SELF SCANNING SYSTEM STATEGIC USE OF IT-SYSTEMS Martin Wählby, Mats Stegemann, Mattias Friberg and Per Selander

Abstract This paper examines the introduction of a self scanning system at the small grocery store COOP Ladan in Linköping. The main question regards the strategic importance of the project for the grocery store. The project seem to be conducted in the right time since it is one of the first on the Swedish market but still have been tested on other markets earlier on. Other system, usually in-store scanning, have been in used in Sweden for a while now, but COOP chose to use this new system instead, mainly because it is more adapted to customers that only shops few items. COOP has been quite successful in the implementation of the new system, there are several reasons why. They have carefully thought throw the implementation and included customers and employees in the process.

Innehåll Abstract ............................................................................................................................................ 2 Introduction ...................................................................................................................................... 5 Background ................................................................................................................................... 5 Purpose ......................................................................................................................................... 5 Research questions........................................................................................................................ 5 Method ......................................................................................................................................... 5 Limitations..................................................................................................................................... 5 Source Criticism ............................................................................................................................. 5 Theory ............................................................................................................................................... 6 Expectations and planning of IT-systems........................................................................................ 6 Information technology systems and organizational changes......................................................... 6 The system .................................................................................................................................... 8 Alternative systems ....................................................................................................................... 9 IKEA ........................................................................................................................................... 9 ICA............................................................................................................................................. 9 Empirical study ................................................................................................................................ 10 Strategy ....................................................................................................................................... 10 The system choice ....................................................................................................................... 10 User impact ................................................................................................................................. 10 Education .................................................................................................................................... 11 Expercienses of the system in reality ........................................................................................... 11 Conclusions ..................................................................................................................................... 12 References ...................................................................................................................................... 14

Introduction Background Lately many grocery stores have started with self scanning which lets the customers scan their items instead of the traditional way when the cashier does it. This way the customers does not have to stand in line to check out their items which saves time for them. The store saves money since they will not need as many cashiers as before since the customers are doing their work. Purpose The purpose of this report is to study the self check-out system at Coop Konsum Ladan in Linköping. Research questions • Is the self check-out system a strategic importance for the company? • What expectations did users and employees have on the system before it was implemented? • Is the self check-out meeting the expectations that users and employees had? Method We will research literature on strategic use of IT to find the answers to our questions. We will also perform interviews with an employee and a costumer at the grocery store Coop Konsum Ladan in Linköping that recently implemented the self check-out system in their store. Limitations There are many different self check-out systems on the market but in this report we will only study the system used at Coop Konsum Ladan. Although there is a short presentation of other systems on the market. We have only talked with one employee at Coop Konsum Ladan, while it could have been relevant to talk with somebody at the Coop concern where the decision to implement the self scanning system was taken. Source Criticism Since we have only talked with one employee at Coop Konsum Ladan we cannot be certain that the information is completely correct. Other employees might have other perceptions and expectations on the system. Questions regarding the decision of implementing the system can also be incorrect since those decisions were taken on a higher level than Coop Konsum Ladan. We have only interviewed one customers and he can of course not represent all customers at Coop Konsum Ladan. The articles we have used in our theory include the author’s personal opinion and arguments for something which reduces the reliability of them.

Theory Expectations and planning of IT-systems In the article “IT doesn’t matter” the author Nicholas G. Carr discusses IT as a phenomenon and how people's expectations of the new technology often lead to disappointment.1 IT has long been seen as a tool that can give a company a competitive advantage only to have it. What however is clear is that it is often easy to copy a solution that others have and by doing that they will have the same conditions as the leading company. In the article Carr also discusses that companies who spend the most on IT is not often the most successful in its industry. He also advocates a more cautious approach to IT investments that we should let the surroundings manage the development and purchase technology when it is developed to a better price and with higher functionality. The article “The right mind-set for managing information technology” by Bensaou and Earl discusses the use of IT in Japan with the western style.2 They think that Europe and the U.S. are having problems connecting to their corporate IT strategies. They talk about the general perception of investments in EU / USA is focused more on value-for-money than the actual operating profit. While in Japan they focus more on the operation profit when planning an IT-investment.

Information technology systems and organizational changes Projects involving information technology often tend to trade more on how the technology will be implemented over how its introduction will help companies to develop their organizational architecture. Sauer and Wilcocks writes in his article “Strategic Alignment Revisited: Connecting Organizational Architecture and IT Infrastructure” that it is very important not to rely on the technology itself as a factor when it comes to changing the organization's strategies.3 They also provided that the relationship cannot be reversed completely back, either. It is important that those who are familiar with the technology, understand what those who want to change the organization wants to do and vice versa. They write also that it is a long process to bring IT to the organization's strategies. The figure below to describe the process as a company needs to go through to achieve a high degree of convergence between information technology and organizational capabilities.

1

Carr, N. G. (2003) IT Doesn’t matter. Harvard Business Review. Bensaou, M. & Earl, M. (1998) The right mind-set for managing information technology. Harvard Business Review. 2

3

Sauer, C.; Willcocks, L. (2004) Strategic alignment revisited: connecting organizational architecture and IT infrastructure. Proceedings of the 37th Annual Hawaii International Conference.

Figure 1: The evolution Of Organizational Architecture In Figure 1: The Evolution of Organizational Architecture is a step known as Real Options. In this part of the article takes up the way a provider of information technology systems to grocery retailing industry use different kinds of pilot projects to find an option that is good for their customers. They make comparisons between the various pilot projects and conclude that those customers who require the information technology system also involves organizational changes are the most successful with their implementations.

The system The system4 is meant to be used as a fast check-out for customers that buy up to approximately fifteen items. First the customers collect their groceries as normal. Then they scan all the items themselves. The system makes a sound when the item is scanned correctly and the item appear on the screen. If it is a grocery that you pay per kilo the customer just press the corresponding button on the touch screen. The customers also pack their groceries while scanning them and there is a device that makes it easy to pack items fast and smoothly. The system includes a weighting function to check that all the items are scanned correct. When finished scanning the customer just press pay and then get to chose if they want to pay with a card or with cash. There is always one employee working at this station to educate and help customers when problem accurse.

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http://www.pirab.se/MIMA/standard/getPIRWebb.asp?x=A519132A, hämtad 2009-05-06

Alternative systems There are some alternative systems on the market. Even if this systems is not used to implement exactly the same strategic goals they are quite similar and worth noting as alternatives to COOP’s system. IKEA

IKEA have a system that is pretty similar to the system used at COOP. The customer shops as normal in the store. Then when getting to the check-out they scan their own items with a handheld scanning devise. IKEA trusts their customers more by not having a weighting control system installed. One limitation with this system is that it only accepts payment with cards. This system has the same usability as COOP system, only that it is adapted to a big furniture department store instead of a small grocery store. ICA

The system used by ICA5 is the most common IT system for shopping groceries in Sweden, several other organizations is using the same system. COOP forum, the biggest version of COOP, is one of those that use this system. This system works quite different from COOP’s system. The customer obtain a mobile handheld scanning device and they then scan all groceries as they collect them in the store and pack them in bags at the same time. Groceries that are priced by kilo have to be weighted and the customer then receives a bar code to scan. Through the whole time a display at the scanning device tells you witch products you have bought and the total. When checking-out you just give the scanning devise to the clerk and then you pay as normal. Sometimes they perform random checks to check that the customer have done all scanning correct. This system is primary thought to be used by customers that shops more items, but works when they buy just few items as well. The system is mainly used in bigger grocery stores.

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http://www.icamaxisodertalje.se/attachment.php?module=departments&id=3, hämtad 2009-05-06

Empirical study To get a good picture of the investment in self-checkout systems we contacted an employee of Coop Konsum Ladan in Linköping. This allowed a better understanding of their views on the investment. An interview was made on the basis of our empirical study. In order to get customer opinions in the survey we also asked a client who daily uses the shop on his views on the investment.

Strategy The employee at the store says that the decision of the investment is something that comes from the top of the company and therefore not at the retail level. It is in line with the company's current strategy of future stores are considered as important for creating the company's concept stores. The decision on when the investment would be done, however, was the store manager’s decision. A renovation of the store was planned and it was therefore easier to introduce the system since it requires that the store is designed in a certain way for the system to fit. The basic idea to invest in this type of system is, from the company’s perspectives, which in the long term achieve cost savings by the employees can work more effectively in the shop. In the shorter term, the company show that they are in the forefront of technological developments. Coop considers it important to be among the first in Sweden to introduce this type of system, they want to show that they are competitive. It is also a competitive advantage to offer the customer an added value in saving time. Similar systems have been operating abroad for several years and the company was able to use the experience from these stores when implemented their own system. The system choice Why they chose this type of check-out system instead of so-called in-store scanning is also something that came from the corporate level. The company has various store concepts, Coop Konsum Ladan is among the smaller stores. They want to use these systems appropriate for small stores where they will serve as a quick checkout, a complement to the regular checkouts. In the larger Coop Forum stores they instead use the concept of in-store scanning, which is focused on making large purchases than that the concept should serve as a quick checkouts. User impact From the beginning, the customers has been involved in the development of the system. Because systems with self scanning and self check-outs is something that is at the company level they have been able to test systems with the customers before the real launch. Since one year back they have had test stores in various locations in Sweden to get the customer's view from the beginning. Here, the staff worked closely with customers and where able to get input from the criticism and ideas to develop the system for the customer.

The staff views has also been important in this stage, because they will also be users of the system. Even in the shop in Linköping, they have been thinking about the customers, the store is among the first in Linköping to put the system in operation and with the large number of young customers in the shop this type of investment is perfect. From customer surveys, among other things, they know that customers want to save time when they shop, this is a way to do it, to make life a little easier for the customer. Education Since the investment idea comes from the corporate level they have throughout the installation process received much help from above. The whole installation has been done with the help of an installation team that has good experience from previous installations. They have been involved from the planning to the final stage with training of personnel. All employees affected by the system has received a basic education to get started. There is also a principal at each store that is more familiar in the system and keep contact with those responsible for the system in the corporate level. The employees always have access to support and help if something unexpected should occur. When the employees had a basic education they will be placed at terminals in the shop to inform and instruct customers. Often they let the customer try themselves and then help if something goes wrong and you are always on hand for questions regarding the system. Surveys show that the customer only after using the system 2-3 times is comfortable and think that the system simplifies the shopping. Expectations Expectations of the employees was for the launch major. Most thought it was stimulating to be part of a larger project and thought that the change was exciting. They also thought it was fun with the attention they received from senior management, with training and meetings. The training of customers was something that many saw as positive as they would have more contact with customers. There was at first also some resistance to the change when the staff felt unsure of how their future would look like with the introduction of the new system. From the management they have been clear with the intention that the investment is not to lay off personnel. The customer we talked to were very positive prior to the launch of the new system. As previously been mentioned as it is much about being able to save time, to simplify life and avoid long queues. The customer we talked to has a technology interest and therefore have no problem with having the courage to test the new technology. He believes, however, that other customers may have a different view, those with a less technology-interest is perhaps more skeptical and reluctant to test the system. Expercienses of the system in reality It is also interesting to get a view from the employees and customers now that the system is in operation. The staff believes that it is perhaps a little early to evaluate the system at this stage as it has only been in operation a few weeks. They know that in other shops where the

system is installed, the experience was mostly positive. The employees are very satisfied with the contact they had with customers in the store, they felt that they could help and that recurring customers learned to use the terminals on their own. Motivation in the staff has increased, the employees feel more inspired and feel that the change had a revival of the shop. They think simply it is fun to go to work. They also believe it is more work but believes it will decrease gradually as the customers learn how to use the terminals. The customer we talked to felt the first time he used the system some difficulties to deal with it but the staff were there to help and the second time the system was used it worked without problems. By now avoid standing in queues he can save time, especially if you are only going for a quick shop. What he noticed is that many customers still choose the traditional checkout but the system has only been used in a few weeks and maybe this will change in time. He is largely satisfied with the system and believe that it is easy to use.

Conclusions With the result from our empirical study and our theory we have now answered our research questions that where announced in the introduction.

•

Is the self check-out system a strategic importance for the company?

When Coop developed the system, they used customers and store employees to get feedback in their development process. This led to their systems from the outset had a short time of learning. This suggests that they were good at listening to those who actually use the system. This goes well with what Sauer and Will Cocks wrote that it should have a close dialogue between those developing the technical solution and those who uses it. Coop introduced its system as part of their future store strategy. They seem also tried to introduce the system as part of an organizational change since the installations are usually related to a shop refurbished or similar. They are in agreement with Sauer and Will Cocks made use of so-called Real Options in the introduction of the strategy in order to test different options. They also considered how their foreign competitors have implemented similar solutions in their stores. This is good because they prepare their staff before the installation in terms of the organizational changes required. This is also in good agreement with what Sauer and Will Cocks come to in their article. •

What expectations did users and employees have on the system before it was implemented?

Employee expectations of the system was before the launch very large. It fits well with the theory about IT investments as the expectations are often large with investments in IT. Most thought it was stimulating to be part of a larger project and thought that the change was exciting. They also thought it was fun with the attention they received from senior management. That the motivation among the employees increases when you give them the opportunity to be part of a larger project is something that is known in organizational theory. Therefore, it is often effective to work within projects. Which is something that also

worked in this case. There was at first also some resistance to change when the staff felt unsure of how their future would look like with the introduction of the new system. Here you can see the importance of informing employees about the changes in the organization. At first, the staff hesitant when they lacked knowledge about the project. When management then shared the strategies with the employees and informed them they also got the employees' support. This we can see through the motivation increased as the project took off. The customer we talked to was before the launch very positive and had good faith in the new system. The customer we talked to, however, has a technology interest and therefore have no problem with having the courage to test the new technology. He believes, however, that other customers may have a different view, those with a less technology-interest is perhaps the skeptical and reluctant to test the system. It would have been interesting if we had room to interview more customers to get a more broad picture of the perception of the system. •

Is the self check-out meeting the expectations that users and employees had?

After our interview with the employee we can see that the expectations of the self check-out system have been met. This can probably be because the system has been in use in other stores before and because of that the employees already knew what to expect of the system. This is something Carr is talking about in his article “IT doesn’t matter” where he says that it is good to not be the first with a new IT-system, instead let others develop it and then adapt the technology. In the interview we also got told that one of the reasons to implement the system was to show that Coop is in the forefront of technology development. This is something the article “The right mind-set for managing information technology” is criticizing, they say that it is better see an IT-investment as a operational profit. Although the employee also says in the interview that the short term goal of the investment is to offer the customer an easier shopping experience and in the long term to make the employees work more effectively.

References Carr, N. G. (2003) IT Doesn’t matter. Harvard Business Review. Bensaou, M. & Earl, M. (1998) The right mind-set for managing information technology. Harvard Business Review. Sauer, C.; Willcocks, L. (2004) Strategic alignment revisited: connecting organizational architecture and IT infrastructure. Proceedings of the 37th Annual Hawaii International Conference. http://www.pirab.se/MIMA/standard/getPIRWebb.asp?x=A519132A, hämtad 2009-05-06 http://www.icamaxisodertalje.se/attachment.php?module=departments&id=3, hämtad 2009-05-06