Shopping for IT

7 Dec 2005

Like many IT professionals, Paul Dickson will stand or fall on his ability to make tough and very big decisions. His forthright approach is evident in everything he says and at least partly explains how his work on the transformation of Arnotts’ IT infrastructure won the recent BT Inspiration Award in the Retail and Distribution category.

Dickson, Arnotts’ director of information systems, has one founding principle when it comes to IT change. “If you’re going to implement a new enterprise resource planning [ERP] system and best practice solutions you have to change your business processes. If you don’t, you’ve wasted the opportunity and you’re just designing all the old inefficiencies on the new software.”

Going against the grain of the mantra peddled by some consultants and vendors, he believes the scale of new systems demand that it has to work this way round. He also believes it’s an approach that reflects a sea change in the way IT executives function within their organisations.

“In the old world IT departments were their own little development houses and they used to wait for the business to approach them and establish some requirements for processes and systems,” he says. “They would write and test them, go live and support them. That’s changing. It’s now about recommending best practice processes to the business and sourcing the software and technology partners to implement them.”

Today, chief information officers and system directors have more of a prescriptive role, according to Dickson, advising the board of directors on trying to use technology to realise the strategic objectives of the business.

“This shift has come about with the advent of ERP systems from SAP and Oracle,” he argues. “As a consequence you no longer have to spend time developing systems. There are companies out there that can provide best practice solutions that allow us to take our energy and focus on the core business.

“In my view, if you want business benefits and improved efficiencies you have to change your business to reflect the process, not the other way round. Otherwise you just bring in software providers to replicate what you already have.”

One upshot of Dickson’s approach is a leaner and more efficient IT department, one that can react more quickly to the challenges of an implementation programme. The Arnotts project is a case in point. Christened Merlin — neatly derived from its key components MERchandise Logistics INformation — the challenge was to deliver on the equivalent of eight to 10 years of IT investment in just two years.

To grasp the scale of the €6m project, it’s important to understand that despite the long history behind one of Ireland’s most famous retail outlets, the IT infrastructure was virtually non-existent. Traditionally the IT department would have invested in tier-two and three-point solution products that fill short-term gaps but contribute nothing to the wider strategic demands of the business.

“The company didn’t have a culture of investment in technology or of using it to enhance to the business. If anything, it was the exact opposite,” says Dickson, “which is true of a big part of the culture of retail in general.”

Change was triggered by the injection of private capital and a new boardroom mentality that has not only set about expanding the existing Dublin store from a 300,000sq ft site to in excess of a million, but is also looking to open branches outside the capital.

To make ready for the expansion the company needed to invest heavily in systems and architecture. Dickson was hired to come up with an aggressive IT infrastructure and implementation strategy, a role that suited him down to the ground. Not from a traditional IT background, he started off in manufacturing with Smurfit and got into technology through its pan-European implementation of SAP.

Subsequently he headed up a supply chain project at Superquinn before joining Arnotts last September. The process and supply chain experiences made him the right man for the job. “I’ve gone from one huge implementation to another,” he quips. “I think it’s a suicidal tendency.”

The starting point for the new project was upgrading all the hardware, from PCs to switches and firewalls. The nuts and bolts of the IT infrastructure is built on an IBM platform with Oracle databases and Unix operating systems, but the key challenge was to install a solid application base that had a comfortable fit with the core business.

The product solution set he chose came from Retek, the No 1 retail systems provider. Its application portfolio covers merchandising, promotions, pricing, purchasing, store inventory as well as warehouse inventory and management. “We took risk out of the implementation by going with the top tier-one product,” explains Dickson. “Retek already has a history of implementing its software in our sector. Selfridges, Nordstrom and Sears are all customers and are happy with it. We took the pressure off ourselves because we knew the software could fit our business requirements.”

Without detailed transitional data to size the proposed software the key was to go and visit references sites, “to touch and feel what has been implemented,” as Dickson puts it. “We had to use the experience from our suppliers’ previous customers, to take the temperature of what we thought we would need.”

The decision to go with Retek had a huge impact. Internal systems were scrapped and replaced with a new footprint with the most immediate felt in purchasing, inventory and warehousing. It was imperative to get it right so Dickson set about recruiting his own team from the UK; experienced people who could bring their expertise in supply chain and merchandising systems to the new implementation.
Inevitably there were change management challenges as well as technology issues. “The methodology to deploy the systems is all about involvement and participation, getting our colleagues in the business to buy into it, to become owners of the processes, using the software to stimulate that change,” says Dickson. “We found our people adopting best practices that are in-built in the software very quickly. When they see something that’s good they want to endorse it.”

Part of this was born out of a great deal of employee frustration over how long it took to do things and the inaccuracies associated with the old systems. “Purchasing, inventory supply chain and warehousing in particular didn’t have real-time visibility of stock balances or article level consumption at the point of sale,” explains Dickson. “We just didn’t have the real-time information we needed to make decisions based on fact rather than instinct.”

Of course, not everything goes to plan. However circumspect Dickson and his team might have been about the internal challenges, there is little they can do about the global machinations of the IT world. Last April when rumours circulated about the takeover of Retek, SAP seemed most likely to make the acquisition. When Oracle finally won and bagged the business Dickson was quietly pleased. It was good news because the other pillar of the back-office business was Oracle Financials.

“It was a testing moment. We had gone with Oracle alongside Retek. Just at the last minute Oracle came in, which worked out very well for us. It made me look like a genius,” he says with a smile.

The takeover has had a very positive impact as Dickson has been very impressed at the level of support from the local Oracle office. “There’s very often a gap between implementation partners wanting something to be successful and actually doing something to make sure it’s successful,” he says. “Oracle has definitely stepped into that gap and helped us make it successful.”

Talking to Dickson it’s very clear that his approach to tackling IT projects is always about reducing risk. “Everything has to be proven and robust and have some degree of commercial integrity and track record,” he says. “You can’t afford to put the business at risk by makings decisions on things that aren’t proven. It’s important to get out and talk to the people who have used the services and software and convince yourself that they are satisfied that they got from their service providers what they set out to get.”

Dickson also has a personal preference of working directly with suppliers wherever possible. “It avoids you getting into three-way triangles,” he says. “Accountability is very clear in terms of delivery of the software and the implementation.”

The biggest technology challenge has been dealing with the volumes of data, always a problem in retail because of day-to-day replenishment requirements that are fundamental to the business model. Batch processing and response times are the key to success.
“One challenge is with inventory management where we want to implement radio frequency all round the store and warehouse for barcode recognition in every part of the process,” he explains. “With more than 600,000 products in retail, cycle counting those products becomes quite a complex affair.”

Currently in their first phase implementations are expected to go live in February. The rollout is slow and careful, ensuring the integrity of the systems with carefully managed pilot programmes.

Down the line, after the back office is in place, he wants to bring the technology closer to the front of the store, letting the customers in on the benefits. “We want to use an information system to manage product availability based on customer demands,” explains Dickson. “We want to be able to implement more interesting promotional and pricing activity in the store on a more frequent basis than we’ve been able to in the past.”

According to Dickson, the key to the project success to date comes down to how the company has embraced the challenges, from the top down. “You have to get buy-in and you have to have the desire to change. We had the desire not just to change but also to be better and challenge accepted knowledge and processes and improve them.”

He sums up: “The single biggest factor in defining the success of the implementation is having real commercial reasons for doing this expansion. The board has a genuine desire to improve the business. It’s not necessarily all about cost cutting, it’s about implementing efficiencies and best practice. It’s about becoming a better business and having sponsorship from the top makes a huge amount of difference.”

Pictured: Ernesto Munoz, European vice-president of Jupiter Technology, sponsor of the retail category of the BT Inspired IT Awards with Paul Dickson, director of information systems, Arnotts, and Government Chief Whip Tom Kitt TD

By Ian Campbell