Sears' big data swap lesson: Functionality over price?

Sears' big data swap lesson: Functionality over price?

Summary: Costs matter, but being nimble is the big selling point behind a Sears move to open source. As a CIO priority, agility is high on the to-do list for 2013.

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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.

searsscreen

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:

Topics: Enterprise Software, Big Data, TechLines

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6 comments
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  • Since when does dynamic pricing require "big data"?

    And since when does the nimble agile sears (scuse me I choked writing that) have business needs that the existing vendors cant keep up with? Seriously why cant they just admit this was a pure idealogical play? There's nothing that mysql or hadoop can do that the traditional vendors dont do better.
    Johnny Vegas
    • Pure ideological play?

      No, Johnny. Greenplum is an open-source data warehousing and business intelligence (or, analytics, if you like) company. They're *OUT*.

      And Teradata is *IN*. Teradata is not open-source.

      Or, maybe, when you used the word 'ideological', you were thinking ABM?

      P.S. I'm still confused with MySQL as an Oracle proprietary DBMS drop-in instead of PostgreSQL or EnterpriseDB.
      Rabid Howler Monkey
  • Methinks the key phrase is:

    "... support the business at a materially lower cost."

    Having authorized a few million dollars worth of both Oracle and MS (nee Sybase) in my time, many of the reporting and functionality we got/we get just doesn't need the toolset. There's no reason to buy a 154-piece set of Craftsman tools when the target environment can be handled with the 45-piece homeowner set. Sure, it's "nicer", but so what?
    jimbo.starr
  • All About Costs

    Several years ago we were involved in a proposal to take over the outsourcing of the entire IT function for Sears. As a result we had a lot of data and information that is not generally available to everyone. Without violating any non-disclosure agreements, it is safe to say that on the average Sears (on IT) was spending 2X per dollar of revenue as was its competition. They did not remotely understand their IT infrastructure, they had farmed it out to IBM many years ago, and the corporate philosophy was “trust IBM”. In hindsight, maybe not such a good idea. Also, they had a few inherent problems, such as 6 points of sale solutions, without any serious rhyme or reason as to “why”, other than that was how it evolved and “they were where they were”. A snake pit in the very best of circumstances. They decided to stay with IBM and I think most of our pursuit team was glad they did….
    tmpusfugit
  • The Facts versus Politics

    Cost reduction (free software and cheap hardware) are the focus of this from a leadership team with infrastructure being their forte. Business problems and use cases come secondary once those decisions are made. Ask about the performance of the cloud, mainframe retirement, and ERP strategy.

    The simple fact that Teradata is still used for most critical BI functions even with a major internal push to Hadoop should provide some indication in the effectiveness of this strategy. A place to store long term data cheaply is compeling, but to suggest that you 'keep it forever' in the onset of this strategy makes any legal advisor extemely nervous as well as any statician scratch their heads (forecast sales demand on 1970s apparel?). And the costs to extract data let alone doing complex transformation requires much higher paid skill sets than those provided by traditional database vendors.

    The basic issue is there are complex business problems, redundant process domains, and many use cases that need solving in this business first and picking technologies is the last decision to be made. Unfortunately a manner of build it and they will come has plagued the decision making in this organization with BI being every CIO's pet project. It has consistently alienated users where there is distrust and resulted in many poor investments. I do not percieve this will effectively be different than any other decision.
    ChangeOnInstall
  • Balancing Act between functionality and cost

    I agree - It is necessary to strike a balance between functionality and cost. We have identified a solution to decrease energy costs while at the same time increasing reliability and efficiency. Our software more efficiently stores Big Data, enabling companies to confidently choose a cheaper hardware that uses up to 50% less energy. Check it out: http://www.youtube.com/watch?v=9916BeLq4MM
    Stefan.Bernbo