GREATER EXPECTATIONS

DENISE ZIMMERMAN

News & Solutions

Managing Rapid Change

Retail information systems executives are feeling the pressure on all fronts as rapidly changing technology gives rise to new expectations from all corners of the organization.

Thorough analysis of all options, swift investment decisions and rapid implementation will define the winners in this race, retailers told SN. The toughest challenge is keeping up with the "moving target" of technology to find solutions that match a company's specific strategy -- if such a thing exists.

Too often, however, such a strategy has not been drafted or clearly communicated, leaving IS executives in the precarious position of making assumptions about the ultimate goal. Is it stellar customer service? A razor-sharp logistics program? A product mix tailored to a specific neighborhood? Marketing to the individual?

Even those companies with clearly defined goals are struggling to sort through and assess the viability of new solutions being introduced at breakneck speed. And that pace change is not showing any sign of slowing.

"I think we're just starting up the big hill and it will continue to be a fight," said Roger Collins, executive vice president and chief financial officer at Harp's Food Stores, Springdale, Ark.

"The technology solutions will continue to expand and there will be continued financial pressure to be more efficient and generate greater sales" as supercenters and other new competitors enter the market, he added.

Implementing new technology merely to accomplish the same tasks more quickly and less expensively is not enough to stay competitive, however. Only by re-engineering the workflow process and applying technology in new ways to drive it will retailers make full use of hardware and software's expanding capabilities.

Michael Heschel, executive vice president of information systems and services at Kroger Co., Cincinnati, said retailers must position themselves effectively to take advantage of new solutions.

"Current technology -- processor memory, disk space, memory chip capacity and communication speed -- will continue to be refined and upgraded, which will in turn accelerate the speed by which data is accumulated, distilled, transmitted and used in a wide variety of industry applications," he said.

"The implications for the supermarket industry are clear: We will be challenged as never before to understand developments in technology and invest selectively in those technologies that enhance efficiency and competitiveness," he said.

At the same time, Heschel added, retailers will need to make investment decisions swiftly and deploy solutions rapidly.

George Dieterich, director of retail technology services at Fleming Cos., Oklahoma City, said selecting technology solutions from among so vast an array of options is indeed difficult, but can be done when decisions are guided by a business strategy with clearly defined goals.

"When we keep that in sight, then we'll be able to live through this onslaught of change," he said.

Retailers who wait too long for new solutions to become proven solutions may be left behind because their bolder competitors are already getting a leg up.

"The food retail business is challenged today by the fact that the new technological possibilities are there and are being exploited more by people outside the industry, which makes it a real life-threatening situation," said Bill Bishop, president of Willard Bishop Consulting, Barrington, Ill. For example, third-party home shopping and delivery firms, using proprietary networks or the Internet, are already reaching out to supermarkets' customers.

"If you don't respond to that -- if you use the new technology [only] to do the same work faster, cheaper and more accurately -- you run the risk of letting somebody else steal the march," Bishop said.

Although technology's price-performance curve has brought more solutions within reach, "we still haven't learned how to use the new stuff differently. That's the challenge," said the vice president of information technology at a 250-store chain, who requested anonymity.

"It's great to say, 'Technology gives people power,' but what is your business objective for that new power? How do you want to push it?" he said. The executive is now exploring those questions himself as he investigates how a data warehousing project might fit into his chain's strategy.

He pointed to the data warehousing program under way at Wal-Mart Stores, Bentonville, Ark., and said the company established clear objectives for the project. Wal-Mart recently decided to expand its data warehouse for decision support and total disk storage will exceed 7.5 terabytes, making it by far the largest retail data-base system in the world.

"If you look at Wal-Mart and their data warehouse, you see they use it primarily for cost-of-goods reductions and not for customer service.

"Other organizations may want to use it strictly for niche marketing, target marketing," he said, emphasizing it's the application of technology, not merely the capability, that defines a retailer.

Evaluating the sheer volume of new technology now available, and understanding how to incorporate it into existing systems, is no small task.

Joanne Donley, vice president of information services at Raley's Supermarkets, West Sacramento, Calif., said IS departments are virtually bombarded with new options daily.

"Every time I turn around, someone is bringing in a new proposal," she said.

Adding complexity to the task of choosing from among so many technologies is the growing use of client-server computing. Modifying systems in one business area now affects many more users -- directly or indirectly -- than ever.

"The advance of distributed technology means that some of the things we've done on a centralized basis is now being demanded on a distributed, or store-level, basis," said an information technology vice president at a 100-store chain. "That complicates things."

While trade exhibitions offer a good opportunity to review the vast array of options, sometimes it can be a bit much to absorb. Case in point: Mark Ossege, president of Dillonvale IGA, Cincinnati, attended the Food Marketing Institute's MarkeTechnics show this year to find a replacement for his store's electronic frequent shopper system.

"There were 26 frequent shopper programs to see down there," he said. Adding complexity to the decision is whichever hardware he ultimately selects may need to accommodate smart cards because the state of Ohio is going forward with a smart-card-based electronic benefits transfer program.

No one argues that an abundance of choice is a good thing. However, "the flood of new options has tended to overwhelm the situation. There are few clear road maps to help guide and prioritize IS applications," said Bishop.

"And more innovations mean more salespeople advocating solutions, which frequently confuses the situation," he added.

Harp's Collins agreed that the tidal wave of new technological tools makes evaluating each option particularly difficult.

"It's created some frustration, both on the part of people seeking information and for people trying to provide it. It's a moving target," he said.

Aligning the moving target of technology with the rapidly changing goals and objectives of a company is more an art than a science -- and a little bit of luck helps, too.

"It's not trivial. You've got to build an infrastructure within a supermarket chain to take advantage of new technology -- and you need to be lucky enough or smart enough to pick the right vendors to empower you," said Barry Wilderman, vice president of applications development strategies at Meta Group, Stamford, Conn.

Fleming's Dieterich said his company has been able to put together effective technology packages because the business strategy takes into account all the variables -- from current infrastructure capacity to long-term goals.

"As we look at new software, and some of it is 'vaporware' -- yet to be completed -- we have to tie that together to the needs of what supports the technology strategy," Fleming's Dieterich said.

Project deadlines, systems compatibility and hardware requirements have to be taken into consideration before moving forward with a developing technology.

Evaluating the potential of a new system -- whether real or vapor -- hinges on its ability to significantly improve the business. Two key criteria to consider are its cost-performance ratio and whether it's a practical application: Will people use it?

When all the right pieces come together, the choices often make themselves evident, Dieterich said. Fleming's VisionNet project is a good example of "matching reality to need" -- or selecting technology solutions that fit in well with the overall business strategy.

The VisionNet package allows retailers to communicate with the wholesaler's product supply center and manage item-related data and information on a central computer with direct communication capabilities.

"Now that's a new set of software that is priority-driven, using a new set of hardware that can speed communications and turnaround time of making a business decision related to an item," he said.

As much as retailers recognize the need to exploit technology in new ways, they are not anxious to be on the "bleeding edge." Even scaling the "leading edge" is more ambitious than some want to get.

"We try to look more to the proven solutions, and it's a matter of determining priorities and maintaining focus, because you can get too carried away with trying to be everything to everybody," said the vice president at a 100-store chain who requested anonymity.

Harp's Collins agreed: "It will be impossible for MIS people to be experts in everything, so the use of consultants will increase. "It's probably best not to be the frontiersman that's taking all the arrows, but rather to see what's working and try to implement it very fast," he continued.

"We don't want to be on the forefront but we want to be right behind it, so other companies can take the lumps and bruises we can avoid," added Jim Antz, Harp's director of management information systems and electronic data processing.

Timing is tricky business, retailers told SN -- move too fast and companies can trip themselves up; move too slowly and they can get trampled underfoot.

"The biggest challenge is taking the time to develop a coherent strategy. The temptation in retailing is generally to be more reactive, and that's natural," Bishop said.

"The problem is that at least today it's hard to build a solid information systems infrastructure if you're always reacting vs. defining your own destiny," he added.