Delivering Business Value with IT at Hefty Hardware2

Delivering Business Value with

IT at Hefty Hardware2

Mini Case

Delivering Business Value with

IT at Hefty Hardware2

“IT is a pain in the neck,” groused Cheryl O’Shea, VP of retail marketing, as she

slipped into a seat at the table in the Hefty Hardware executive dining room, next to

her colleagues.

“It’s all technical mumbo-jumbo when they talk to you and I still don’t

know if they have any idea about what we’re trying to accomplish with our Savvy Store

program. I keep explaining that we have to improve the customer experience and that

we need IT’s help to do this, but they keep talking about infrastructure and bandwidth

and technical architecture, which is all their internal stuff and doesn’t relate to what

we’re trying to do at all! They have so many processes and reviews that I’m not sure

we’ll ever get this project off the ground unless we go outside the company.”

“You’ve got that right,” agreed Glen Vogel, the COO. “I really like my IT account

manager, Jenny Henderson. She sits in on all our strategy meetings and seems to really

understand our business, but that’s about as far as it goes. By the time we get a project

going, my staff are all complaining that the IT people don’t even know some of our

basic business functions, like how our warehouses operate. It takes so long to deliver

any sort of technology to the field, and when it doesn’t work the way we want it to, they

just shrug and tell us to add it to the list for the next release! Are we really getting value

for all of the millions that we pour into IT?”

“Well, I don’t think it’s as bad as you both seem to believe,” added Michelle

Wright, the CFO. “My EA sings the praises of the help desk and the new ERP system

we put in last year. We can now close the books at month-end in 24 hours. Before that,

it took days. And I’ve seen the benchmarking reports on our computer operations. We

are in the top quartile for reliability and cost-effectiveness for all our hardware and

systems.

I don’t think we could get IT any cheaper outside the company.”

“You are talking ‘apples and oranges’ here,” said Glen. “On one hand, you’re

saying that we’re getting good, cheap, reliable computer operations and value for the

money we’re spending here. On the other hand, we don’t feel IT is contributing to

creating

new business value for Hefty. They’re really two different things.”

“Yes, they are,” agreed Cheryl. “I’d even agree with you that they do a pretty

good job of keeping our systems functioning and preventing viruses and things. At

least we’ve never lost any data like some of our competitors. But I don’t see how they’re

contributing to executing our business strategy. And surely in this day and age with

increased competition, new technologies coming out all over the place, and so many

changes in our economy, we should be able to get them to help us be more flexible, not

less, and deliver new products and services to our customers quickly!”

The conversation moved on then, but Glen was thoughtful as he walked back to

his office after lunch. Truthfully, he only ever thought about IT when it affected him and

his area. Like his other colleagues, he found most of his communication with the department,

Jenny excepted, to be unintelligible, so he delegated it to his subordinates, unless

it absolutely couldn’t be avoided. But Cheryl was right. IT was becoming increasingly

important to how the company did its business. Although Hefty’s success was built on

its excellent supply chain logistics and the assortment of products in its stores, IT played

a huge role in this. And to implement Hefty’s new Savvy Store strategy, IT would be

critical for ensuring that the products were there when a customer wanted them and

that every store associate had the proper information to answer customers’ questions.

In Europe, he knew from his travels, IT was front and center in most cuttingedge

retail stores. It provided extensive self-service to improve checkout; multichannel

access to information inside stores to enable customers to browse an extended product

base and better support sales associates assisting customers; and multimedia to engage

customers with extended product knowledge. Part of Hefty’s new Savvy Store business

strategy was to copy some of these initiatives, hoping to become the first retailer in

North America to completely integrate multimedia and digital information into each of

its 1,000 stores. They’d spent months at the executive committee meetings working out

this new strategic thrust—using information and multimedia to improve the customer

experience in a variety of ways and to make it consistent in each of their stores. Now,

they had to figure out exactly how to execute it, and IT was a key player. The question

in Glen’s mind now was how could the business and IT work together to deliver on this

vision, when IT was essentially operating in its own technical world, which bore very

little relationship to the world of business?

Entering his office, with its panoramic view of the downtown core, Glen had an

idea. “Hefty’s stores operate in a different world than we do at our head office. Wouldn’t

it be great to take some of our best IT folks out on the road so they could see what it’s

really like in the field? What seems like a good idea here at corporate doesn’t always

work out there, and we need to balance our corporate needs with those of our store

operations.” He remembered going to one of Hefty’s smaller stores in Moose River and

seeing how its managers had circumvented the company’s stringent security protocols

by writing their passwords on Post-it notes stuck to the store’s only computer terminal.

So, on his next trip to the field he decided he would take Jenny, along with Cheryl

and the Marketing IT Relationship Manager, Paul Gutierez, and maybe even invite the

CIO, Farzad Mohammed, and a couple of the IT architects. “It would be good for them

to see what’s actually happening in the stores,” he reasoned. “Maybe once they do, it

will help them understand what we’re trying to accomplish.”

A few days later, Glen’s e-mailed invitation had Farzad in a quandary. “He wants

to take me and some of my top people—including you—on the road two weeks from

now,” he complained to his chief architect, Sergei Grozny. “Maybe I could spare Jenny

to go, since she’s Glen’s main contact, but we’re up to our wazoos in alligators trying to

put together our strategic IT architecture so we can support their Savvy Stores initiative

and half a dozen more ‘top priority’ projects. We’re supposed to present our IT strategy

to the steering committee in three weeks!”

“And I need Paul to work with the architecture team over the next couple of

weeks to review our plans and then to work with the master data team to help them

outline their information strategy,” said Sergei. “If we don’t have the infrastructure and

send Paul and my core architects off on some boondoggle for a whole week! They’ve all

seen a Hefty store. It’s not like they’re going to see anything different.”

“You’re right,” agreed Farzad. “Glen’s just going to have to understand that I can’t

send five of our top people into the field right now. Maybe in six months after we’ve

finished this planning and budget cycle. We’ve got too much work to do now. I’ll send

Jenny and maybe that new intern, Joyce Li, who we’re thinking of hiring. She could use

some exposure to the business, and she’s not working on anything critical. I’ll e-mail

Jenny and get her to set it up with Glen. She’

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