KROGER TO MOVE ON SYSTEMS INTEGRATION AFTER MERGER

DAN ALAIMO

SAN FRANCISCO -- In the aftermath of Y2K, Kroger Co., Cincinnati, will focus on integrating systems from its recent merger with Fred Meyer, as well as on implementing new technologies, said Carver Johnson, group vice president, management information systems, speaking at the FMI MarkeTechnics show here last month.

"With the business model that we have, we are going to address maintenance, infrastructure, merger and acquisition activity integration and new technology opportunities," Johnson said.

"We are really trying to realize the synergies of our recent large merger and acquisition. That will be a major focus in the year 2000, as well as trying to continue to move forward on gaining operating efficiencies and productivity gains. That will allow us to continue to drive margin and reduce operating costs," he said.

Wholesaler Spartan Stores, Grand Rapids, Mich., is moving into retail and its information systems department will concentrate on facilitating that transition, said Dave Couch, vice president, information technology. "In the last year, we acquired four grocery chains and are now up to about 47 stores and I think the company is going to continue to evolve in that direction," he said.

"Our focus, as we acquire more retail locations, is to modify and evolve our systems to provide a more integrated supply chain as a portion of our business becomes a self-distributing chain. That's a significant change for us as a wholesaler. Then another significant piece is, with our traditional retail base, how we create a more efficient set of transactions and how we conduct business with our traditional customers," Couch said.

Much more acquisition activity will take place in the future, noted Tom Murphy, former vice president of information systems at Kroger, and the principal speaker at the session. He is now president of Peak Tech Consulting, Colorado Springs, Colo.

"You could see more grocery and mass merchandisers start to merge in an effort to provide some reasonable competition to Wal-Mart," he said. In addition, as various international economies get stronger, more foreign firms will attempt to compete in the United States. "The biggest retailers are going to continue to get bigger and they are going to continue to focus on eliminating non-value added lines of business," Murphy said.

In this environment, top management will be wanting bigger projects completed with less resources, he said. "In many cases, I suspect the appetite for technology is greater than your budget. Selecting the highest payback projects is going to be your challenge for the year 2000 and beyond." Picking only the best projects to work on means a there will continue to be a backlog and some people in the organization will be alienated, he said.

"You are going to be facing new technologies that are going to force you to go in new directions and require that you develop new skills and capabilities. Many of us are going to face obsolete technologies that need to be replaced and will be heavy consumers of resources, both capital and human, he said.

"Meanwhile, efficiency-minded executives not only want you to produce more, but they are going to want you to do it for less. Unfortunately the mismatch between technical resources and the supply and demand over them will make last year's work force the cheapest work force you ever paid for and probably forever will ever pay for. From here on out, technical resources are going to be a rough ride," Murphy said.

A key to facing this challenge is mastering "portfolio management," Murphy said. "Portfolio management is nothing more than selecting a strategy for figuring out how to manage the different types of work on your plate. A clear strategy, if you can get it supported by senior management and communicated to all your customers, will help minimize the dissatisfaction that you are going to develop from the constrained resources and the fact that you can't do all the projects that are on your plate," he said.