Every year, WWDExecTech picks a group of technology executives who have demonstrated outstanding leadership and innovation. This year’s five are strategists as well as technologists. They are profiled here and will be honored at the WWDExecTech CIO/IT Leadership & Innovation Awards ceremony next week during the annual Retail Systems exhibition and conference in Chicago. They’re clearly an eclectic group, but these individuals share a common attribute: Their influence extends beyond the borders of their companies.
Burrows: The Consensus Builder
Good chief information officers identify a business problem or opportunity and rally their technology teams to tackle it with unity of purpose and their companies reap the rewards. But great cio’s know that sometimes collaborating with direct competitors can benefit the industry at large. Take Peter Burrows.
As Reebok International’s senior vice president, management information systems, and cio, Burrows is responsible for a vast, complex and global network of technologies and processes supporting the $3.8 billion activewear company. Clearly, that’s not enough to keep him entertained.
His ability to spot a truly global information technology business issue and recruit peers at other companies to confront it is as unique as his signature mustache. The fruits of his most recent effort are expected as early as this month, when the Fair Factories Clearinghouse solution will be released to the industry. Developed internally at Reebok as part of its overall ethical sourcing initiative, this database-driven solution tracks workplace conditions in overseas factories so companies can be sure their vendors are not violating human rights.
Burrows enlisted Federated Department Stores, The Wet Seal and Canada’s Hudson’s Bay Co. and Mark’s Work Wearhouse to test and refine the solution before offering it to the market. Reebok could have sold its software for profit, but that prospect “felt bad,” Burrows said. “Selling it at a profit and making it less attractive would stop the movement of solving the underlying issues of bad workplace practices.”
Instead, the FFC group opted for a not-for-profit business model. Companies can acquire the software for free, but must pay a membership fee to FFC. The tool can be used internally, to easily share factory audit data across the organization. Also, companies can opt to use the tool to post select factory data for all FFC members to view online. Armed with complete, accurate and up-to-date information, companies can better enforce fair labor standards. Hudson’s Bay Co., for example, recently instituted a “three strikes” policy that cuts off vendors with a history of bad practices, and the automated nature of the tool makes it easier to identify the offenders.
Dave Hogan, senior vice president and cio at the National Retail Federation, which is part of the FFC, said it’s Burrows’ nature to look for collaborative opportunities like this one. “Not only does he have the vision of what is possible,” Hogan said, “but he also will roll up his shirt sleeves to make it happen.”
Another case in point: When technology vendors failed to provide a solution that his business sector needed several years ago, Burrows enlisted VF Corp. and others to find an answer together as a group. Led by Burrows, the consortium of apparel and footwear companies collectively devised a wish list of what they wanted in an enterprise resource planning system and approached SAP, the Walldorf, Germany, ERP company, to develop the software.
Such collaboration among competitors is “very rare,” said Esther Lutz, industry principal, apparel and footwear, SAP America. Big companies may ask technology vendors to customize software to address specific needs, but that path benefits just one company and brings with it complex and costly support issues. “What sets Peter Burrows apart is he did not want a proprietary Reebok solution,” she said. “He wanted an industry solution” that was well-rounded and satisfied the criteria of European and Japanese companies, as well.
In 1998, Reebok was the first company to install the resulting AFS solution from SAP, which has since been adopted by more than 80 companies.
— Denise Power
Ron Ehlers Honors Simplicity
As vice president of information services at $1 billion Pacific Sunwear of California, Ehlers’ challenge is ensuring the company’s computer systems keep up with — and ahead of — the retailer’s dizzying growth. Systems that are built to handle exponentially increasing demands are seldom simple, but Ehlers manages this delicate balancing act like few others can.
“Ron Ehlers has one of the most inventive minds in retail. He is able to devise brilliantly simple responses to vexing retail technology issues,” said Cathy Hotka, principal, Cathy Hotka & Associates, a Washington-based consulting company.
When Ehlers joined Pacific Sunwear a decade ago, the company had about 35 corporate employees, fewer than 100 stores and less than $100 million in sales. In 10 years’ time, the company grew to nearly 400 employees at headquarters and 1,000 stores — all in need of technology support.
To keep things simple, Ehlers and his team relied mostly on commercially available software, rather than developing too much custom software that brings with it complexity. The IT shop at Pacific Sunwear of California functions as a group of technology integrators, smoothing the implementation of proven technology, rather than reinventing it.
“He is very clued in to the business and provides cost-effective solutions that meet the business needs,” Guess cio Mike Relich said of Ehlers. “He has done a good job of consolidating all his applications and minimizing complexity. His approach has created a scalable platform that has enabled PacSun’s growth.”
The company’s impressive growth is driven in large part by its ability to identify and respond to fast-changing fashion trends among its young customers, who shop PacSun for surf and skate apparel and D.e.m.o. for hip-hop urban styles. Ehlers’ group has been instrumental in that growth by supporting the brands with the tools they need to keep on top of fast-changing trends. His team developed analytical and reporting tools — a rare instance when it built its own software — that reveal those trends as they first begin to take shape. For instance, the reports highlighted patterns that enabled the company to spot momentum of woven shirts with vertical stripes in the teen market before it was widely recognized by the brands, Ehlers said.
Years ago, when PacSun sold young men’s clothes exclusively, the company suspected that females were also shopping the store, buying apparel for themselves. A simple technology tweak at the checkout reminded cashiers to input a “1” or a “0” to indicate whether a customer was male or female. This small, yet incredibly valuable, system modification yielded great business intelligence: 25 percent of transactions in the young men’s store were in fact made by female shoppers and those purchases accounted for 35 percent of sales. Based on this finding, PacSun encouraged its brands to develop product for girls.
Today, Pacific Sunwear of California continues to feed trend analysis to its brands and that information is used to guide decisions on new product introductions and brand extensions.
The company plans to reach 1,400 stores and $2 billion in sales by the end of 2007. Ehlers’ technology strategy aligns with that vision, and recalls the famous Wayne Gretzky quote: “I skate to where the puck is going to be, not to where it has been.”
Boscov’s Roberts Champions ROI
When the industry buzzes about cio’s who “get it” — that is, those progressive individuals who have a vision for new technology opportunities without losing sight of business needs — it’s someone like Harry Roberts they’re talking about.
As cio and senior vice president of Boscov’s Department Store, Roberts choreographs technology strategy for more than 40 stores and five distribution centers operated by the $1 billion privately held company, which is based in Reading, Pa. Roberts’ genuine passion for return on investment is evident in every decision, whether it’s moving the e-commerce platform to the Linux operating system to simplify and reduce support costs, or bringing the department store chain’s gift card processing in-house.
“In the new era of fiscal responsibility within the cio position, he is an example of what the cio must be,” said an executive from SofTechnics, which provides Boscov’s inventory management solutions.
Indeed, Roberts and his IT team delivered 10 major technology projects in the last year alone, each on time, within the prescribed budget and producing the expected ROI. Those outside technology circles may not fully appreciate this impressive feat unless they follow trends on project failures and successes.
More than two-thirds of IT projects undertaken are considered failures that either crash and burn entirely (18 percent) or fail to come in on budget, on time or with the expected functionality (53 percent). Those findings, from the Standish Group International, a West Yarmouth, Mass., research firm that has tracked IT projects for 10 years, are widely acknowledged by cio’s and underscore the challenges they face.
“Harry has a very thorough understanding of technology and the difference between leading edge and bleeding edge,” said George Marrer, Boscov’s director of financial systems. “We tend to do things in smaller pieces, manageable pieces, and have realistic expectations of what can be achieved.”
As a leader, Roberts grants autonomy to individuals in his organization and trusts them, one direct report said, and that management style keeps the team motivated and focused.
The Thinking Man’s CIO
Colin Cobain, Tesco IT director, believes in RFID and isn’t afraid to say so. But he also believes in careful testing — not just to make sure the technology works, but to ensure the business case works.
It’s an approach that has helped Tesco avoid the controversy and technical roadblocks that have dogged Wal-Mart’s implementation of the technology. What’s more, it is, naturally, helping Tesco achieve an ROI in RFID.
The way Cobain sees it, new technology is only useful if it makes things better for customers, simplifies work for staff or saves Tesco money.
“We tend to look at any new project against those three simple criteria before we decide to proceed,” he told an audience at the Global Retail Technology Forum in Barcelona in March.
“The technology, of course, is just an enabler. What you really need to look at are the processes you want to change and then figure out how to use the technology to do that. So don’t start off with ‘the technology is the solution, what are the problems,’ start with what are the problems we want to solve,” he said.
Unlike Wal-Mart and Metro, Tesco has focused on categories of goods that seem likely to deliver an ROI, rather than asking its suppliers to tag all kinds of items.
So far, the U.K.’s largest food retailer has tested the technology in three areas: Tagging razor blades on the shelf to reduce shrinkage, tagging the baskets it uses to ship high-value goods such as razor blades and batteries from the distribution center to stores and tagging DVDs on the shelf to make sure titles are in stock and filed where they belong.
The first test showed the technology worked, but wasn’t cost effective. Tesco was able to send accurate updates about the number of razors on the shelf to its closed-circuit TV security system, but couldn’t decrease shrinkage enough to make the pilot worth expanding. Tesco’s ongoing DVD pilot has helped the company keep titles in stock and in their proper places and has clearly benefited Tesco and its customers, Cobain said, but the company has not yet found a way to make adding the tags cost effective for its suppliers.
“We won’t ask suppliers to do anything until the technology is low risk and stable,” Cobain said during a press conference at the National Retail Federation in New York in January.
The company has gone ahead with its third effort, and will use tagged baskets to move goods in more than 30 distribution centers serving 14,000 stores by the end of this year. (Tesco, not suppliers, tags the totes.)
Cobain speaks regularly about Tesco’s approach and findings at numerous industry conferences and in the press. And the company is working with Wal-Mart and Metro to ensure that global RFID standards develop. Cobain’s final words of wisdom to others wishing to get started with the technology?
“Think big, start small.”
— Cate T. Corcoran and Barbara Barker
Sleepless in Salt Lake City
Nearly everything about Overstock.com Inc. is unusual, and senior vice president of technology Shawn Schwegman is no exception. He is responsible for the Web retailer’s IT department and Web operations as well as all marketing related to the Internet, e-mail, affiliates and partners.
Since it started in 1999 in Salt Lake City, the company has expanded its business beyond closeouts to include travel, crafts from disadvantaged artisans around the world (such as women living in Afghanistan) and, most recently, auctions with a social networking component. In 2004, the company pulled in $494.6 million in revenue, with a net loss of $5 million.
Schwegman has been with Overstock.com since 2000, when the IT department had six people. Now it has 60, but that is still not enough to keep up with the company’s rapid growth and expansion into new markets.
His secret strategy? He often works until midnight. “We don’t sleep,” he said. “It’s been very difficult and challenging.”
Most of the IT department’s projects this year involve rearchitecting Overstock’s computing environment and enhancing the customer experience from top to bottom. A month ago, Schwegman’s team started building a data warehouse with the goal of finishing it in 60 days, about half the time usually required. The company, which has multiple clusters of Oracle databases, is migrating to a new version of the software this year. Another project: implementing a new customer-service package for the call center.
Schwegman is an entrepreneur at heart, and this is his third start-up. He has worked on both the sales and the tech side, and was vice president of marketing for Overstock in 2003. “He’s just the best technologist I’ve ever worked with,” Overstock chief executive officer Patrick Byrne told investors during the company’s first-quarter earnings call in April last year. “I’ve got huge confidence in him.”