Smyths Toys is one of Ireland’s fastest-growing retailers. Its head of IT Vincent Nolan talks about changing the mindset from an SME to an enterprise, and why IT operations shouldn’t see the cloud as a threat.
Can you describe your own day-to-day role with Smyths Toys?
My position is to assist the business to transform its IT services from an SME mindset to an enterprise one. The business is growing and therefore the dependency on technology is more important to ensure that the growth is accounted for in the technology roadmap.
The role of IT is changing from pure technical focus to being more commercially savvy – in your own career, how have you found this working in practice?
IT is a very complex area and moving at an incredible pace of significant change, which puts huge pressures on IT to make the right decisions, as some of these changes could fail and expose companies who have been sold the future promise.
Traditional IT departments which are removed from the business are things of the past and now IT has to be aligned with the business to allow change to be implemented as the market demands dictate.
Did you always see yourself as being business-aware rather than purely looking at IT as a silo?
My background has always been commercially focused and the move into IT occurred by accident. I was asked to implement a change and transformation programme in a traditional IT operation of a PLC and found that I understood IT from the business perspective rather than the technology one and enjoyed the programme, which was perceived as a success.
How would you describe your approach to IT: is it just a cost to be managed sensibly, or can it deliver real value and innovation to the business?
I will always believe that IT, if implemented in partnership with the business, is an enabler and can significantly provide a competitive advantage to any business that competes in today’s competitive environment. Of course, costs have to be managed and controlled as with every other part of a successful business.
What are the big challenges in the business and how can IT help: for example, competing in online retail against the likes of Amazon, or making sure POS systems stay up in the stores?
The biggest challenge for any fast-growing business is to implement processes and policies which allow flexibility to compete but discipline to ensure that the infrastructure and services are available on a 24/7 basis. Competition within business will always be there and emerging distribution channels, such as online, need to be embraced.
Take the music industry, for example. Online services completely changed the model and the companies which embraced the change or indeed, caused the change, are now the dominant players. IT services within the business are the enablers of change not the silver bullet and that’s the reason why IT and the business need to be more aligned.
You’ve talked about your IT strategy as co-sourcing rather than outsourcing: can you explain what this is and why you’ve taken this approach?
Outsourcing is a much-hyped silver bullet which some businesses see as a way to shift costs and responsibility away from the core business. My view of co-sourcing is that the business keeps a number of subject matter experts, or SMEs, within the business who both understand the business and its overall objectives and work with a service provider to provide infrastructural services and solutions to work alongside the SMEs.
In this model, we keep the internal IP resource and use the co-sourced partner to provide their business excellence, thought leadership and partnership. In effect, you get the best of both worlds and not have a complete department outsourced to become a number in a larger, process-driven organisation whose reason for existence is to reduce costs and deliver the same services to multiple organisations.
Who are some of the external partners you work with, and why did you pick those particular ones?
When we’re looking for external partners, we look for companies that can complement our skills. The key requirement on top of the partner’s key skills is that they provide the following: integrity, thought leadership and a shared ownership. If this occurs, then it’s a working relationship.
You’re already using cloud computing in your business: can you tell me what you’re using it for, what were the reasons for doing so, and what difference it has made?
Smyths is a seasonal business, which peaks in the weeks coming up to Christmas and our online business is successful and growing rapidly. If we had to make an investment in the infrastructure required to cater for the business growth, it would have been expensive and lying idle for nine months of the year. The cloud computing decision was made on the basis that we can flex the size as the demand increases.
Now that it’s bedded in successfully, would you consider using it for other parts of the business?
Of course, if the business case stacks up we would actively consider it.
There’s a view among some IT professionals that cloud threatens their jobs: what’s your view?
All indications are that the team within Smyths are both hungry to learn and more importantly, adapt. I personally feel that a well-structured IT department with clear objectives alleviates the concerns about new technologies. Also, providing training is a great incentive to the team, as they can learn to adapt to the emerging trends.
The re-emergence of hosted technologies, or what we now call cloud computing, is bringing an added flexibility to business and this has significant challenges as the more traditional IT operations seem to perceive this a threat rather than an opportunity.
Bringing internal IT teams along to a new way of doing business takes business and coaching skills rather than IT skills, so my position is to allow the change and transformation to occur without the IT teams perceiving this as a threat but an opportunity to upskill and realign their thinking with market developments.
Smyths’ business is growing, and you have ambitious expansion plans. Will your IT budget increase in line with that, or are you still subject to the dreaded ‘do more with less’ mantra?
I am always trying to do more for less and ensure we get value for money but I have to be honest: too many mistakes are made in IT when costs are cut too far: a case of ‘we are too poor to buy cheap’. Retail is very competitive but the dependence on 24/7 uptime does not allow you to compromise quality for cost.
You’ve said you’re looking to make your IT more agile to respond quickly to business needs – how close do you think you are to that ideal state?
We are currently in a transition process with our transformation and change programme. I expect that we will be in a stronger position within the next six months but things are changing so fast within the IT arena I don’t think we will ever be in the ideal state as the competition is aggressive and we can’t be complacent.
Our customers are the reason why we have a job and we have to ensure that we deliver on their expectations in terms of availability, service, channel and of course keep delivering a quality product at a competitive price.
We often see very technically bright people who have no strategic or business focus: in your opinion, are computing courses in Ireland teaching enough about general business?
Look, I consider myself as someone who has a high-level understanding of technology and what it can deliver for the business. I believe by being on the other side and having frustrations with IT makes me more aware of what IT needs to do.
The question in relation about general business is a difficult one to answer. People who have a passionate interest in technology sometimes do not really want or need to understand the business drivers. Notwithstanding this, if the courses could explain the importance of IT to enable a business to grow and prosper, and the meaning of the cost of capital and its implications to the business, that could be beneficial.
For example, the difference between an OPEX/CAPEX operating model and how on-demand services are enabling smaller companies to scale faster without having the requirement for significant upfront capital costs. That might give people an understanding of the challenges which the finance director and shareholders face in growing a business.
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