Module Title: Individual Report

Course Name: BABS Foundation

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 CFPBUS003-1 Individual Report

Executive Summary

This report contains information systems that Tesco, a leading UK supermarket and retail
company utilises to ensure operational efficiency, and customer service excellence and gain a
competitive advantage. IT systems (ERP, CRM, SCM) are reviewed to understand how they help
with resource management, customer interactions, and supply chain efficiency. We discuss the
ethical and social implications - data privacy, job displacement, digital inclusion etc. The course
introduces you to networking technologies: LANS, WANS, VPNs and IoT - and how they
continue to impact the communication environment and related data management. The report
then discusses the pros and cons of implementing AI, based on interviews with 64 executives
across Asia-Pacific, in personalisation marketing, operation efficiencies and cashierless stores. In
short, IT is the magic bullet that will make Tesco a winner in the retail wars.

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Table of Contents

Table of Contents 3
Introduction 4
Literature Review 5
Types of Software in General 5
Ethics and Social Issues of Using Technology in General 6
Different Types of Networking Technologies 7
Importance of Artificial Intelligence (AI), Its Applications, Challenges, and Benefits 8
Software Development Life Cycle 9
Analysis and Discussion 11
Types of Software 11
Ethics and Social Issues of Using Technology Specific to Tesco 12
Different Types of Networking Technologies in Tesco 14
Impact of AI on Tesco 16
Conclusion 18
References 19

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Introduction

This report will explore the significant role of information technology (IT) in enhancing business
operations at Tesco, a leading retailer in the UK. The purpose of this assignment is to analyse
how Tesco leverages various IT solutions to maintain operational efficiency, improve customer
service, and stay competitive in the retail sector. Tesco, established in 1919, has grown to
become one of the world's largest retailers, offering a wide range of products from groceries to
electronics. In today’s digital age, IT has become an integral part of its business strategy. By
implementing advanced IT systems, Tesco ensures seamless operations across its numerous
stores and online platforms. IT facilitates efficient supply chain management, robust customer
relationship management, and effective internal and external communication. The report will
highlight the types of software essential for Tesco’s operations, the ethical and social issues
associated with technology use, the networking technologies employed, and the impact of
artificial intelligence (AI). It will also outline the stages of the software development life cycle.
Through this analysis, the report aims to highlight the critical importance of IT in driving
Tesco’s success and addressing the challenges in the retail industry.

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Literature Review

Types of Software in General

Figure 1: Types of software used in Business

Sources: (Abbate 2021)

In a modern business environment, critical software types' five functional categories are
generally: Resource Planning (ERP), Customer Relationship Management (CRM), Supply Chain
Management (SCM) Key communication tools. ERP systems combine areas like finance, HR,
and the supply chain of business, and enable these to work in harmony in such a manner as to
save both time and trouble. Further noted that ERP systems are very important in managing
business resources effectively, reducing costs, and improving decision-making. Theories such as
Porter's Value Chain Model suggest that ERP plays a crucial part in refining internal workflow,
thereby enhancing a firm's competitive edge.

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CRM software is a system that helps businesses manage interactions with current and future
customers. It unifies customer data and records customer interaction, enabling personalised
marketing efforts. Taylor makes it very clear as well that CRM systems increase consumer
satisfaction and loyalty which are helpful for the future success of any enterprise. SCM tools are
critical to control the supply chain - including goods, information, and finances. They assist in
demand forecasting, inventory management, and supplier relationship management. The ability
to lower costs and achieve more favourable service levels that are critical for competitiveness
can be ascribed to effective SCM.

The communication methods are some of the most critical - ways to communicate internally and
externally such as email, instant messages and face-to-face conferences. The tools allow for fast
and effective communication, which in turn promotes collaboration and productivity. For
aligning organisational goals and achieving this effective communication systems are necessary.

Ethics and Social Issues of Using Technology in General

Figure 2: Ethical and Social Issues of Using Technology

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Sources: (Moor 2020)

The rate at which technology is being adopted raises several profound ethical and sociological
dilemmas. Ethical issues relate to privacy and data safety, and the digital divide. Businesses
hoarding loads of personal data violate privacy. It is important to protect this data from breaches
and unauthorised access, hence it is necessary to provide robust data security measures.

Digital divide: Those who have access to contemporary information communication technology
and those who do not. All this division would cause variations of opportunity and would increase
social differences. It is important to confront this problem to eliminate the disparities between
technology and benefits.

Social Technology Use: How Technology Use Influences Employment and Digital Addiction
Automation and AI might result in job displacement, which raises the fear of unemployment and
a richer world. The negative impacts of cognitive technologies on employment are particularly
stark and thus warn that business strategies should shift to incorporate measures such as
upskilling and reskilling employees.

Another important social issue is digital addiction -or how people become overly dependent on
digital devices. The consequences on mental health and well-being are long-lasting. Abbate
(2021) emphasises the importance of an ethical framework that encourages responsible tech use
while effectively addressing these social problems.

Different Types of Networking Technologies

Networking technologies are essential to communication and data interchange among

organisations. LAN(Local Area Network): It is used in a small area like an office, building, or
group of buildings that are often faced by several end users. A Wide Area Network (WANS)
extends over wide geographic areas and connects several LANs. VPNs offer employees a secure
medium to access internal networks which in turn keeps their data safe from malicious agents.

IoT: The process of connecting data to the internet and software: indexing it in real time3. This
connectivity enables new use cases in business, such as smart inventory and predictive

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maintenance. IoT is providing actionable insights and enhancing efficiency in business

operations.

Concepts are the OSI model and TCP/IP protocol suite must be known to know how networking
technologies work. The OSI model is an abstraction that provides a way to conceptualise the
different layers of network communication, while TCP/IP is the primary protocol that the
internet and many modern networking applications use. Similar views are reflected in the
influence of these models in network infrastructures in their design and administration.

Importance of Artificial Intelligence (AI), Its Applications, Challenges, and Benefits

Figure 3: Benefits of AI in Business

Sources: (Berente et al. 2021)

AI is transforming business operations by delivering automation, decision-making support and

data analysis very intelligently. Types of AI used in customer services like a chatbot, which
minifies response times and increases customer satisfaction. Inventory Management: Here AI

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assists in maintaining good stock levels and hence saves from unnecessary waste. AI-driven
predictive analytics enable businesses to predict outcomes and countering patterns faster and
more accurately and power their decision-making. The application of AI is challenging due to
data privacy limitations, and huge deployment cost ranges of AI. This is what we mean by saying
AI have to be straightforward, transparent, and fair. They may have high costs of initial
investment and maintenance, especially for small and medium-sized companies.

Despite these challenges, the advantages of AI are considerable. Additionally, AI boosts

productivity by automating routine tasks, increases accuracy by eliminating error-prone human
processes and enhances customer experience by enabling personalised interactions. Benbya et al.
They also mention that companies that are using AI can improve their operations and create
more enjoyable experiences for customers. These applications are supported by AI frameworks
such as machine learning and neural networks. This allows AI models to see the data and
perform better with time-adding value to businesses.

Software Development Life Cycle

Figure 4: The Software Development Lifecycle

Sources:(Akinsola et al. 2020)

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Every work unit in the Software Development Life Cycle (SDLC) is divided into several stages:
planning, analysis, design, implementation, testing, and maintenance. The definition of goals and
requirements for the project took place during the planning phase. Gathering detailed
requirements is part of the analysis phase where the requirement is analysed whether it meets the
business needs. In the design phase, we focus on the software architecture and implementation
phase, we write the actual code. Testing Different types of TestingTesting is to ensure the code
works correctly, and it satisfies the actual requirements. Furthermore, the maintenance phase is
in which the software is updated and maintained to fix issues and support new customer desires.
Each stage is important for the development of sustainable and efficient software. The SDLC
helps in delivering software with high quality and minimum bugs, that meets user requirements,
under deadline and within budget.

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Analysis and Discussion

Types of Software

Figure 5: Impact of ERP, CRM and SCM Systems at Tesco

Source: (Langenwalter 2020)

Enterprise Resource Planning (ERP) System

Tesco uses different pieces of software to run its operations smoothly and improve user
experience Here is one of the key systems which is the Enterprise Resource Planning (ERP)
system. SAP, an ERP solution adopting uniformised business processes spanning across finance,
HR and supply chain management, is employed by the supermarket group, Tesco. This system is

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designed to make operations more efficient: It allows real-time data to be examined, which in
turn, guides decision-making and resource optimisation (Langenwalter 2020).

Customer Relationship Management (CRM) Software

Another important tool used by Tesco is the Customer Relationship Management (CRM)
software. Tesco uses Salesforce, the best CRM platform, to make it easier to manage customer
interactions, analyse customer behaviour and customise marketing. Tesco: Tesco uses the CRM
system to facilitate their Clubcard loyalty program to over 19 million active users which enables
personalised discounts and offers based on purchasing history (Baiyewu 2022).

Supply Chain Management (SCM) Tools

Tesco operates and manages a vast supply chain network, and SCM tools are indispensable in
this regard. JDA Software is used by Tesco to support demand forecasting and inventory
optimisation. This system limits overstock and stockouts, which leads to significant cost savings
and enhances customer satisfaction. Though these software solutions are robust and come with a
plethora of benefits, there are also downsides. For example, ERP systems can be difficult to
implement and expensive, with Tesco having spent well over £1 billion on technology
improvements in the last few years. Continuous CRM systems Data Input and Management
efforts have proved to be very resource-consuming. Lastly, extensive data are required for SCM
tools that use data for improved results and any anomalies in these data can cause inefficiencies
(Hugos 2024).

Ethics and Social Issues of Using Technology Specific to Tesco

Tesco Data Privacy & Security

All other information security practices of Tesco, it takes data related to its customers very
seriously by following strict US laws such as GDPR and international laws to protect customer
data. It implements system security measures using https protocols - data is encrypted at rest and
when it is being used, in transit, sits in a SOC 1 Type I, SOC 2 Type I and a HIPAA compliant
data centre, regular audits and ongoing training bringing employee awareness to mitigate
security breaches. However, in 2016 Tesco was hit by a large data breach affecting 2,000 online

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accounts, despite these measures. The incident highlights the apparent issue with data security
processes to keep data private.

Social Implications of Technology at Tesco

At Tesco, the adoption of technology, such as automated checkouts and kiosks, has resulted in
much improved operational efficiencies but also fears that machines are likely to take away jobs.
A move to automation has typically translated to fears of job insecurity for employees in
traditional cashier roles. To combat these challenges, Tesco has additionally invested in
workforce development, enabling their employees to be upskilled and trained in digital so that
they can perform new roles within the business. Rather, this forward-thinking effort is a secretly
well-balanced mixture of technology and workforce uplift (Van de Poel and Royakkers 2023).

Tesco's Ethical Policies and Corporate Social Responsibility

Tesco is compliant with ethical principles and corporate social responsibility (CSR) by acting on
a framework known as the 'Little Helps Plan'. This program aims to help local communities by
providing employment as well as giving back to local charities. Tesco is committed to digital
inclusion and is working to ensure that everyone has the opportunity to engage in digital life and
that technology is accessible to all its stakeholders (Thaichon and Quach 2023). This is
something that highlights, drawing attention to the idea that organisations like Tesco have a
responsibility to innovate responsibly and use technology to serve the broad spectrum of
community needs.

By bravely wading through the murky waters of data privacy practices, the social implications of
technology and the ethical obligations it holds with the morals at its heart, Tesco shows how
purposeful we can be about driving technology forward in a way that is careful to address the
broader societal context in which we exist (Coeckelbergh 2020). By improving its data security
architecture, reskilling and upskilling its staff, and engaging in CSR initiatives, Tesco not only
strengthens its competitive advantage but also positions itself as a trustworthy data-responsible
corporate citizen.

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Different Types of Networking Technologies in Tesco

Figure 6: Networking Technologies Utilised by Tesco

Source: (Alexander 2020)

Local Area Networks (LANs)

Tesco operates a lot of Local Area Networks (LANs) in its stores and distribution centres. LANs
allow individual computers to be networked together to join data links within each building to
improve data communication efficiencies (Alexander 2020). This improves the operational
coordination and access to real-time data directly influencing the proper management of store
operations.

Wide Area Networks (WANs)

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Tesco Wide Area Networks (WANs) connect to the Local Area Networks (LANs) at different
places, creating what is known to be Centralised Data Management and Access. In addition to
streamlining communication between a company and its stores, distribution centres, and
headquarters, the infrastructure also boosts operational efficiency and provides better
information for the company's decision-making processes.

Virtual Private Networks ( VPNs)

Virtual Private Networks (VPNs) are used to connect to Tesco network securely via remote
access This is particularly important for senior management and IT personnel who will often
need access to Tesco's network whilst offsite (Ocran 2023). It protects the data with which the
employees deal during remote operations and maintains their confidentiality, thereby ensuring its
integrity.

Internet of Things (IoT)

IoT is an important component of Tesco's operations as it deploys devices such as smart shelves
and temperature sensors that gather relevant information. They take real-time data that Tesco
uses for inventory and product quality management. IoT improves operational visibility, which
in turn leads to more efficient control over inventories and overall customer satisfaction.

Benefits and Challenges

Tesco benefits from utilising these networking technologies as they helped Tesco to improve
communication efficiency, increase data accuracy and simplify the supply chain operations [9].
But they also bring challenges (including high CapEx and OpEx, plus a necessity for full-time
network monitoring) with them. The significance of strong network management best practices
is a focus of Abbate (2021), who claims that such considerations are crucial to guard Tesco
against interruption while concurrently ensuring operational excellence in the face of innovation
(Bravi et al. 2022).

Through effective management of these networking technologies, Tesco will be able to harness
its capabilities effectively to help in the support of its vast retail operations while properly
managing related problems. This strategy re-affirms Tesco's commitment to taking advantage of

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technological advancements in enhancing productivity and customer experience in a highly

competitive retail market.

Impact of AI on Tesco

Figure 7: Impact of AI on Tesco’s Online Sales

Source: (Katsikeas et al. 2023)

Personalised Marketing

Tesco uses AI algorithms to interpret the data collected from customer behaviour through its
Clubcard program for personalised marketing. Machine learning algorithms provide
individualised product suggestions and promotions to shoppers, boosting online sales by 20%.
This app demonstrates how AI can be used to improve customer engagement and satisfaction
with the help of tailored marketing campaigns (Katsikeas et al. 2023).

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Supply Chain Optimisation

Tesco's supply chain management relies heavily on AI by using sophisticated demand

forecasting and inventory optimisation models. Typically these are sophisticated AI platforms
which use a mix of historical sales and other data such as weather patterns, to create an accurate
demand forecast. Consequently, Tesco has improved its food waste by an excellent 15%, which
fits in with its sustainability aspirations (Katsikeas et al. 2023). What is more, robots in logistics
help streamline logistical processes through AI-powered warehouse robots, contributing to
increased operational efficiency while reducing costs

Cashier-less Stores

Tesco trialled cashier-less stores in stores like the GetGo store in London with AI-powered
cameras and sensors built-in. These tools can help in real-time monitoring of customer activity
(helping to enable automated mobile app payments) This feature advancement aids store
purchases as well as reduces client problems to take care of (GHR and Aithal 2020).

Advantages and Disadvantages of AI Adoption

There are challenges to surmount when it comes to the integration of AI in Tesco, despite the
considerable advantages it offers. However, issues such as data privacy concerns and biases in
AI algorithms continue to be hotly debated and scrutinised. Furthermore, while it is difficult to
project several years out, the cost of AI technologies can require a significant up-front
investment, even more so if deploying across multiple units. On the other hand, Tesco's
investment in AI has delivered a significant rise in ROI by improving operational efficiency, and
customer satisfaction and reducing operational costs (Rosnizam et al. 2020).

The move symbolises Tesco's strategy to innovate and place the customer at the heart of its retail
membership in an increasingly competitive retail sector. To counter these challenges with a
commitment to rigorous ethical considerations and strategic investment, Tesco can not only
continue to use AI technologies as effectively as possible to increase the recovery of their
business but can integrate it more fully into the customer shopping experience.

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Conclusion

This report has investigated the essential contribution provided by Information Technology (IT)
that facilitated the operational efficiency and customer interface of Tesco. Analysis of software
systems such as ERP, CRM and SCM revealed that these technologies play a large role in
helping Tesco juggle resources, build better relationships with customers, and keep its stock
chains running smoothly. This highlighted the emphasis on accountability of Tesco's data
privacy policies and their attendant questions on questions on employment practices and
community relations with ethical issues and social inclusion aspects. Tesco, a retail giant by
training the chatbot for the future, Tesco can invest more in AI-based technologies to harvest the
benefits of customised marketing campaigns and operational automation. These improvements
could ultimately create a positive return on investment and increase customer happiness. The
findings finally support the notion that IT does indeed play a decisive part in fashioning Tesco's
competitive lead in the retail environment. To stay ahead in this global digital evolution, Tesco
will need to ensure it punches above its weight and continues to be a leader in a changing world.

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References

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Akinsola, J.E., Ogunbanwo, A.S., Okesola, O.J., Odun-Ayo, I.J., Ayegbusi, F.D. and Adebiyi,
A.A.,(2020). Comparative analysis of software development life cycle models (SDLC). In
Intelligent Algorithms in Software Engineering: Proceedings of the 9th Computer Science On-
line Conference 2020, Volume 1 9 (pp. 310-322). Springer International Publishing.

Alexander, I.N.,(2020). The influence of technological innovations on organization's competitive

advantage: Case study on Irish food retail company (Tesco) (Doctoral dissertation, Dublin,
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Baiyewu, O., (2022). The impact of customer relationship management on organizational

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GHR, G. and Aithal, P.S.,(2020). Artificial Intelligence-Based Consumer Communication by

Brick-and-Mortar Retailers in India Leading to Syllogistic Fallacy and Trap–Insights from an

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Experiment. International Journal of Applied Engineering and Management Letters (IJAEML),

4(2), pp.211-221.

Hugos, M.H.,(2024). Essentials of supply chain management. John Wiley & Sons.

Katsikeas, C., Viglia, G. and Hollebeek, L.D.,(2023). Artificial Intelligence, Stakeholder

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Van de Poel, I. and Royakkers, L.,(2023). Ethics, technology, and engineering: An introduction.
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