In a comprehensive research note from Cowen & Co, analysts Peter Goldmacher and Joe del Callar note that IBM and Oracle are being edged out of Sears in favor of open sources alternatives:
The primary issue facing Sears was the reality that the current line up 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 [that includes significant open source adoption] is a more nimble IT infrastructure that can better support the business at a materially lower cost.
In making this radical shift, Oracle and IBM are the losers:
IBM mainframes and Oracle Exadata were two technologies described as too expensive and not flexible enough to adapt to the changes and seasonality of the business. Oracle RAC is being used only where absolutely necessary, and MySQL is seen as a compelling and viable alternative in most situations. The company is also moving away from Microsoft (Mail), Netezza (DW) and Greenplum (DW) in favor of open source solutions wherever possible.
What of the future?
Sears is investing aggressively in Hadoop, Linux and Private Clouds...these technologies are perceived as more flexible and cost effective. Sears has also been investing in IT personnel with advanced skills. Even with the increased investments in staff, the cost savings associated with getting off legacy technologies are perceived to be well worth it. Standardizing on as few technologies as possible is enabling IT to leverage staff across multiple requirements. ETL workloads on Hadoop have helped Sears make big strides towards a "Single Source of Truth" that was previously impossible. Sears is investing in high bandwidth connections to its stores and mobile, which should increase demand for Big Data mgmt and analytics.
Cowen's provided some interesting nuggets in the detailed analysis including:
- Turning IT services into a commercial entity through the MetaScale subsidiary. Sears hopes this will help other large IT orgs adopt open source by leveraging Sears' internally developed skills. (Vinnie Mirchandani has been talking about this trend for some time.) It is developing talent from the inside as part of this exercise and already has customers in healthcare and high speed trading.
- New devices replacing handheld from 5-10 years ago.
- Mainframe giving way to private cloud which is perceived as more scalable at lower cost.
- Upfront investments for multi-channel delivery and loyalty programs are expected to lower future costs.
- Open source removes the traditional relational database dependency.
- Putting petabytes of data into an Oracle stack was deemed 'extremely expensive' and even then Exadata could not handle Sears workloads.
- SAP is ostenisbly interested in integrating with Sears' open source solutions.
- It will take Sears around 2-3 years to move to a private cloud. This time frame is designed to ensure no breakages along the way.
- The general strategy is to be as devoid of vendors as possible, concentrating on open source wherever possible.
While this kind of landscape is commonplace among newer businesses like Google, Facebook and so on, it represents a radical departure for an established business. I can imagine that many eyes will be watching closely to see how this ambitious project turns out.