Q&A: Sears CIO expects quick acceptance of online exchanges

Sears, Roebuck and Co. and French retailer Carrefour Group are two of the founding members of the GlobalNetXchange business-to-business marketplace that launched in February. Sears CIO Jerry Miller spoke with Computerworld about the marketplace's progress.

Q: Is GlobalNetXchange doing much beyond auctions at this stage?

Miller: Right now, that's all we're doing. But next month, in October, our hub comes up. And as our hub comes up, that's when we'll start running supply-chain transactions through it. So our everyday purchase orders will start going across the exchange. By the end of the year, Sears hopes to get upwards of $5 [billion] to $7 billion on the exchange, and I think with our collective partners, it'll be somewhere between $10 [billion] and $20 billion.

Q: What kind of materials will you be buying and selling over the exchange?

Miller: In the auction phase, which we're in right now, it's a little bit of both. We've had a lot of MRO (maintenance, repair and operations) purchases that we've auctioned, but we've also had some for-resale items that we've auctioned. For example, we went out and auctioned blank VCR tapes. We sell a lot of those, and we put that on auction and made our buy.

But when we get our hub up and running, the majority of the transactions going through the hub will be our supply-chain transactions. Currently, it's on electronic data interchange [EDI]. And all we're going to do is take those EDI transactions and move them over to an XML-based transaction.

Q: What percentage of your EDI transactions will be transitioned by the end of the year?

Miller: I would say maybe 20% [based on dollar value]. It's going to be a little slow. We're going to have to phase it in. We have a number of suppliers, however, that are ready to go. They're chomping at the bit. They were actually talking to us about this before we even put the exchange together. So I think the fast-paced adopters are going to jump on this thing, and then others will come on. But I really do think that we're going to see adoption of this technology a lot faster than we saw with EDI, because it's so much easier. It's so much simpler. It's so much less expensive.

Q: You've said that eventually you'd like to see 100% of your transactions run across the exchange. When do you expect to get there?

Miller: We think that within three years, we're going to have critical mass. We're going to have 75% or better going through the exchange. And I think that's very doable.

Q: What do you see as the greatest technology challenges?

Miller: I think the integration piece is going to be challenging, how all of the retailers, all of the suppliers try to integrate this back end to their back-end systems. But that's the age-old problem. That's why they have IT departments, to try to figure out how to do that.

Q: Are you close to being finished on your end?

Miller: Oh no. We'll never be finished with that process. Integration's going to be very key to the success of this. It's going to be an extensive effort. It's not something that's going to be easy, and it's going to take a good deal of time to fully integrate this back end. But it's no different than EDI.

Q: Except that you've got all these EDI systems already in place, and they're presumably working.

Miller: And we're going to take that output that we form into an EDI transaction. We're going to have the same output. We're just going to form it into an XML-based transaction. But in order to really integrate it back, we've got to get our buying behaviors changed within our company, where our people can get online with the suppliers. We can't do that today in EDI. And so there's going to be some in-house training, some business processes that we're going to have to change. But that's the beauty of it. Once we can get to that real-time, online conversation with our suppliers, then there are all kinds of things that we can do.

Q: Is your global exchange developing its own XML standards for the transaction sets?

Miller: No. This is going to be a standards-based exchange. We're working with VICS [Voluntary Interindustry Commerce Standards]. We're working with the Global Commerce Initiative, and we'll support all of those standards. This is not a proprietary exchange at all.

Q: Have you encountered many of the doubting Thomases who question the value of business-to-business exchanges?

Miller: Oh yeah. Sure. Absolutely. No question. But then I'm also hearing from a lot of suppliers and retailers that this is definitely the way to go and how fast can we get there? So it's just like everything else. You're going to see the full gamut.

It's no different than what we saw 10 years ago when EDI started. We had those that were early adopters of it, recognized right away the benefits of it. There were others that said, "Gee. That means a lot of change to our systems. We don't have the resources. We don't have the money committed to it. Maybe we're going to just wait to see if this thing really catches on."

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