As retailers continue to expand their industry presence through acquisitions and mergers, they are discovering that a common information systems architecture that provides a seamless flow of data across their enterprise will be the key to competing in the new millennium.
"I think information-technology integration can make people's dreams become a reality if it is done correctly," said John Granger, vice president of information systems for Furr's Supermarkets, Albuquerque, N.M. "Technology needs to be an enabling factor that provides functionality. There is a critical path that is needed to solve problems, and we need to get through this path as quickly as possible."
Systems integration is a process that allows companies to flow data from a variety of systems, both at headquarters and store level, and access data from a common repository. To connect disparate systems, some companies opt for "best-of-breed" applications, which require the creation and deployment of relational databases to store and connect immense amounts of company data.
The other option is to deploy an enterprise resource planning system, an architecture that provides a suite of applications designed to connect all functions, from the store level to the warehouse. This platform provides a standard data model.
As integration continues to evolve, Web-based architecture could be the next catalyst retailers use to connect and circulate core applications to multiple locations. Though still in their infancy, Internet-style browsers could potentially replace the need to push core systems and applications to clients.
Instead, Web-based platforms could enable users to download specific applications from browsers, which would eliminate high costs associated with maintaining connecting platforms running on mainframe and client-server networks.
"Web technology is changing on a daily basis," said Eric Tuman, senior manager for the IT infrastructure service line for Deloitte & Touche, New York. "The key to its success will depend on how companies are able to retain an educated IT staff -- one that can manage and monitor the network."
While companies are devoting considerable resources to integration -- Tuman estimated that one-third of current IT budgets are allotted to such projects -- retailers' overall deployment progress has been slow.
"Each company is creating its own unique, individual way to deal with their situation," said Skip Smith, president of Smith Technology Consulting, Minneapolis. "For example, you can compare integration to [the structure of] a city. A city has a variety of different structures and architecture, and each is complete with problems and challenges.
"In the supermarket industry, there is a blend of older and newer systems, and the industry is deciding how best to deal with integration, and when is the best time to deploy new systems," he added. "A company needs a global picture of its architecture and its tools, then needs to create an environment that solves its common problems. This can differ between larger and smaller organizations."
Whatever the company's size, the important issue is analyzing how its information flow needs to be improved. "As an enterprise, companies need to gain access to data that is contained in silos within the organization," said Tuman.
Like supermarket IT executives, industry observers disagree about what provides the best solution to this common problem. "ERP is a different animal," said a source familiar with the situation. "There needs to flexibility and scalability to manage the flow of data, as well as the high transaction volume. ERP could be the answer to achieve a quick return on investment, while solving certain points of pain. Most importantly, however, the investment allows the company to move forward."
Some experts see enterprise systems as a replacement for legacy systems and existing applications, and note that ERP solutions can more easily consolidate different technological environments. However, others do not see an enterprise system being the answer for literal end-to-end management.
"I cannot imagine that one end-to-end solution can solve all IT issues," said Furr's Granger. "I do not think one company can be an expert in warehouse systems, and also be an expert in financial systems or buying or transportation. I do not see how one vendor can do that.
"I like the idea of individual solutions to solve problems," he added. "To me an industry-specific solution tends to work better. For example, if there is a system that is specific to supermarkets, we need a vendor in this ball game to relate. If a vendor provides a theoretical approach, that is less valuable to the company. We need something unique to the issue to solve it."
Looking ahead, observers predict the next evolution of integration could be in the form of Web architecture. "There has been more change and progress with integration in the past seven months [than in] the last seven years," said Deloitte's Tuman. "Web architecture is leading the winds of change here."
The key to the explosion of Web architecture will depend on how quickly retailers begin to move from a client-server-based network to focus on a network computing system, which would better support distribution of applications within a multiple-store format.
"The idea that retailers need to focus on is using a Web browser to deploy a specific system to multiple stores," said the source. "By relying on a Web browser, operations departments do not have to maintain rollouts. Everything will be installed via Web browsers."
Whether distributors opt for best-of-breed products, commit to an end-to-end conversion, or even decide to convert to a Web-based process, companies identified IT integration as a crucial ingredient for future survival. "The idea of this transformation allows companies to build a foundation that will enable them to maintain a competitive position and continue growing -- its development is the key to survival," said Deloitte's Tuman.
"Our perception is systems need to be built to support strategies, processes, people and organizational change," he added. "IT integration uses this combination to help companies survive and excel in this evolutionary culture."