SN REPORT
tailers, moored to mainframes, are reluctant to take the plunge into an open-systems environment. But those who have made the switch say it's the wave of the future.
Open systems offer retailers the chance to pick and choose from a wider range of vendors' hardware and software systems to meet their operational needs. Such flexibility is considered crucial for adapting to the myriad changes sweeping the industry.
Specifically, the systems can help retailers and wholesalers more fully incorporate many of the fundamental changes envisioned as part of the Efficient Consumer Response initiative, such as electronic data interchange, continuous replenishment, direct store delivery and other computer-driven programs.
But switching to open systems is not easy. Not only does it involve considerable financial investment, it also goes against the grain of a corporate culture reared on centralized mainframe systems.
Further, while the promise of open systems is enormous, retailers and wholesalers testing these systems today are, to a large extent, charting new waters.
"It's a tough decision because the current mainframe systems we have are stable and so it's a very safe environment to be in," said Dennis Wisdom, director of management information systems at Furr's Supermarkets, Albuquerque, N.M.
"But stores that are going to be competitive have to look at open systems as being a competitive advantage. In the future we will be able much more easily to control our costs compared with a company that stays with a proprietary system," Wisdom said.
"I certainly think it's the way to go. Within three years we will probably be completely converted to open systems. At other companies, though, it may be many more years than that. I've talked to many other people who are not yet willing to take the risk," he said.
Joey Valentine, store systems analyst at Hughes Family Markets, Irwindale, Calif., similarly stressed the advantages of moving toward an open-systems environment. The chain, he said, started switching over about two years ago and expects to complete the process within the next 12 to 24 months.
"We are finding that personal computer-based open systems allow us more flexibility to do what we want to do. It opens up more opportunities for things we couldn't do with a mainframe, processor-based system," Valentine said.
"We can now mix and match. We can use different peripheral programs and applications that are available to open systems architecture. We like to think we're a little leading edge, but most people I talk to are leaning toward this type of computer environment," he said.
Spartan Stores, Grand Rapids, Mich., also has acknowledged the importance of moving toward an open-systems environment. The wholesaler is "in the process of converting to open systems. We are putting together the strategy for doing that right now," said Bill May, vice president of management information systems.
"The reason [we are looking to switch] is that open systems are going to give us a super ability to manage change. It will allow us to migrate to new technology and to provide us with increased effectiveness in our management information systems operations," May said.
It will allow Spartan to manage change, he said. "It won't tie us to any single proprietary vendor. In terms of software and hardware, we will be able to move where we want to meet a competitive situation and react more quickly.
"A lot of wholesalers are talking about this, and many are seriously considering it. The migration is starting. I think we are all starting to understand how to pull it together," he said.
The wholesaler, however, also noted that, while changing over to open systems would bring major positive benefits to Spartan's ability to serve its retailers, fully implementing the systems will not happen overnight.
For one thing, the investment required to switch over to the new type of systems is considerable. Before making the move on a widescale basis, the total costs involved and overall financial considerations must be carefully explored, he said.
"I think we'll be able to develop all the applications [with open systems] to meet our business needs. The big thing about making the transition is how we go about it. It's an evolution. There are people factors and cost factors to consider," May said.
"We have a big investment in our mainframe computer and we can't justify just shutting it down immediately. We have to make sure open systems have a financial benefit to us. It will probably take a minimum of several years to switch over completely.
"It's not cheap to make the transition from the days of old into what the future is going to be. There's also talk that some things will always reside on the mainframe, such as big batch jobs and large data base transfers," he said.
Further, from Spartan's perspective, the true benefits of switching to open systems cannot be fully realized until a much larger number of the independent retailers the wholesaler works with also switch over, and that could take some time.
"In the next five years, any independent that is not moving toward open systems is making a major mistake because of all the benefits that go with it," May said.
Indeed, Spartan views one of its missions as helping independents move toward an open-systems environment, even as the wholesaler is striving to make the switch itself.
"We are working like crazy right now to get our retailers to be receptive. It's critical that they get involved. If a wholesaler doesn't assist individual retailers to make progress in this area, there are going to be problems," May said.
Wisdom of Furr's said cost clearly is one consideration in whether, and when, to make the switch. But he also stressed that switching to open systems involves much more than just upgrading a computer system.
It can represent a fundamental switch in how business is conducted within an organization. Thus, retailers considering making the change must be sure to look at the big picture.
"You can't look just at the cost savings. You have to look at it as an opportunity to re-engineer a lot of business processes, and it's a perfect time to do that. Moving to open systems is an opportunity," Wisdom said.
It allows a company to "completely rethink the way that business processes happen or take place. Instead of just moving applications from the mainframe to open systems, for instance, we are completely redesigning some applications from scratch."
Switching to open systems is really an opportunity for us to "step back and look at how the right way is to do things in today's environment," he added.
Hughes Family Markets, for its part, is looking toward open systems as a key factor in its ability to implement more sophisticated ECR programs.
"It opens the door for EDI and ECR, which you could not do as well on a real-time basis with a mainframe processor-based system. In the ECR arena it becomes much more efficient to have current real-time data as opposed to relying on batch processing," Valentine said. The chain wants to be in an operating environment, for instance, in which store orders "can be processed with instantaneous, up-to-the-minute sales information, not in batches sent up and processed once a day," he added.
Hughes now has its "direct-store-delivery system on open systems, as well as electronic payments and electronic mail," he said. "Eventually we want to move into computer-assisted ordering. That is something everyone wants to do but no one can figure out how to do it perfectly."
Not every retailer, though, is convinced open systems are the way to go.
Al LaMontagne, director of management information systems at Red Food Stores, Chattanooga, Tenn., is hesitant about making such a dramatic switch.
"We didn't think that right now was the right time for us to move in this direction. We evaluated it but decided to upgrade with a proprietary system instead," he said.
To switch to a truly open system would have involved "buying software and hardware from different vendors and then integrating it all ourselves. We just don't have the staff to do that. Instead, we are relying on a proprietary system in which the vendor does all the systems integration for us," LaMontagne said.
Red Food Stores, though, is making some significant changes to upgrade its computer system in its 56 stores. "We are converting to a different platform. The old computer system didn't work as well as we hoped. But I'm not sure why we should move to open systems."
