable sale since customers now either ordered more or ordered a more expensive dish and therefore increasing the Bistro’s profitability. Bistro’s transactional technology objectives were to reduce overheads by handling high volumes of transaction faster and cheaper per transaction and this was achieved by investing in transactional information technology that administer/streamline Bistro’s basic repetitive transactions (Broadbent 1998).
The prior paper-based order taking process is now automated by the new system and the new process is described as more efficient since the waiters no longer waste time travelling around the restaurant to hand-deliver copies of orders and can instead spend more time attending to customers’ needs while taking the opportunity to up-sell more regularly. The owner also observed savings in labour overheads since they could reduce the number of waiters required even during peak periods without compromising service quality.
The “point and tap” entry of orders accelerates the order-taking process while electronically collecting order data. This is made possible by the digitization of data which allows various forms of information to be produced digitally (Kulatilaka 2002). The electronic capture of data means that all data is captured thus reducing the occurrences of undercharging due to processing error and occurrences of fraud which was hard to detect previously. Bistro’s information technology objective is to obtain information relevant to managing and controlling the organization (Broadbent 1998).
There is clear indication that Bistro’s management understood the restaurant processes enough to exploit the information obtained. Business value is derived when there is appropriate application of information decision and when there is clear business drivers and management processes instilled to exploit the information (Broadbent 1998). The system provides waiters with information on availability of dishes which can then be passed onto customers, thus providing information faster, saving time and providing better customer service.
The rich and fine-grained data collected has aided the owner in better planning e. . better menu planning since he can now keep track of popular menu items. Also, it provided him with better inventory control since he can observe trends in the usage of food ingredients and therefore can order with more precision, resulting in more savings and less wastage. We can see that Bistro’s system fits the profile of a firm who aspired to gain reduced overheads than strategic positioning, minimal infrastructure, heavy transactional investments and informational investment focused on controlling overheads (Broadbent 1998).
Bistro’s system can also be described as using a business model augmentation where Bistro’s existing business processes were enhanced without significantly changing the restaurant’s business model (Kulatilaka 2002). When technology enables new ways of working and it can be internally unsettling for employees, companies, employees and consumers who must be willing to change their behaviors to accommodate the new ways of working (Kulatilaka 2002). In Bistro’s case, there were no difficulties reported in switching to the new system which can be accredited to no significant changes being made to Bistro’s business model.
It can be argued this smooth transition has been crucial to Bistro successfully attaining their management objectives in investing in mobile and wireless technology. When first comparing the business models of a bistro and a fine dining restaurant, the most prominent difference is the different charges of the dining experience. The combination of unique restaurant concept, exceptional customer service, environment and exquisite cuisine justifies the higher price that a diner will pay for a meal.
Comparatively, a bistro charging affordable prices would comprise of simple restaurant concept and environment, reasonable cuisine and average-to above average customer service. In terms of transactional management objectives, it can be seen that the bistro would typically cater to more customers and therefore handle more transactions compared to a fine-dining restaurant. In this case, the Bistro’s system can handle a bistro’s transaction demands and therefore should not have any problem handling lesser transactions expected at a fine-dining restaurant.
The business value generated for both restaurants would be similar i. . increased customer service and more efficient order-taking process. The strategic management objective for Bistro’s system provided waiters with more information on menu items allowing them to up-sell which resulted in better profitability. Bistro’s system would give a fine-dining restaurant the same business value, albeit not only increasing food but also wine sales. In terms of informational management objectives, information is crucial for both restaurants. Bistro’s system provides information on available dishes, inventory and customer’s ordering trend for menu items.
Inventory control is extremely vital for a fine-dining restaurant since higher prices justifies the freshest ingredients. At a fine-dining restaurant, more information could be obtained to provide a more impeccable level of service and Bistro’s system in the case study cannot generate sufficient business value here in terms of customer service. To provide a higher level of customer service, Bistro’s informational system can be further extended. Normally, reservations are made at a fine-dining restaurant. First-time patrons could be assigned a profile according to reservation name and contact information.
During the visit, information could be recorded about the patron’s preferences such as favourite dishes, sitting preferences or meal preferences (such as less-salty or non-spicy). This would create a more personable and attentive customer service to attend to the needs of high-end customers whom one can assume to have higher expectations and be fussier than your average customer due to the higher prices paid for a meal. To maintain a high level of customer service, complaints should be recorded after being dealt with and ensured that the same mistake not be repeated. Some reservations may be booked up to 2 weeks in advance.
By linking inventory control to the expected customer’s profile and his food preferences, the restaurant can attempt to better predict and order ingredients more accurately, thus ensuring freshness of ingredients and reducing wastage. It can be interpreted that Bistro’s system fits the profile of a firm whose main goal was meant to reduce costs versus gaining competitive advantage over a competitor and therefore its IT portfolio consists of minimal strategic positioning, minimal infrastructure, maximal transactional initiatives and informational investments focused on information to reduce overheads (Broadbent 1998).
On the other hand, a fine-dining restaurant would typically emphasize quality of food and customer service over overheads reduction. Given Bistro’s system’s basic infrastructure, it is more suited for a bistro but insufficient to support the high level of customer service expected at a fine-dining restaurant. To be used in a fine-dining restaurant, more applications would be needed to extend the informational and transactional objectives of the current Bistro’s system.
A fine-dining restaurant would fit the profile of a firm pursuing a cost-reduction strategy with agility and hence would have substantial infrastructure and moderate balance between strategic, informational and transactional investment (Broadbent 1998). In conclusion, Bistro’s system would have a better fit and more likely to generate more appropriate business value for a “bistro” type restaurant than a more upmarket fine-dining restaurant.