Boots, House of Fraser not renewing IT director posts
Short-sighted or smart move?
Comment Initial reaction to the fact that two sizable retailers are not renewing their outgoing IT director posts could easily be "short sighted mistake".
It's easy to see why they might be doing this though. The retail refresh cycle has seen many retailers catching up on 15 years of under investment. Many may have little appetite for much more, and so a sense of "thanks we'll take it from here/use what we have/try to keep a lid on costs by giving overall responsibility to the CFO", is not surprising.
But, given the fact that most businesses' fortunes are now inextricably linked to their IT capabilities, this could point to an assumption of a lack of dynamasism in the retail sector going forwards (wrong), or a more fundamental misunderstanding of the fact that IT needs to be seen as part of the family in terms of having board level representation and the ability to liaise properly between what the business needs and enabling that through effective IT investment and resource management.
Many of the problems associated with IT stem from the fact that it is managed as something discrete from the business, so having its overall management subsumed by the business (e.g. managed as an integral part of the business) is a possible sign of very mature thinking. That is not necessarily the case, however, depending on how IT is viewed. It could be that it is a backward step.
The obvious starting point is to ask what an IT director of a large organisation does, which includes:
There are three levels of maturity in our view:
A) IT as a slave or cost centre - often reports into the business directly (e.g. part of the FD's responsibility) and/or has a relatively weak IT director in place. IT is told to jump when things need doing rather than being involved in business level discussions and proactively adding value. IT directors in this kind of role are typically stressed and frustrated and die young of heart attacks. Often, they are techies that have been promoted beyond their means.
B) IT as an internal service provider This ischaracterised by a strong IT director who almost runs IT as a business within a business. Heavy emphasis on contract/commitment mentality and a "negotiation" mindset. People seem to aspire to this, and lots of IT departments are run this way (in spirit at least), but it is not the optimum model as IT is still regarded as something separate, albeit better tuned in than a) via the negotiation process.
C) IT as an integral function of the business This is characterised by an "us" or "we" mentality which has the business and IT objectives integral to each other indistinguishable. There may or may not be an IT director in place, but if there is, they are more of a business person than a technical one. In mechanical terms, the key attribute with this kind of approach is a good business driven IT governance model. With that in place, and things like an Enterprise Architecture group feeding into it, the traditional IT director "champion" or "chief" role is less relevant and can be picked up by another exec or as a main board responsibility. This on the surface seems similar to a), but the mindset is totally different.
To put is more simply, IT is a slave in the first model, a supplier in the second, and a part of the family in the third.
So, are these retailers moving from B to A or B to C? If the first then that's bad, if the second, then it's good.
Furthermore, these relatively bold/enlightened/foolhardy moves are being made by retailers which, in all fairness, are not acknowledged as being at the cutting edge of "harnessing technology" (although Boots has certainly stepped up the pace in recent years) in their respective markets.
This takes us back to my initial points:
- Have Boots and House of Fraser out-thought their peers and are establishing a next generation "IT governance" model (think brand new kit, plus lots of outsourcing being managed by a "skeleton crew")?
- Are they very naive and think the work is done and that they can sit back for another 15 years?
- Is this simply a cost control exercise and we are reading far too much into names, titles, and roles?
Time will tell if their model is right, or if we shall see them desperately playing catch up again within the next five years.
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Yes, governance is key
Good point about governance. When does IT governance become corporate governance? The "system" at Abbey (Santander) has been down for days. At what point does this poor level of IT become of interest to the FSA?
If you want to look at where IT fits into a retail organization, first look at an industry leader, then see where your company measures up to them.
What Would Wal*Mart Do?
If I'm not mistaken, Wal*Mart has one of the most advanced IT organizations in the world, and their IT director is a key member of the operations group - reporting to the President/CEO at the level of the CFO and as a major contributor to ALL operational and internal organizations.
Simon above hits the nail pretty square: at Wal*Mart, it's not about Technology but about INFORMATION and how it can help the business. This is evident in the way Wal*Mart addresses IT problems: every project, problem, opportunity is measured on time vs. payback. Often a long-term "elegant" solution to a problem will be put on a slower track while a short-term, possibly more costly solution gets done NOW, simply because the payback opportunity in the short term will pay for the long-term project.
At Wal*Mart, everything - and I mean EVERYTHING, including offices, desks, lights, employees - is measured for its contribution to being a retailer. This is not the Jack Welch Economic Value Added measurements done short-term, but at every time measurement in the business life - minute-by-minute to decades in the future. That's why it's not unusual to see "half-assed" projects implemented - with all the work-arounds necessary to do them, only, unlike most other companies, Wal*Mart knows that these are temporary measures and there is a date set that will see them supplanted.
Makes the IT Director's job pretty cushy when he can say at every meeting "we made X dollars in IT this month" - and truly mean it and measure it from the POS scan right up to the corporate bottom line.
A few points
"C) IT as an integral function of the business This is characterised by an "us" or "we" mentality which has the business and IT objectives integral to each other indistinguishable. There may or may not be an IT director in place, but if there is, they are more of a business person than a technical one."
And just what does "they are more of a business person than a technical one" mean? It is just a platitude.
"The obvious starting point is to ask what an IT director of a large organisation does"
Is it? I do not think so. The starting point is to ask a company what the IT director's duties and responsibilities are. Then ask what the IT director does.
"given the fact that most businesses' fortunes are now inextricably linked to their IT capabilities"
Yes. I would mention first that all businesses' fortunes are inextricably linked to the information deemed necessary to those businesses to survive.
And who should be responsible for this information in a company?
What companies require first is a director of information not an IT director.
Go to any (large?) company and ask; is there a board-level member that is responsible to the company for the timely gathering of, production of, transformation of, assessment of, accessibility of and storage of information?
Technology is just a set of tools that can be applied to the domain of information.
outsourced most of their ops to IBM three years ago. So they're probably just about to insource again.
Proactively adding value?