Ending a nightmare - Overstock's data center journey
Saved by Teradata
Overstock.com CEO Patrick Byrne refuses to believe that technology doesn't matter. The outspoken CEO watched as his computer systems crumbled in 2005, resulting in a customer service nightmare. Then, he watched data warehousing specialist Teradata barge into his computing center and save the day.
Before Overstock.com's IT meltdown, the online retailer had enjoyed a run of success thanks to its bizarre ads where a babe talked about "the big O" and thanks to solid customer service. That flirtation with good fortune ended as Byrne pushed his team to install a new Oracle ERP (enterprise resource planning) system in record time. As many of you know, Oracle is not to be trifled with and demands months, if not years, of fine-tuning. Byrne learned this lesson too late.
"Some things were going through okay and a lot weren't," he told us during a recent interview. "It was just spraying orders. Sometimes customers might not get a ship confirm. Sometimes the order might not flow through the system. Sometimes the order got misrouted."
You can see a picture of the ERP system as drawn by Byrne here.
We've documented - at length - the customer service debacle that followed as a result of this Oracle ERP implosion. Never one to run from issues, Byrne cops to the crisis.
"It was really my fault," he said. "I had us wait too long to upgrade the IT system and then pushed too hard to get a new one rolled out."
It's rare to see a CEO be so upfront.
The Big 'Oh Crap'
During the worst part of the IT meltdown, Overstock began manually sifting through data collected by its Teradata systems. This helped the company sort out orders that had gone wrong.
"We were really catching everything we needed to catch with the Teradata system," Byrne said.
Going through all this information by hand was painful and less than optimal, but at least Overstock had that option.
For the unfamiliar, Teradata sells a range of data warehousing products used to do everything from tracking inventory to performing complex analysis on sales data. It's become the gold standard in the industry with companies such as Wal-Mart and Dell celebrating Teradata for their ruthless supply chains.
These days the likes of Oracle, IBM and HP want to horn in on Teradata's business, so the soon to be released division of NCR has started to emphasize its fanciest features as advantages over rivals. That's where the Overstock.com story continues.
Overstock eventually sorted out its ERP system and now has a smooth running operation. Its customer service ranking has surged over the past couple of years, placing it as one of the top online retailers.
Overstock gives "customer aggravation points" set scores. A missing ship confirmation might count for 5 points, while and a missing product might count for 50. Meanwhile, a few missing MP3 players might count as a life altering experience.
In the IT horror story days, Overstock had an aggravation score of 5 million points. Now, it's down to a few hundred, according to Byrne.
Beyond just keeping track of orders, however, Overstock now uses Teradata for information on just about every aspect of its business.
"We have fantastic business intelligence now," Byrne said.
Byrne can get information on sales, all his widgets and gross profits that's just 30 seconds old. "We have a near real-time income statement," he said.
As a result, Overstock can now tweak its promotions, sales and customer programs on-the-fly.
Getting Over Overstock
It's a touching story and one we think is worth telling because of our past issues with Overstock's system.
As best as we can tell, the big boys have decided that data warehousing will be one of their big things moving forward. For example, HP has rolled out an entire produce line - Neoview - just to handle these tasks. (HP's CEO Mark Hurd (formerly of NCR) and CIO Randy Mott (an ex Dell and Wal-Mart man) have intimate knowledge of this technology.) So, it's only natural for Teradata to try and bring folks like Byrne out of the woodwork to discuss how its technology is not only more mature but also more forward thinking than that of rivals.
For the record, Byrne did not receive any kickbacks for spreading the Teradata good cheer. He felt he owed them some credit for stopping a disaster. Or at least that's what we were told.
As we left the interview room, we could hear Byrne repeating, "Give us another try this Christmas. Give us another try."
We don't think so, Patrick. But maybe our readers will. ®