Many articles and business cases have been written about Wal-Mart. Most customers are probably familiar with the store and the overall concepts, but a considerable amount of work takes place to manage the large inventory, suppliers, pricing, customers, and employ-ees. Wal-Mart has been a leader in using information technology to reduce costs. A huge part of succeeding in retailing is to provide the right products in the stores at the right price, when customers want to buy them. To succeed, Wal-Mart needs to forecast demand for every product in every store. Each product can have multiple variations—such as size or color. Individual items are commonly identified with an SKU number (stock-keeping unit), pronounced “skew.” Any Wal-Mart store has tens of thousands of SKUs. Of course, all of this data needs to be tracked by IT. Wal-Mart also can track personal purchases—based on credit and debit cards. All of the data from every store is collected and sent to the central servers at Bentonville, Arkansas.
In 2002, Wal-Mart primarily focused on using its home-grown custom code on its centralized systems (Lundberg 2002). In an interview, CIO Kevin Turner noted that a key to Wal-Mart’s success was continued striving to improve. His goals for the IT organization are to (1) run a centralized operation, (2) use common platforms, and (3) “be merchants first and technologists second.” His first two conditions are important to holding down costs. It also makes it easier to transfer personnel among stores. Turner noted that the process was challenging when the standardized systems were first introduced to stores in other coun-tries. The answer was to build a flexible system that still allowed local managers to make decentralized decisions but using centralized data. Turner emphasizes the importance of matching IT to the business needs—and simplifying all tasks. As one step in developing systems, the IT department requires developers to go out and perform the function before writing system specifications or designing changes. For example, a developer might spend a day working a cash register to understand the pressure and data-entry requirements.