Trend Turns Back to
Decentralization"> Although his chain is still solidly in the centralized camp, todays technology is raising the question of whether that needs to be adjusted. "Years ago, it was a strong trend to centralization. Today, [the retail IT industry] is going back to decentralization," he said, talking from the show floor at this weeks NRF event in New York City.Among those options are Web services and an assortment of tools and services that make a remote complex retail environment easier to manage. Wolfram sees a big decentralized argument being store independence. But he doesnt mean the ability to alter product mix to local customers. Hes referring to the stores ability to fully function when servers at headquarters crash, the old single-point-of-failure issue. Wolfram said the battle of centralized versus decentralized must be decided "on the basis of security, cost of operation and user-friendliness. Theres no final answer." A key assumption behind the decision to keep operations centralized is that it will deliver faster analytics, which theoretically enables faster decisions. Although the faster analytics part is certainly true, the faster decisions part has a human component that, as humans so often do, mucks up the equation. In other words, real-time data doesnt help much unless theres a manager out there willing to give it real-time attention. Click here to read about Virgin Music Stores love affair with kiosks. Wolfram sees the need for software to address that concern, to act as a sophisticated filter that will flag any exceptional trends that warrant managements attention. "There is an issue. Data overload is there," he said. So much of retail IT operates on the premise that the more data that is delivered, and delivered as quickly as possible, the higher quality decisions will come out the other end. But this misses the fundamental issue of context. Take a grocery chain. A store manager sees that a particular product has only been sold 16 times in the past month, which lets assume is far below the threshold of this particular store manager. Before replacing that item with something else, does the manager query who bought those items and what their buying history is? What if the manager knew that four of the people who were buying that rhubarb-scented disinfectant were among the stores highest profit, and largest volume, customers? And what if the manager then knew that those four customers simply love that product and the discontinuation of it would send them to every other grocer in town, searching for it? Suddenly, that $1.29 spray can is associated with the potential loss of a lot of repeat business and a healthy slice of profit. Todays software is trying in vain to replicate the 1950s-era local grocer who knew all of his/her customers and what they bought. They had CRM databases in their heads that nothing today from the likes of Oracle, SAP or Microsoft can match. Yes, the reverse is true. Those vendors today offer databases that provide information that earlier merchants couldnt dream of. But if theyre not using the data, what good is it? Centralized or decentralized should be based on a lot of factors, but having a realistic sense of how your people make their decisions is a pretty good start. Evan Schuman is retail editor for Ziff Davis Internets Enterprise Edit group. He has tracked high-tech issues since 1987, has been opinionated long before that and doesnt plan to stop anytime soon. He can be reached at Evan_Schuman@ziffdavis.com. Check out eWEEK.coms for the latest news, views and analysis on technologys impact on retail.
"With a Web services approach, the question is, What is centralized and what should be decentralized? There are a lot more options than before."