When VF Corp’s Martin Schneider took over as the company’s first global CIO in 2006, he wouldn’t say VF’s IT department was in disarray, but it certainly wasn’t the IT department the company needed.
VF, the parent company of such familiar brands as Lee and Wrangler jeans, The North Face outerwear, Majestic (major league baseball uniforms), and JansSport, is a company in transition. Once primarily a wholesaler to other retailers, today, VF is a $7B mix of wholesale and global retail. With 630 captive stores the company also supplies 67,000 other retail outlets, makes over 600M items annually, and conducts operations on every continent and in every time zone.
What Schneider inherited was a mish-mash of systems, platforms, outsourcers and independent groups all trying to work together but not having a whole lot of success. Regional CIOs were too busy firefighting to help the brand CIOs support the new retail operations. Support and infrastructure were separate operations with little or no communication. Being a wholesaler meant there was no one in Schneider’s immediate group that understood how to support retail operations—let alone retail ops in Russia or Italy.When he arrived there were issues around prioritizing funding for projects, alignment, a skills “challenge” (i.e., the skills they had supported where they were verses the skills they needed to get where they wanted to go).
“Because we had manufacturing, now we need people that understand sourcing product,” said Schneider. “We had primarily wholesale expertise in my group now we needed retail and ecommerce. So, again a lot of re-skilling. When we looked at our costs, fixed costs were too high.
“Coming in, when we took a look at our system availability and the way our organization was structured, I said we have a lot of room for improvement there. So, one of the first things I did was realign the IS/IT organization.”
Decisions used to be made on a regional or brand basis or, because of M&A, by the limitations of acquired technology. Today, decisions are made based on two things: the needs of the brand and the needs of corporate. Where there is a disagreement, the needs of the brand (and therefore the customer) usually takes precedence. This is not say that corporate is subservient to the brands, but, because VF is morphing into a giant global retailer, that is where the company’s rubber hits the road.
Wherever possible, though, Schneider insists on standards. SAP, for example. The trouble is, no one standard works everywhere so there is always compromise. But, with strong brand CIOs that now spend 80% of their day working with their business counterparts trying to grow the brand, it is much easier to see where IT can work to support the business. In earlier days, corporate was either a order taker or a dictator. Today, there is a lot more collaboration.
“So, the disconnect in the past was we might be working on the SAP piece but (the brands) need retail to enable their growth. So, now, collaboratively, we work with our business partners but they determine the priorities.”
Schneider’s IT Effectiveness Council—made up of brand presidents and corporate IT—is where priorities are hammered out. Schneider calls this a “business driven prioritization process.” But there is also a group of seven regional CIOs that are responsible for supporting the brand and “category” (outdoor apparel, for example) CIOs with the technology they need to get the job done. The regional CIOs have been granted broad decision making powers.
“When you have a centralized organization you tend to over centralize those decision rights and processes. So, what we’re doing is flipping that so it is about the brand and the coalition and really giving them the right to make more decisions; again within standards and all that.”
One of the key ingredients for making this behemoth change course was outsourcing. When Schneider arrived on scene three years ago, VF was already contracted with IBM for datacenter, network, service desk, and break/fix. Application support was primarily internal but done with a large number of external partners. Now, IBM is still their nuts and bolts provider, but they’ve partnered with Wipro for application support because they wanted an outsourcer that would do more than just fill orders.
“In order for us to transform we really needed a partner that was going to innovate.” With Wipro they’ve established an Innovation Council that meets monthly to see what can be done better, faster, cheaper. They’ve only met once as of December 2008, so Schneider is reserving judgment, but, so far, Wipro is meeting their SLAs.