ARCHITECTURE TO BUILD ON

In the ongoing pursuit of new efficiencies, cost savings and end-user applications, information systems executives are turning to "open systems" architecture.Retailers and wholesalers who have made the move to open systems point to a startlingly diverse array of potential and realized benefits, in areas extending from the point of sale to the warehouse receiving dock.But they are quick to add some

In the ongoing pursuit of new efficiencies, cost savings and end-user applications, information systems executives are turning to "open systems" architecture.

Retailers and wholesalers who have made the move to open systems point to a startlingly diverse array of potential and realized benefits, in areas extending from the point of sale to the warehouse receiving dock.

But they are quick to add some words of advice for those about to embark on the open systems path: Proceed with caution. It is not yet a mature industry. There's still a considerable learning curve, and there could be some bumps for those who travel too quickly.

"You can jump into something and spend a lot of money and then find out that you're spending more to support open systems than to support your mainframe," one industry executive told SN.

Tom Nowak, vice president of management information systems at Price Chopper Supermarkets, Schenectady, N.Y., echoed a similar note. "Originally, everybody said, 'Open systems are going to save you a lot of money.' Now we're hearing, 'That may not necessarily be the case.' "

Moving to open systems requires retailers to take new decision-making risks that previously were the domain of the proprietary mainframe vendor. That should give retailers further reason to pause, said Michael Faber, network analyst at G&R Felpausch Co., Hastings, Mich.

"You're definitely more at risk. If something goes wrong, and we were under a vendor's umbrella, we could blame them. Now if something goes wrong, stores come to us and say, 'Why is this happening?' " he said.

But that doesn't mean retailers should stay away from open systems. Despite the words of caution, all three executives are champions of open-systems technology. Their companies are committed to it and they have had considerable success, they said.

The distinguishing factor separating success from failure is a company's willingness to evaluate each application's potential compatibility with an open environment, to make educated choices and to move slowly.

Also critical to success, information executives told SN, is a clear understanding of the company's own culture, business relationships and goals for the next decade -- and beyond.

What open-systems technology brings to the table is the ability to run any software application on any hardware platform. "It's kind of like what the invention of interchangeable parts did for manufacturing," said one industry observer.

By contrast, companies operating on closed, proprietary mainframes, now referred to as "legacy" systems, are limited in what software they can use.

Flexible Advantages Open-systems architecture can provide retailers with more flexibility and applications opportunities than mainframe computers, executives said. Among the benefits most often cited:

Cost savings: Open systems' ability to mix and match industry standard hardware from different vendors gives companies bargaining power when purchasing equipment. Maintenance costs for networked personal computers are significantly less than for proprietary systems.

Efficiency: Automated applications and improved accessibility to an open, systemwide data base reduce manual processes that lead to errors and delays. Rapid delivery of meaningful information to store managers improves decision-making capabilities at the store level.

Flexibility: The "plug and play" nature of open systems provides companies with broader software options and the freedom to configure their systems in ways that best serve their needs.

Among the chains putting "plug and play" open systems to the test is Price Chopper. After installing PCs at the front end of its Clifton Park, N.Y., store, the chain decided to mix and match different types of scanners and computer monitors at the customer checkout.

"We're testing a two-line customer display to show the customer the items," Nowak said. "We're also testing a 9-inch color monitor that has a rolling register receipt, and we're testing a 14-inch color monitor. We have some front-scanning lanes with one type of scanner and a side-scanning lane with a different type of scanner."

Price Chopper is gathering customer feedback to learn what shoppers prefer. The chain will combine mix-and-match industry standard components as it sees fit, Nowak said.

"It gives us more flexibility in terms of the components of the system," Nowak noted. "It allows us to pick the best of breed. I guess that's the term a lot of people like to use. But it's really true when it comes to scanner scales or printers or displays."

Nowak said testing open systems has been a learning experience for all involved. "There's always a lot of work when you're developing software from scratch," he said. "There are always small problems that have to be resolved.

"But we feel that ultimately we'll be better off for all our efforts, because we will have the ability to kind of choose our own destiny, maintain our software and pick the best equipment," he continued.

An 'Open' Question

Information systems executives agree that the benefits of open systems are many. The formula for migrating to open systems, however, depends in large part on how a particular company defines "open systems."

"There still is a problem with the definition of the word 'open,' " said John Granger, vice president of MIS at Roundy's, Pewaukee, Wis. "Many people are using the term 'open' for systems that really aren't -- and that's what the novice getting into open architecture has to be careful of.

"If they are looking for hardware independence and applications portability, they'd better not buy a package based on the word 'open.' They need to be sure it can truly be moved from one machine to another," he said.

"My warning to anyone new getting into it would be: Don't take the word 'open' at face value," Granger said.

Price Chopper's Nowak agreed. "Open systems are not truly open yet," he said. "There is still some proprietariness to them."

At Roundy's, open-systems projects for item purchasing and warehouse applications have moved front and center on the MIS agenda. "Since we're a wholesaler, purchasing and distribution systems are the most important kinds of systems we can have," Granger said.

The open architecture of Roundy's warehousing operations calls for the bulk of data to reside on a mainframe system at headquarters. "But the actual work is being done in a distributed fashion at the warehouse," he said.

The wholesaler expects to complete implementing an open-systems architecture for purchasing and distribution applications next year. The top priority throughout the migration process has been end-user effectiveness, Granger said.

"We recognize we're not in the computer business. Our intent is not to build a more complicated, more technologically up-to-date mousetrap here. We're in the food business," Granger said.

"We have two objectives: to improve the work of our people in the warehouse and other facilities, and to help our end customers in the supermarket. If the work we do helps one or the other or both, then we're OK. If all we've done is help ourselves, then we've picked up the wrong project," he said.

Evaluating Needs

Selecting the right projects is critical in determining how, when -- and whether -- to migrate to an open-systems environment, executives said.

A top priority for G&R Felpausch, for instance, is the ability to extract movement data from its 18 stores more frequently. The desire to begin a frequent-shopper program also motivated the company to upgrade its in-store systems.

The retailer replaced proprietary POS systems with open PC-based front-end systems in all its stores. Now, said Faber, Felpausch is pulling movement weekly and venturing more aggressively into category management.

"We're doing more category management. We work more frequently with vendors and recently did a reset with Nabisco," he said. "Basically, we provided them with information. They put it into their category-management system and came back and said, 'Here's how it looks,' and recommended some adjustments.

"Now we're in the process of setting up category management ourselves," he added.

Also on the horizon for Felpausch's new open-systems environment is an electronic frequent-shopper program, which is being tested in four stores.

The chain plans to improve communications with its wholesaler, Spartan Foods, Grand Rapids, Mich., which eventually will be able to access Felpausch's transaction data. "But the first step will be for them to put in a wide area network, do some testing and see how that goes."

Retailers reduce costs with open-systems architecture by bringing maintenance in-house, rather than contracting with a service provider, and choosing non-name-brand equipment, when appropriate. Price Chopper's Nowak cautioned, however, that those venturing into open systems should investigate all cost-benefit ramifications.

"Is there going to be cost savings? Yes and no," he said. "In my mind, it depends. There are implementations of open systems where you may take a system and move it to a different platform and save money."

However, "there will be cases -- if you're looking at replacing everything -- where you may not save money because as your implementation of open systems grows, there's more support requirements," he said.

Among those chains that credit substantial cost savings to reduced maintenance of front-end open systems are Felpausch and Community Cash Stores, Spartanburg, S.C.

Felpausch's Faber said: "We hired our own field engineer when we switched from proprietary cash register towers to 486 PCs. We figure we saved about 50% from what the vendor was charging."

Felpausch completed the rollout of PC-based POS systems to its 18 stores last month.

Community Cash is also rolling out personal computers at the checkout, and enjoying substantial savings in maintenance costs.

Marty Yarborough, MIS director, said the 40% savings projection is bearing out, even though the chain has converted only five of its 27 stores to PC-based checkouts. "In the stores that are installed, we're seeing about a 40% reduction in what we were paying for maintenance," he said.

Yarborough said Community Cash will bring the PC-based point-of-sale systems to six more of its stores this year.

"We probably won't start making operational changes until half the chain is implemented. And those changes will be in the office area -- the bookkeeping area. We're planning to automate some of the functions they do in the offices in the stores, but I can't go into specifics," he said.

'A Ton of Savings'

In addition to maintenance savings, the interchangeability of open-systems components yields another cost benefit: powerful leverage when purchasing equipment, executives said.

"The reason people get excited with open systems is they can save a ton of money. In a market where the user has a broader choice, they can play different hardware vendors against each other and they can dramatically reduce their prices," said one industry observer, who asked not to be named.

"If the software only runs on a certain system, you don't have any negotiating room," he added. "Once you go to open systems with the same kind of software capability, you have a much lower price on hardware -- typically half the price, a third, or even a quarter."

Kevin Mullen, manager of retail technology at the Pittsburgh division of Supervalu, Minneapolis, agreed.

"You can negotiate with different vendors because you've got the same software," he said. "So you know you're going to get the same reports and the same connectivity with Supervalu-Pittsburgh because you're going to buy this software. You're not restricted to one hardware vendor."

Mullen said he sees a powerful future for open systems in the supermarket industry. "In today's world, the front end has gone away from being a proprietary device to more of an open, PC network."

To illustrate his point, Mullen cited an open systems-based scanning software program in place at about 70 Supervalu stores.

"The system allows you to have four lanes or 40 lanes. It really doesn't matter how many extra cash registers you put on the system. Each cash register is a PC, so therefore it acts on its own but relates back to a central processor. It's nothing more than a [UNIX] network," he explained.

At Supervalu's Pittsburgh division, Mullen said, open systems provide a simple solution for supporting different types of retailers' front-end systems.

"The big key is we have one solution for any size store," he said. "In the old days, you had to buy Data Checker [POS hardware] if you had 40 lanes -- they were the tank -- and you had to buy Casio or [NCR] 2126 for a smaller store.

"What the open system does is, you only pay for what you get. If you're a four-lane store, you obviously don't need a Corvette to run the system, so you buy a 486 LAN, downsize everything and only pay per lane," he said.

The value of a single solution cannot be underestimated, especially for wholesalers like Supervalu-Pittsburgh, Mullen said.

"Being a wholesaler, you've got to be a jack of all trades, unlike a chain that can dictate what stores are going to use. We don't have that luxury," he said.

"That's what open systems have done for us: enabled us to be kind of a jack of all trades without having to buy from multiple companies."

Overcoming 'Bigotry'

If there are so many potential benefits, what's to stop a supermarket company from investing in open systems? In a word: fear. In two words: "mainframe bigots," said Roundy's Granger.

"A mainframe bigot is somebody sitting in my job -- as a top MIS guy -- who continues to feel even in 1994 that mainframes are the only choice that you have to do things right for a company," Granger said.

"There is still room for mainframe work," he acknowledged. "But it would not be my first choice."

Price Chopper's Nowak agreed there is a place for mainframes. "You have to look at it from a scaling standpoint. Certain things still need the processing horsepower of a mainframe," he said.

"I've talked to some MIS people from some very large chains, and they said, 'We looked at putting our financial applications on an open system, but we don't see how it's going to have the horsepower to handle millions of accounts, so we don't feel that technology is sufficient for us.' "

Advances in open-systems technology continue to build momentum, said industry observers, but companies probably won't exploit sophisticated new enhancements until MIS and top management open their minds to new options.

Executives who remain closed-minded about open systems, he said, "will become less and less effective as time goes on. So I think they will become dinosaurs," said Roundy's Granger.

Fear prevents some retailers from reaping the full benefits of open systems. The real-time data communications capability between chain and wholesaler is too daunting for some companies.

Traditionally, retailers have been guarded about who has access to their data and still may not want some information traveling back to their wholesaler. Such retailers pay a price by closing themselves off to services offered by the wholesaler partners, such as real-time sales reporting services.

There are other limitations -- characteristic of emerging technology -- that hinder broader implementation of open systems.

"There's a real absence of system tools; some good packages have come along, but there are no good schedulers or resource managers or even security packages," said Granger. "There are no schedulers to date that will schedule open architecture and a mainframe together."