Two CIOs Unhappy With Supermarket Technology

MICHAEL GARRY

NEW YORK — Two chief information officers expressed dissatisfaction with the technology available to food retailers, saying it isn't sufficiently tailored to the supermarket industry, among other complaints.

The CIOs, Eric Wilson of Raley's, West Sacramento, Calif., and Richard Bauer of Price Chopper Supermarkets, Schenectady, N.Y., made these comments at the “CIO Innovators Forum,” a session at the National Retail Federation's 96th Annual Convention & Expo here last month.

“I came from Unilever and I'm accustomed to ERP [enterprise resource planning] vendors having world-class solutions for CPG companies,” Bauer said. “In retail, it's not quite there yet, particularly for grocers. So there's a challenge for [vendors] who want to be in grocery to fill out your product line with more grocery-specific technology.”

To appeal to food retailers, Bauer added, this technology would need to address such areas as variable-weight items, limited shelf life and the kinds of pricing and promotion common to a supermarket environment. Price Chopper is currently seeking an ERP solution that handles these needs. “We're on the prowl, but we haven't seen the right set of answers for us yet,” he said.

Price Chopper is also looking for systems to help its bakery and deli departments develop a production plan and optimize production to meet expected demand. “We've done some work with a couple of different packages, but they didn't fit very well with the way we do business, so we're still searching,” Bauer said. “This will be a big opportunity for our company and other grocers as well.”

Raley's is moving toward developing what's known as a service-oriented architecture, which uses loosely coupled software services to support business processes. But Wilson complained about the availability of services. “We're starting to wrap things in services, but we can't buy specific services,” he said. “I can't go to a big vendor and say, ‘Give me your A/P service.’ They want to sell you the whole thing.”

Wilson also harshly criticized the cost of software maintenance, which he said is Raley's biggest IT cost, accounting for 30% of its budget. “We end up paying for the software again in 3½ years,” he said. “Is that going to drive us to build more solutions?” He said high maintenance costs have forced him to get involved in every vendor negotiation “to make sure a maintenance discussion is had.”

Wilson and Bauer also spoke of their struggles in finding and retaining good IT employees. Because of Price Chopper's location in a relatively small market in New York, the chain has partnered with local universities, such as the University of Albany and Rensselaer Polytechnic Institute, “to build feeder stocks into the IT labor pool,” Bauer said. “They have some bright sparks coming into our team.”

At the same time, he added, Price Chopper is investing over the next few years in “tools to get more out of the technical staff I have. I can't continue to grow our staff at the same pace as the overall business is growing.”

A harder challenge, Bauer said, was finding business analysts “who are not pure technology specialists but know how we apply technology in a retail world.” Price Chopper's approach has been to hire consultants or train its own executives from the business side, but “it's a continuing struggle.”

Raley's location in California has enabled it to tap executives who have been laid off from high-tech companies such as Intel and Hewlett-Packard. But he is alarmed by the lack of younger people coming out of universities with IT expertise. “The best Oracle people are from India and living here,” he said. But as conditions improve in India, “they're going to go back,” leaving a vacuum behind. While Price Chopper has hired local college graduates, Bauer noted that he has seen a drop in the number of graduates with a master's degree in IT.

Raley's has been able to find some technical people from the ranks of its store employees. “When we have a rollout of POS or PCI [the Payment Card Industry data security standard], we post hiring notices in the stores,” Wilson noted. “Out of 16,000 store employees, there are a lot of computer scientists out there that will come in for a three- to 12-month assignment and then go back to the stores. They become a source that we hire from.”