Kmart, Sears Expect to Gain IT Efficiencies From Merger
But reconciling IT systems will be tall order
NOVEMBER 22, 2004 (COMPUTERWORLD) –
Kmart Holding Corp. and Sears, Roebuck and Co. claimed that the planned merger they
announced last week will broaden their retail presence and make their procurement,
marketing, IT and supply chain management operations more efficient.
But the marriage could require a daunting amount of IT work, depending on the degree to
which the retailers decide to go to common systems.
Cross-functional groups and managers will be making the decisions here
One key part of the strategic plan calls for many of Kmart's retail locations to be converted
to Sears stores as the latter operation tries to branch out from its base in shopping malls.
But the conversion could require "dramatic" IT changes, said Stephen Smith, an analyst at
Gartner Inc. Not surprisingly, the two companies have accumulated plenty of different
systems.
The real problem will be with back-office applications at headquarters, including the
merchandising, inventory planning and supply chain software. "From a process
perspective, if you're going to start saving money, you've got to standardize on one
distribution network,"
Sears said only that the two companies will "do a thorough analysis of both organizations
and determine the best path toward integration." When it merged with Lands' End
Inc. in 2002, Sears decided not to combine IT operations.
Sears has been more aggressive than Kmart in pursuing new IT initiatives during the past
two years. Last spring, Sears CIO Gerald Kelly Jr. orchestrated a 10-year,
$1.6 billion IT outsourcing deal with Computer Sciences Corp..
Long-standing IT woes contributed to Kmart's business problems. The company tried to
reverse years of constrained IT spending with a two-year, $1.4 billion investment in May
2000.
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Sears
STORES: About 2,300
Sears-branded and affiliate
stores in the U.S. and Canada
EMPLOYEES: 200,000 in
the U.S., plus 48,000 at Sears
Canada
IT WORKERS: About 850*
CIO: Gerald Kelly Jr., named
Gerald Kelly Jr. in October 2002
*Doesn’t include workers at
Lands’ End.
Kmart
STORES: 1,484
TOTAL EMPLOYEES:
144,000
IT WORKERS: Not
available
CIO: Karen Austin, named in
Karen Austin
April 2002