By Kim S. Nash  |  Posted 2002-11-01 Print this article Print

Will the uniqueness of 7-Eleven's home-grown information system—which tracks Slurpee sales by the hour—isolate the company from its suppliers?

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What $400 Million Buys You

Inside 7-Eleven, enhancements to the retail-information system are now written with tools that adhere to the Web standard eXtensible Markup Language—mainly Java and Microsoft's .NET products. Pilots of .NET development at 7-Eleven have shown that programmers can build, test and deploy new systems 30% to 50% faster than they can using the company's existing software systems, says Keith Morrow, the chain's chief information officer. That will let 7-Eleven shift some of the 65 people it currently has supporting RIS—roughly half of the 125-member technology staff—to new projects.

Retail executives have historically disdained the information technology department as a cost center. But in the low-tech retail sector, information technology has on occasion been a monster of a differentiator; look at Wal-Mart. At 7-Eleven, senior managers readily invest in technology, which will be an advantage for Morrow as he tries to replace existing systems with newer technology. Already, the company has accelerated technology spending by $120 million this year—bringing to $400 million the total it has spent on hardware, software and consulting since RIS development began in 1993.

RIS was built primarily using the Uniface development tool from Compuware Corp. Uniface is what's known as a fourth-generation programming language, which was a popular way to write software in the early 1990s. Uniface itself is 15 years old. While Compuware recently issued a statement saying it will continue to support and enhance the product, it also urged customers with critical business applications written in older versions of Uniface to migrate to the latest release. Compuware won't be retrofitting older editions with new features, such as support for Web services.

Migration, though, isn't in 7-Eleven's plans. As Morrow flatly puts it, "Uniface is not where we want to be."

7-Eleven isn't behind yet, but meshing the old with the new will be an expensive undertaking, says Pete Abell, an analyst at AMR Research, a technology consulting firm in Cambridge, Mass. Generally, integrating retail applications, whether proprietary or packaged, costs two to seven times the cost of the original software, Abell says.

7-Eleven officials decline to disclose their precise technology expenditures on RIS—direct purchases, leases and operating costs—since 1993, though the company says it spent $10 million on RIS software last year alone. Outfitting each of 5,300 stores with a Microsoft Corp. Windows NT workstation, software and frame-relay network connection cost another $30 million.

The real trick will be preserving the capabilities of a system that has set 7-Eleven above its rivals.

Cash registers track sales by product and time of day and feed that data to a Windows NT server running RIS in the back room, which matches the information against inventory on hand and on order. Store managers know when they're selling what, and can tailor the product mix to their clientele. At one store in Dallas, for example, a man comes in every weekday at 7:30 a.m. for a cup of coffee and two blueberry cake doughnuts. The store manager knows to order the doughnuts every day. He also knows the man's vacation plans, from their morning chats, and doesn't order the blueberry cake doughnuts when that customer won't be around. Wal-Mart Stores and other big chains are also trying to do this, so they can give a mom-and-pop feel to their stores, even though their square footage makes it hard for them to come across this way.

7-Eleven's store-information system also factors in weather reports to help store managers do daily ordering. Expectations of a snowstorm might prompt them to lay in extra milk and batteries. Managers also are encouraged to know what is happening in their communities. A local soccer tournament over Labor Day weekend might call for lots of Gatorade and bags of ice.

Senior Writer
Kim has covered the business of technology for 14 years, doing investigative work and writing about legal issues in the industry, including Microsoft Corp.'s antitrust trial. She has won numerous awards and has a B.S. degree in journalism from Boston University.

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