Management Information System of Starbucks

This report analyzes the development and upgrade of the management information system for Starbucks Chermside. It discusses the impact of the project on society and organizational success.

Running Head: PROJECT MANAGEMENT
Project Management: Management Information System of Starbucks
Name of the Student
Name of the University

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Executive Summary
Starbucks is a multinational coffeehouse chain that is massively popular among the fans
throughout the world. The selected project is the development and upgrade of management
information system for Starbucks Chermside. The project is mainly designed to upgrade the
information system and make significant changes in the management process so as to attract
more customers and compete against the main competitors in the country.

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Table of Contents
Introduction......................................................................................................................................3
Analysis of Selected Project Case and Organizational Context......................................................4
Evaluation of Current State of Organization’s IS/IT Technology...................................................5
Impact of Project on Society and Organizational Success..............................................................6
Analysis of Processes and Methods to Select the Project................................................................8
Justification for Methodology Selected for Project Execution........................................................8
Evaluation of Tools or Software Applications................................................................................9
Alignment with Strategic Goals of the Organization....................................................................10
Project Scope and Features............................................................................................................13
Project Scope Statement............................................................................................................13
Project Features.........................................................................................................................13
Project Limitations.....................................................................................................................13
Issues Related to Scope Changes...............................................................................................13
Project Charter...........................................................................................................................14
Project Schedule............................................................................................................................16
Project Budget...............................................................................................................................20
Performance Analysis of the Project.............................................................................................24
Conclusion.....................................................................................................................................27
References......................................................................................................................................28

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Introduction
The study for this report involves the case study of deployment of management
information system in Starbucks Chermside., Queensland, Australia. Starbucks is one of the most
popular coffeehouse chains around the world that entered the Australian market only a decade
ago. Before venturing into the Australian market, the company has gained massive popularity
around the world and has tried to replicate the success in Australia as well (Li, 2018). However,
in current times, development and deployment of suitable information system is essential for any
business organisation. Similarly, Starbucks has deployed a management information that
includes four main components – transaction processing system, supply chain management
system, decision support system and customer relationship management system. The same
information system model was deployed in Australia when business was initiated in the country.
Starbucks Chermside was first set up in 2004 and the information system development project
was initiated in 2005. However, it was a basic information system and currently, this existing
information system does not meet the needs of current day business amidst the market
competition and rapid evolution of technology. The proposed project for Starbucks Chermside
will be initiated this year (2019) and is expected to finish within next year.
The purpose of this report is to analyze the project case and determine the benefits or
shortfalls faced by Starbucks regarding the deployment and utilization of information system.
The main reason behind choosing this case study is that it is one of best examples of the effects
of lack of sufficient information system and how a well developed information system has the
potential to change the performance of a company.

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Analysis of Selected Project Case and Organizational Context
Starbucks is a multinational coffeehouse chain that is massively popular among the fans
throughout the world. Initially, the company was dependant on the development of branding and
quality of products but after its international growth, the company relies on very high brand
value, premium products and pricing as well as the support of management information system
that allows the central management of the company to control all the branches throughout the
world through one common system architecture (Martínez-Torres, Rodriguez-Piñero & Toral,
2015). However, in spite of the rapid international growth of the company, it could not grow as
expected in Australia. While there are many non-technical factors behind it, there are also several
technical shortfalls that resulted in lack of control of the business in the country. In the selected
store of Chermside, Queensland, Starbucks did not assign sufficient information system support
for the business and as a result, the business performance has faltered. This is mainly due to the
fact that the operations were slow, error prone and ineffective and as a result, the customer and
operations management failed in the Starbucks store. The organisational context based on the
project is explained below.
Size – The project will be launched first in the Chermside store only and depending on
the success of the project, further projects will be executed in other Starbucks stores in Australia.
Budget – The decided budget for the project is $250,000 and efforts will be made to
complete the project within this budget limit only.
Problem Statement – The main problem is that, due to lack of a proper information
system, the operations are slow at the store resulting in various errors during order and bill

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processing and others. Moreover, the staffs are mostly involved in order and bill processing and
as a result, customer service is generally overlooked.
Project Objectives – The main objective of the project is to implement a management
information system at Starbucks Chermside that will enhance the quality of services at the store
as well as solve the errors that have been occurring due to complete manual handling of
operations.
Evaluation of Current State of Organization’s IS/IT Technology
Considering the initial days’ issues and problems, Starbucks Chermside implemented an
IT system that consists of a number of different features aimed towards enhancement of
customer care process, internal operations, business process management and others. This IT set
up is not different from the mainstream and popular Starbucks stores placed at various important
locations around the world (Shirdastian, Laroche & Richard, 2017). The basic features of the IT
system include transaction processing system, supply chain management system and business
analytics system that help to enhance the overall performance and operations. The features of the
current state of organisation’s IT strategy are briefly explained below.
Transaction Processing System – Although cash payments are accepted at the store, the
store promotes the use of cashless payments through credit and debit cards. Online payments can
be recorded effectively with an accounting system and the records can be updated to the cloud
database of the company (Ivanov, Tsipoulanidis & Schönberger, 2017). Without the use of
accounting system, the transaction processing were inefficient and there were many errors in the
records that were partially solved with the new system. However, further development is

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necessary that will enable the company to produce 100% error free transaction processing and
records.
Supply Chain Management System – Starbucks always operates through a large supply
chain through which it procures various raw materials like coffee beans, milk and others
(Shirdastian, Laroche & Richard, 2017). For managing all the supply chain processes effectively,
Starbucks Chermside has deployed a supply chain management system that helps the store to
keep track of the supply chain including delivery of materials, pending payments, ordering
materials and many others.
Business Analytics System – Starbucks Chermside has deployed a business analytics
system that helps to forecast the business based on current and past sales (Real & Percell, 2018).
This helps the company to prepare appropriate business and procurement strategy so that
resources are not wasted or spent inappropriately.
Impact of Project on Society and Organizational Success
This project is selected keeping mind the main goal to serve the customers better so that
return again after a visit. Without sufficient quality of service, no customers will be satisfied and
they will not again return to the store. The selected project is the development and upgrade of
management information system for Starbucks Chermside. It is expected that the proposed
project will have a significant impact on the society and organizational success (Ivanov,
Tsipoulanidis & Schönberger, 2017). However, in order to determine the impact of the project, it
is important to determine the internal factors that are analyzed using SWOT technique as
follows.

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Strength Weakness
The main strength of the company is that it has a
very high brand value and it is relatively easy for
the company to attract more customers especially
the tourists and immigrants in the country who are
already fans of the brand. Another major strength is
that due to the international success and size of the
company, sufficient funding can be made available
without any major issue.
The main weakness of the company is that the
coffee products of Starbucks are not among the
favorites of the native Australians. The type of
coffee preferred by the Australians is not available
at Starbucks. Hence, even after upgrading the
information system, success cannot be completely
ensured.
Opportunity Threat
Australia has a huge market and with increasing
number of tourists and immigrants, Starbucks has
the opportunity to start getting hold of the market
given the fact that the customer favorite products
are made available at reasonable costs.
Furthermore, with the upgrade of information
system, the store will be able to handle the
operations more efficiently and can invest more
time and funds on marketing and customer service.
In Australia, there are numerous alternative coffee
product sellers available. They already have strong
hold on the market as they sell the coffee products
preferred by the Australians at much lower prices
than Starbucks. Hence, Starbucks faces strong
competition against these already established
companies.
Based on the study of the SWOT table, it has been found that the main current problem
area is the lack of products preferred by the customers in the region and also high prices of
products compared to other coffee product sellers (Ivanov, Tsipoulanidis & Schönberger, 2017).
As a result, social factor plays a major role in determining the organisational success in
Starbucks Chermside and thus, the information system upgrade should focus on customer care

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and ensure the customer feedbacks are considered while implementing operational and business
related changes.
Analysis of Processes and Methods to Select the Project
There are several processes and methods that are generally utilized to select the project
for an organisation. The selection process is mainly based on the needs or requirements of the
organisation and the selection criteria include operations, customer service, external operations,
marketing, cost benefit and others. In order to select the project, the organisation needs to
prioritize the requirement before proceeding with the same (Dorn, Messner & Wänke, 2016). For
this particular case, the main priority of Starbucks is to enhance the state of the internal
operations in order to provide smooth and efficient service to the customers in order to increase
the customer base and get hold of the market against the rival competitors. Starbucks Chermside
also has the target to enhance the customer base by focusing on the customer requirements and
feedbacks and in order to establish the same, the company has focused on upgrading the
management information system (Harrington, Ottenbacher & Fauser, 2017). This project was
chosen considering all the benefits that can be provided by the management information system
towards the business operations as well as customer service. Hence, this project was selected that
would strengthen the IT system of the company and would enable them to focus more on
customer and service development department.
Justification for Methodology Selected for Project Execution
For the proposed project, there are different systems development methodologies that can
be considered. However, not all methodologies can be used as they may not be effective for the

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purpose of the project. Two possible methodologies that can be used in this project are agile and
predictive methodologies. Agile methodology involves iterations throughout the course of
project in order to get the best quality outcome constantly changing the outcomes of each
iteration (Schlagwein et al. 2017). As a result, although the final solution is the best possible, this
methodology does not have any proper roadmap or plan and it also takes a long time to complete
the project. On the other hand, in predictive methodology, a detailed project plan is created along
with the project roadmap based on which, the project development life cycle is executed. For this
project, Starbucks Chermside needs to choose predictive methodology as it follows a planned
path. Starbucks already has an existing information system and has specific plans for system
upgradation and hence, iterative development is not suitable for the project.
This IT project is selected solely based on the improvement requirements for the store.
As per the analysis, the store requires urgent attention towards the operations that are currently
done manually and as a result, various errors are generated (Dong & Netten, 2017). Hence, even
after providing high quality products to the customers, the company cannot emphasize on
customer service as the staffs are involved in managing the system operations.
Evaluation of Tools or Software Applications
Starbucks already uses a wide variety of tools and software applications from a large
number of different vendors. Each vendor provides a specific software solution to the company
stores. For instance, HighRadius is a vendor that provides SaaS (software as a service) solution
to Starbucks whereas Affirma Consulting provides business intelligence and analytics service to
Starbucks (Ghaffari & Aubert, 2016). However, not all these vendors are applicable for
Starbucks Chermside as there is only limited software application in the store. The plan of this

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store is to upgrade the information system and then launch the mobile app for the Australian
users who can order coffee through the app. This software tool will be very effective in
developing convenience for the customers who will then be attracted to purchase products from
Starbucks (Dong & Netten, 2017). In addition, the use of various software services provided by
the different vendors will allow Starbucks Chermside to develop and upgrade their existing
information system and will add a different dimension to the store. The upgradation of the
information system at the store will also allow the store to advance much further than the nearest
rival organisations in terms of operations, service quality and efficiency. After the
implementation of the software tools, if the store can develop a strong customer base in the area,
it can then start of build up and go far ahead in terms of market competition.
Alignment with Strategic Goals of the Organization
The strategic goal of the organisation is to provide premium quality product and services
to the customers within a high quality environment regardless of the price of products.
According to the general opinion of the Australian customers, the prices of the Starbucks
products are too high compared to other coffee shops in Australia. In order to justify high prices,
Starbucks needs to provide equivalent or better services to the customers so that the customers
return to the store and choose Starbucks over other coffee shops (Chae, Koh & Park, 2018). The
strategic implementation of the project for aligning with the existing business operations of the
company can be done based on any of the following use cases, each of which has its own
benefits to the operations.

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Figure 1: The Basic Use Case of Current Operations
(Source: Dzone.com, 2019)
Figure 2: “Divide and Conquer” Strategic Policy with a Single IT System
(Source: Dzone.com, 2019)

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Figure 3: Partition Method of Strategic Operations with Multiple IT Systems
(Source: Dzone.com, 2019)
Figure 4: Distributed Partition Method with Double IT Systems
(Source: Dzone.com, 2019)

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Project Scope and Features
Project Scope Statement
The scope of the project is to develop and upgrade the existing management information
system at Starbucks Chermside. The scope also includes development of a new mobile
application, implementation of various services from software service vendors like SaaS, cloud
computing functionality application, accounting management systems and others.
Project Features
The project will include the development of a mobile app side by side with the
implementation of cloud computing services at the store. The cloud will provide solutions
regarding storage and management of various types of business data. The project will also
provide an accounting management system that will help the billing and account management
process at the store.
Project Limitations
The following are the limitations of the project:
 The Chermside store is small and has limited scope for expansion.
 The business of Starbucks in Australia is very limited and hence, there is strong
uncertainty regarding growth of business in the country.
Issues Related to Scope Changes
Scope change in a small store as Starbucks Chermside may lead to serious impacts on the
strategic management of the store. Change in scope will lead to significant additional budget and

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time. Moreover, since the selected methodology is adaptive, scope change will require restarting
the project plan, which is not desirable.
Project Charter
The deliverables of the project include the following items.
Deliverables
Analysis of market requirements and need for Information System
Develop Initial Project Plan
Analyze Feasibility of Information System Implementation
Milestone 1:Completion of initiation phase
Define project scope
Estimate duration for project
Estimate budget for the project
Risk assessment and management plan development
Assign project team
Milestone 2: Completion of planning phase
Design MIS System Architecture
Develop system requirements

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Procure hardware and software resources
Develop final system blueprint
Milestone 3: Completion of designing phase
Install hardware
Install necessary software
Develop data warehouse
Develop Information System as per Specifications
Design and Deploy System Security
Connect to central server
Milestone 4:Completion of development phase
Test hardware
Test software
Test data warehouse
Milestone 5: Completion of testing phase
Review and appraisal
Present system maintenance plan

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Sign Off
Milestone 6:Completion of closure phase
Project Schedule
The project manager can utilize project scheduling software to develop an appropriate
schedule for the project. Furthermore, techniques like project crashing, resource leveling and
others can be used by the project manager for controlling the project. The schedule of the project
is presented in the following table.
Task Name Duration Start Finish
Management Information System for
Starbucks Chermside
188 days Mon 6/18/19 Mon 3/11/20
Initiation phase 10 days Mon 6/18/19 Fri 6/29/19
Analysis of market requirements and need for
Information System
3 days Mon 6/18/19 Wed 6/20/19
Develop Initial Project Plan 4 days Tue 6/19/19 Fri 6/22/19
Analyze Feasibility of Information System
Implementation
3 days Mon 6/25/19 Wed 6/27/19
Milestone 1:Completion of initiation phase 0 days Fri 6/29/19 Fri 6/29/19

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Planning phase 37 days Mon 7/2/19 Tue 8/21/19
Define project scope 3 days Mon 7/2/19 Wed 7/4/19
Estimate duration for project 3 days Fri 7/6/19 Tue 7/10/19
Estimate budget for the project 4 days Mon 7/16/19 Thu 7/19/19
Risk assessment and management plan
development
5 days Fri 7/27/19 Thu 8/2/19
Assign project team 3 days Thu 8/9/19 Mon 8/13/19
Milestone 2: Completion of planning phase 0 days Tue 8/21/19 Tue 8/21/19
Designing phase 40 days Wed 8/22/19 Wed 10/17/19
Design MIS System Architecture 15 days Wed 8/22/19 Tue 9/11/19
Develop system requirements 5 days Fri 8/31/19 Thu 9/6/19
Procure hardware and software resources 5 days Mon 9/10/19 Fri 9/14/19
Develop final system blueprint 15 days Wed 9/19/19 Wed 10/10/19
Milestone 3: Completion of designing phase 0 days Wed 10/17/19 Wed 10/17/18
Development phase 74 days Thu 10/18/19 Thu 1/31/20
Install hardware 5 days Thu 10/18/19 Wed 10/24/19
Install necessary software 5 days Mon 10/29/19 Fri 11/2/19

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Develop data warehouse 20 days Thu 11/8/19 Wed 12/5/19
Develop Information System as per
Specifications
25 days Thu 12/6/19 Fri 1/11/20
Design and Deploy System Security 10 days Thu 12/20/19 Wed 1/23/20
Connect to central server 6 days Thu 1/24/20 Thu 1/31/20
Milestone 4:Completion of development
phase
0 days Thu 1/31/20 Thu 1/31/20
Testing phase 18 days Fri 2/1/20 Tue 2/26/20
Test hardware 6 days Fri 2/1/20 Fri 2/8/20
Test software 6 days Mon 2/11/20 Mon 2/18/20
Test data warehouse 6 days Tue 2/19/20 Tue 2/26/20
Milestone 5: Completion of testing phase 0 days Tue 2/26/20 Tue 2/26/20
Closure phase 9 days Wed 2/27/20 Mon 3/11/20
Review and appraisal 4 days Wed 2/27/20 Mon 3/4/20
Present system maintenance plan 4 days Tue 3/5/20 Fri 3/8/20
Sign Off 1 day Mon 3/11/20 Mon 3/11/20

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Milestone 6:Completion of closure phase 0 days Mon 3/11/20 Mon 3/11/20
The schedule is also represented in the form of a Gantt chart as follows.

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Figure 5: Gantt Chart of the Project
(Source: Created by Author)
Project Budget
For the purpose of determining the project budget, bottom up budget estimation is used.
This technique involves allocation of human and material resources to the work packages in the
project in order to calculate their usage rates and then the total budget required for the project.
An appropriate budget of the project has been developed using bottom up estimation technique
as follows.
Task Name Duration Resource Names Cost
Management Information
System for Starbucks
Chermside
188 days $210,760.00
Initiation phase 10 days $10,440.00
Analysis of market
requirements and need for
Information System
3 days Project Manager $3,600.00
Develop Initial Project
Plan
4 days Project Manager $4,800.00
Analyze Feasibility of 3 days Project Manager, $2,040.00

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Information System
Implementation
Designer
Milestone
1:Completion of initiation
phase
0 days $0.00
Planning phase 37 days $34,280.00
Define project scope 3 days Contractor $3,000.00
Estimate duration for
project
3 days Financial Manager $2,880.00
Estimate budget for the
project
4 days
Team Leaders,
Supervisor
$9,600.00
Risk assessment and
management plan
development
5 days
Project Manager, Team
Leaders
$14,000.00
Assign project team 3 days Team Leaders $4,800.00
Milestone 2:
Completion of planning
phase
0 days $0.00
Designing phase 40 days $37,400.00

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Design MIS System
Architecture
15 days Designer $10,200.00
Develop system
requirements
5 days Team Leaders $8,000.00
Procure hardware and
software resources
5 days Financial Manager $4,800.00
Develop final system
blueprint
15 days Financial Manager $14,400.00
Milestone 3:
Completion of designing
phase
0 days $0.00
Development phase 74 days $86,500.00
Install hardware 5 days Hardware[1] $15,000.00
Install necessary
software
5 days Software[1] $7,500.00
Develop data warehouse 20 days
Financial Manager,
Contractor
$39,200.00
Develop Information
System as per
25 days Network cost[2] $4,000.00

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Specifications
Design and Deploy
System Security
10 days
Business Consultant,
Tester
$13,600.00
Connect to central
server
6 days Project Manager $7,200.00
Milestone
4:Completion of
development phase
0 days $0.00
Testing phase 18 days $33,420.00
Test hardware 6 days
Designer, Additional
cost[1]
$5,580.00
Test software 6 days
Tester, Designer, Risk
Manager
$13,920.00
Test data warehouse 6 days
Tester, Designer, Risk
Manager
$13,920.00
Milestone 5:
Completion of testing
phase
0 days $0.00
Closure phase 9 days $8,720.00

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Review and appraisal 4 days
Project Sponsor, Project
Manager
$4,800.00
Present system
maintenance plan
4 days Designer $2,720.00
Sign Off 1 day Project Manager $1,200.00
Milestone
6:Completion of closure
phase
0 days $0.00
For the project, it is necessary to control the budget so that it does not exceed the limit as
shown in the above table. In order to control the budget, the project manager needs to ensure
there is no scope creep and any additional unnecessary costs are avoided throughout the course
of the project. Appropriate change management can be implemented to avoid extra costs that
might be encountered during the project. Further cost estimation and budget baseline analysis
reveal the following data for the project.
Name Actual Cost Cost Baseline Cost Cost Variance
Initiation phase $10,440.00 $10,440.00 $4,800.00 $5,640.00
Planning phase $34,280.00 $34,280.00 $8,720.00 $25,560.00
Designing phase $32,640.00 $37,400.00 $9,600.00 $27,800.00
Development phase $66,420.00 $86,500.00 $0.00 $86,500.00

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Testing phase $0.00 $33,420.00 $5,920.00 $27,500.00
Closure phase $0.00 $8,720.00 $5,680.00 $3,040.00
June 2018
July 2018
August 2018
September 2018
October 2018
November 2018
December 2018
January 2019
February 2019
March 2019
$0.00
$5,000.00
$10,000.00
$15,000.00
$20,000.00
$25,000.00
$30,000.00
$35,000.00
$40,000.00
Actual Cost Baseline Cost
Figure 6: Cost Baseline Costs
(Source: Created by Author)

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Status: Complete;
$133,620.00Status: Late;
$10,200.00
Status: Future
Task; $66,940.00
Status: Complete Status: Late Status: Future Task
Figure 7: Cost Status
(Source: Created by Author)
Performance Analysis of the Project and Suggestions for Preventing Failure
The initial implementation of the management information system at Starbucks
Chermside has not been a successful venture due to various internal and external reasons. The
internal reasons include lack of sufficient technical expertise among the store staffs, out of date
technical specifications and others whereas the external reasons include lack of interest among
the customers, high pricing of products and others (Kandampully, Bilgihan & Zhang, 2016). The
failure of the previous information system implementation could be avoided if sufficient funding
was provided right at the start. It is true that the technology has changed from 2005 to 2019 but
even considering the standards of 2005, the quality of information system at Starbucks
Chermside was not sufficient. Instead of basic IS implementation, Starbucks Chermside could
have invested more to implement a number of IS components including ERP, CRM and others
that would have prevented failure of the project (Chae, Koh & Park, 2018). With the proposed

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changes in the new project, this situation is expected to change and it is estimated that Starbucks
Chermside will start generating high amounts of revenue.
Conclusion
It can be concluded that the proposed changes in the project will provide significant
benefits to Starbucks Chermside including growth in the already competitive market. The
proposed management information system for Starbucks Chermside store will enhance the
existing operations and will allow the store to focus more on customer requirements and
feedbacks. Furthermore, with the changes in information system, the strategic management of
the company will also change significantly.

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