SN ASKS: HANNAFORD'S VISIONARY CIO 2004-04-26 (2)

MICHAEL GARRY

SCARBOROUGH, Maine -- Last year at Food Marketing Institute's Marketechnics show in Dallas, William L. Homa, chief information officer for Hannaford Bros. here, and chairman of FMI's IT Leadership Committee, unveiled to the industry his unorthodox vision for the future of point-of-sale technology. It was more than just a vision. Homa had already begun to implement his new approach to POS at Hannaford, using an operating system rare for retail POS: Linux, the famed "freeware" alternative to Microsoft. He was convinced that a Linux operating system, supporting a Retalix POS application on a stripped-down POS terminal from Wincor Nixdorf, would prove to be a low-cost, reliable checkout solution. (Its initial cost was under $5,000 per lane.) One retailer at Marketechnics queried by SN, Raymond Devanney, technology manager, Highland Park Market, Manchester, Conn., praised Hannaford's courage and "clear vision," but said he would "like to see them come back in a year, and let us know" how it turned out. Homa recently agreed to do just that.

SN: Are you meeting your timetable for the POS rollout?

Homa: We have 45 stores live, and by September we'll have 88. The rest -- about 45 more stores -- will be done in early 2005. We stretched the rollout into a third fiscal year because of capital constraints. It has nothing to do with the technology. It's very expensive to replace your point-of-sale system.

SN: Has the system met your expectations?

Homa: It has met or exceeded our expectations. We have reduced training time by 25% because of the intuitive nature of the touchscreen interface. We have reduced tender time for check, debit and credit card transactions by 25% because of better workflow and how fast the response time is; customers have noticed that and commented on it. And our rings per minute are as good as or better than they were with the former system. Finally, we wanted the total cost of ownership for the new system -- in terms of initial cost and maintenance -- to be lower than the old system, and that seems to be true. The reliability is what we expected because it has no moving parts and is running on Linux.

SN: What challenges have you experienced with the system?

Homa: We have not been able to use all the USB [Universal Serial Bus] interfaces [connections] for our peripherals. We want all our peripherals to use USB, not serial [connections]. So we're going to be upgrading this year from Red Hat Linux to a more current version of Linux offered by Suse, and that will address the USB issue. Otherwise, it's been smoother than I thought given it's a radical change.

SN: Are you changing any peripherals?

Homa: We're going to change the customer monitor to a flat panel display from a CRT display. The cost of flat screen has fallen dramatically, it has a longer life, uses less electricity, and has no disposal issues. We already use flat touchscreen monitors for cashiers.

SN: So would you recommend a Linux-based POS system to other retailers?

Homa: I'd absolutely recommend it. If you're interested in reliability and the lowest cost of ownership, this is the solution you should use.

SN: What if you're not familiar with Linux?

Homa: In our case, [POS application vendor] Retalix supports Linux and does the interface work. It's a bundled solution, and you wouldn't know Linux was there. So a retailer can feel comfortable not learning Linux as a separate operating system. At Hannaford, we have Linux and Unix expertise, but it's not necessary.

SN: Do you expect more retailers to try Linux?

Homa: I field lots of calls from retailers around the world who are interested in it. But retailers don't change POS more than once a decade, so it will take time to make a change. I've heard Ahold's next-generation POS is a Linux-based application, and they will start using it in Europe. IBM announced a Linux solution for POS at the NRF [National Retail Federation] show in January.

SN: Unix vendor SCO recently sued auto parts retailer AutoZone and DaimlerChrysler over their use of Linux, claiming copyright violations, and has sued other companies like IBM. Are you concerned about that?

Homa: Almost every retailer, including us, has received a warning letter from SCO saying it holds copyrights. It's a fishing expedition. I think they need to win the suits against IBM and Novell before they go after end users. But we're moving to Suse for Linux, and Suse will indemnify its end users for copyright issues. SCO is not affecting our plans.