Sears' big data swap lesson: Functionality over price?
Sears has moved away from its legacy systems to more open source software---especially for the big data backbone needed for things like dynamic pricing---but the real kicker is that functionality may be trumping price.
The Sears software swap---highlighted a few weeks ago by me and again today by Dennis Howlett---goes like this: The retailer is swapping Oracle and IBM systems for MySQL and Hadoop. Greenplum and Microsoft are also being phased out.
However, the reasons behind the switch may be more important. Cowen analyst Peter Goldmacher noted:
Over the past 2 1/2 years, Sears has systematically decreased its spend with legacy tech vendors in favor of recreating the vast majority of its infrastructure using custom development and open source technology. The primary issue facing Sears was the reality that the current lineup of technology it had been using from its existing vendors wasn't able to keep up with the demands of the business. The benefit of its transition to a custom environment is a more nimble IT infrastructure that can better support the business at a materially lower cost.
In other words, costs matter, but being nimble is the big selling point. As a CIO priority, agility is high on the to-do list as outlined by the Society of Information Management today. The reality is that the business demands on CIOs will result in a hodge-podge of systems---legacy, open source and custom.
JC Penney CEO Ron Johnson recently noted that the technology innovation was really happening in the brick-and-mortar retail market over e-commerce. Johnson sounded a bit wacky, but given JC Penney is experimenting with RFID checkouts with real-time inventory management and Sears is ripping up its stack perhaps he has a point.
The larger question here is whether these retail experiments at Sears and other places are the start of a big trend. If custom builds and open source can top functionality from the big tech guns a move in that direction will be unstoppable.
Here's a look at the key moving parts: