Take the CIO Challenge: Five to Stay Alive

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Aug 19, 2005
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By Bill Bittner, President, BWH Consulting

Whether you’re in IT, or need to deal with IT, here’s a good exercise to keep your wits sharp…

You’re the new chief information officer at a venerable retailer — brought on board to “fix things up.” What are the first five steps you would take to meet your objective?

This scenario doesn’t come about every day but, when it does, it’s an open snake pit. Competing visions and old rivalries team up to make the new CIO’s job a real challenge.
Just getting to “the truth” can be a nightmare. Here is my list. Tell me what you think and add your own.


  1. Document all the KPI’s
  2. Before you do anything, you’re going to need benchmarks… to demonstrate what you’ve accomplished and justify your actions to both your management and your own department.
    By identifying both your own department KPI’s (system down time, application bugs, updates installed, etc.) and your company’s (out of stocks, quality orders, PO discrepancies,
    etc.) you will have the baseline against which to measure your successes.

  3. Take an application inventory
  4. Inventory all the existing applications and compare them to the industry standards. To identify urgent requirements, look to current FMI and NRF information on the current
    state of the art. And consider functionality first; not technology. Technology takes a backseat at this stage because your first concern must be to give the business the tools
    it needs to survive long enough to afford any technical upgrades you may want to do later. This is also a great opportunity to use the GCI Scorecard (www.globalscorecard.net
    See Business Tip) that captures retailer capabilities. During this process you open up the dialogue
    with your users and understand why they need your help. Since many applications are purchased, you need to understand both the contractual commitments and the quality of vendor
    support for purchased applications.

  5. Do an IT staff assessment
  6. This is not going to be easy. I think of the IT Staff as falling into four categories. The “A Players” are the ones who understand the job well and perform at an exceptional
    level. These are the “red meat eaters” when it comes to technology and the ones you must “pamper” in order to succeed. These people may need to be given additional training
    when the technology changes begin, but their knowledge of the company and the history that brought them to this point cannot be purchased.

    The “C Players” are the ones who are not nearly as aggressive as the A’s and may not be technical geniuses. But as in most fields, IT has a lot of mundane tasks that don’t
    require creativity but rather a commitment to getting the job done accurately. These are the last to go if you have to begin severe cut backs. It’s like they say: “You can fire
    five vice presidents and not miss them but if you fire the maintenance crew, everyone knows the next day.”

    Finally, there are the “B Players.” These are the people who have the creativity necessary to make innovations when given clear requirements from the users and the A Players.
    This middle area is where IT must accommodate their labor budget requirements. The company can afford to cut back on B Players because they are not critical to the day-to-day
    operation and are not the visionaries that are going to carry the company to new heights. In an ideal situation, these are the “hired guns,” consultants hired to complete specific
    tasks while the permanent staff sets the vision and provides the continuity required to run the department.

    (Hopefully the “D players” have been dealt with already.)

  7. Improve the gross margin
  8. The simplest, most direct improvement you can make for your new organization is to help them boost their gross margins. Gross margin improvement does not require any organizational
    changes and does not involve training a lot of people at warehouse or store level. This does not mean merely raising retails; it means “pricing smarter.” You can actually increase
    gross margins and create or sustain a “low price perception” at the same time. Improved execution of price changes and more intelligent markdown decisions (small cuts early)
    can go a long way to helping this effort.

  9. Improve the customer experience



The point here — what goes on in the store is the customer’s one perspective of your technology. If it is difficult to handle a return, or frequent shopper points are “always
screwed up,” this is the customer’s perspective of your technology. If the competition is able to offer discounts and continuity programs that your stores cannot, you are
sending your team out to play without the proper equipment. Some of these capabilities may have to be postponed until back office systems are upgraded, but by thinking about
them now and beginning the store upgrades needed, the stores will be ready when the back office is fixed.



Moderator’s Comment: What are your thoughts about my five and which ones would you change?

I have plenty more thoughts, but since I set five as the limit, I am at the end. Remember, in order to put in another one, you have to drop one of these.
Tell us what you would add and what you would remove.

Bill Bittner – Moderator

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

9 Comments on "Take the CIO Challenge: Five to Stay Alive"


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Stephan Kouzomis
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Stephan Kouzomis
15 years 6 months ago
Bill’s list may be inversed. First Action Step: In companies that I am aware of, or consult with, the immediate action is to review and define the target business and audience strategically. Then validate the marketing direction and plan. Within this, the P&L and gross margins are reviewed, as well as cost of materials, and 5 year trends. Second Action Step: Review with key customers (top 25), retailers in this case, their marketing thrust, and use of micro-marketing in their business. Within this activity, the shopper experience is covered, as well as current research and monitoring of the retailers’ shoppers and non shoppers, to include ‘benchmarking analysis.” Validates what is right and working, and what isn’t working. Third Action Step: Review and then set out initiatives to test new products, production processes, and costing of labor, etc. Fourth Action Step: Do a SWOT analysis of competition, and ones that may enter or buy into the category, and/or business. Fifth Action Step: What other information, data, and people skills in CIO the group (with understanding of… Read more »
Tom Zatina
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Tom Zatina
15 years 6 months ago

These are all great suggections. I think I might add a first step of ensuring that the IT plan/activity/spending is fully aligned with the strategic objectives and direction of the business.

Robert Antall
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Robert Antall
15 years 6 months ago

I think Bill did a good job, but there is one thing I would add, and that is evaluating internal customer satisfaction which can be very different than what the KPIs indicate. Unless the CIO clearly understands the present level of service provided and, more importantly, the perceived level of service, no plan of action may be on target. My experience is that there is frequently a large communication gap and a misalignment of expectations between IT and the internal customers that needs to be fixed to make meaningful progress.

Mark Burr
Guest
15 years 6 months ago
Lots of great comments here and the list is very good. As part of the application inventory, several types of alignment inventories need to take place. First, a stack ranking of application activity and resource allocation to the company priorities and objectives. Secondly, another stack ranking of project activity around the companies top priorities and objectives. Typically, I would believe that you would find these two things out of alignment. As another points out, too often there are not strategic as well as broad based relationships built with key business and other leaders in the organization. The ‘other’ leaders category is equally, if not more, important. IT departments both internally and externally are often not viewed as service organizations. In many cases, they find themselves overlooked and behind when it comes to delivering real solutions to real business objectives. This is due to the fact that, in many ways, IT does not integrate itself as part of the business. They tend to be walled off from it or misinterpret their importance or relationships. The typical… Read more »
Mark Lilien
Guest
15 years 6 months ago
Bill asked us to list what we’d add. He also asked that we list what we’d have to drop to add those things, since the limit is 5. I’d drop #4 and #5, and do these 2 things instead: a. Ask the rest of the management what their top 3 goals are. Many retailers have dozens of goals instead of a few. The chances of success are much greater if the few goals that matter are identified with as much of the organization’s buy-in as possible. I’m not sure that all retailers would endorse #4 and #5 as their critical goals. If they did endorse #4 and #5, then the action steps needed to achieve those goals need to be agreed upon. The CIO’s action steps might not be automatically endorsed by the rest of the management. b. Estimate the work-hours, budget, skills, and culture needed by IT to complete its work properly. List the projects desired, projects already started, and time needed for expected normal maintenance, software updates, etc. Many retailers have an “iceberg… Read more »
Bernice Hurst
Guest
15 years 6 months ago

Definitely a sensible list but perhaps a little bit too tight. I would actually do the application inventory before the benchmarking. While doing those, I would also want to know what current + ideal expectations are from various departments throughout the business. What information is needed and how will it be used? By whom? Getting to know end users of the information as well as those who use the actual hard and software is pretty important. When trying to set up a computer system from scratch some years ago, in the very earliest stages of using computers to acquire and manage information, we had terrible problems getting the end users and the techies to understand one another. One can only hope such situations no longer arise but somehow I doubt it. Which neatly (I hope) leads into your third suggestion. I just feel that the interaction and communication necessary cannot be emphasised strongly enough. Points four and five are obviously important but will hopefully follow on naturally if points one, two and three are achieved.

Lucius Boardwalk
Guest
Lucius Boardwalk
15 years 6 months ago

Good list, but when does this hypothetical CIO start building a relationship with his own customers, the merchants in this organization?

A major failing of IT shops in any business is that they become walled off from those they’re supposed to support.

I’d slip an item into this list of five–maybe between #1 and #2–for the new CIO to spend some time building a solid working relationship with top merchandise managers. If that relationship doesn’t exist, the IT shop becomes the scapegoat for merchandising failures.

Robert Dyer
Guest
Robert Dyer
15 years 6 months ago

Everyone has provided good input to the list of 5 items. The first 3 are right on target. The last 2 are a bit suspect due to the need for the rest of the organization to be aligned behind them. What is noticeably missing is the core mission of IT and of a CIO – protection and accuracy of the data asset. Too many organizations that I support and consult to have lost their way in this area, while focusing on new systems, such as pricing or CRM. Though data quality is not sexy, it is a core IT deliverable that does not have the focus it requires.

Ken Kubat
Guest
Ken Kubat
15 years 6 months ago
It’s an excellent list, Bill! My only addition is to explicitly call out the importance of C-level/Board communication and gaining their support for the vision, strategy, plans, and, eventually, detailed budget. I realize C-level/Board communication and support is implicitly assumed in your “first five steps.” Through my recent interaction with a new CIO at a leading retailer, however, I’ve witnessed first hand the value of “starting at the top and working your way down” when it comes to gaining organizational alignment! In his first 3 months on the job, this particular CIO achieved clear understanding/solid support from C-level business execs AND gained board approval for budget associated with his 2 year plan to upgrade key systems (beginning with POS and merchandising). Importantly, PRIOR to upgrading key systems, the plan for an enterprise integration architecture was clearly articulated, an approach similar to the Smart & Final “mini-bang” recently documented in Supermarket News (8/1/05) … the resulting “layer and leverage” vision/message (vs. “rip and replace”) was, of course, a more palatable solution from the perspective of this… Read more »
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