Breaking up is easier to do

Technology: AT&T's Global Information Systems hopes to become an even bigger force at the shopping tills when it is hived off
ONE OF the stated objectives of last month's breakup of AT&T, the global telecommunications group, according to Robert Allan, its chairman, "was to separate into smaller, more focused enterprises". Arguably, nowhere was this more necessary than in the company's Global Information Systems division (GIS), which is to be focused on three specific industry sectors and floated off free to shareholders in 1997.

Given that the greater part of GIS is made up of NCR, the computer manufacturer, which was acquired for $7.5bn (pounds 4.8bn) by Mr Allan in 1991, critics have been querying the about-turn, not to mention the wisdom of paying so much for something given away four years later.

But instead of baying for blood, shareholders seem resigned to the deal, with the share price rising strongly on the news that the company was to be rid of what had come to be regarded as a cash drain.

The mood within GIS is upbeat, too, as former NCR executives welcome the prospect of release from the burden of AT&T's corporate bureaucracy. The GIS chairman, Lars Nyberg, who was recruited from Philips to turn the ailing division around before flotation, accepts that there is a lot of work ahead. "As a niche player we will only succeed if we are better than everybody else," he said. More to the point, perhaps, the money pumped into the business over the past four years has created products and technologies that are only now coming to fruition.

Mr Nyberg was in Chicago to launch the company's new enterprise servers - the giant "data warehouses" that lie at the heart of many big companies.

These combine high levels of "scalability" and plug-in expansion capability with a few top-end models that also offer "massively parallel processing" - industry jargon for the ability to carry out multiple searches through databases at high speeds. According to industry analysts, GIS has 50 per cent of the market in massively parallel processing.

NCR/GIS have always been strong in the retail sector and Mr Nyberg intends the new range to consolidate their retail presence.

Advances such as point-of-sale terminals, barcodes and customer loyalty cards are generating unprecedented amounts of data for the company's computers to analyse. GIS's work last year with WH Smith, the high street chain, has been credited with helping the company deal profitably in the troubled computer games products, and Tesco's annual results last month paid tribute to the contribution of its loyalty card.

But behind the latest range of computers lie a series of emerging retail- based technologies developed at the company's Human Interface Technology laboratories in Atlanta, Georgia. Scientists at the laboratory, who work closely with AT&T's Bell Labs, are regular visitors to the UK, where the retailing sector is acknowledged to be more efficient than in America. GIS's British customers include Debenhams, WH Smith, Littlewoods and Argos, and the laboratory's latest technologies have been developed in close collaboration with customers.

Chief among these are several image-based recognition-and-analysis techniques. Which precise routes do shoppers tend to trace in a shop, and how many stop, and for how long, in front of eye-catching merchandise? This type of information will shortly be available via video li linked to computers.

Surprisingly, a more basic application of this technology is simply counting shoppers who enter the shop or queue at tills - with the computer distinguishing between shoppers and children, or shop staff.

A still bigger dividend is likely to emerge from the laboratory's "affinity analysis" software, which takes as a starting-point the gigabytes of data contained in the typical retailer's data warehouse. Automated "till roll analysis" is one of retailing's holy grails: establishing exactly who buys which products and in combination with which other items - and in response to which particular promotions and marketing initiatives. The science is still vestigial, although WH Smith is recognised as having stolen a march on several competitors in delivering bottom-line benefits.

Mr Nyberg has, in effect, been given 15 months to return the company to break-even point prior to flotation. It is likely that the laboratory's technology assets will move closer to centre stage as the company seeks to reassure its retail customers that it is a viable long-term information technology partner - and that some of the money sunk into the venture will yield a return.