Q3. CASE 1: Digitizing the Depot: Beyond the No. 2 Pencil (CLO1.1) (1.5 Marks)

When CIO Bob DeRodes joined Home Depot in 2001, he described the companys technology as consisting of the No. 2 pencil. Home Depot has come a long way since 2001. In 2005, the company was opening a new store every 24 hours; in the first six months of 2007,Home Depot opened 47 new stores. A No. 2 pencil couldnt keep up with all that expansion! A solid ERP system is the only type of system that could handle that growth. In fact, when asked if Home Depot could use open source software, DeRodes said, Big companies need big software companies. In keeping with this statement, in 2002, Home Depot began a 10-year implementation of SAP software. The implementation will help Home Depot in areas such as supply chain management and connecting electronically to its suppliers. SAP is already helping out in the four areas of Home Depots expansion plans: international sales,Web sales, in-home installation, and sales to contractors. SAPs scalability is a good fit for Home Depots expansion plans. Home Depot has some other lofty goals for the new system. The company will eventually allow each store employee to pull up detailed information about the product that is being sold. This information will include availability and uses. In addition, employees will have access to customer information. The product and customer data will be available at the checkout kiosk and also through a hand-held device. Home Depot also uses business analytics to help manage pricing changes, which will differ from store to store. For example, if customers in one city are hesitant to buy a certain item, that particular items price might be lowered for that store only. Also, Home Depot is embracing the service-oriented architecture of SAPs NetWeaver, as a way to link different software applications seamlessly.

Questions:

1. Research open source software. Why do you think the CIO implied that open source software is not appropriate for a large company like Home Depot?