Article

Best Buy's Willett struts business technology

Linda Tucci, Executive Editor
NASHVILLE, Tenn. -- When Best Buy Co.'s Robert Willett lies awake in the wee hours, he's not obsessing over an ERP implementation. Rather, it's the business that's making his head spin: What's the next source of top-line growth? What does each of Best Buy's many brands stand for? How can he build better customer relationships? And, oh yes, how can IT help him?

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Retail used to be all about location, location, location. Now it is about innovation, innovation, innovation.
Robert Willett
CEO and CIOBest Buy International
"Retail used to be all about location, location, location. Now it is about innovation, innovation, innovation," said Willett, CEO and CIO of Best Buy International, the business unit of Best Buy dedicated to developing growth and innovation opportunities outside the U.S.

While many retailers focus on store formats or geographical location to edge out the competition, the nation's largest outlet for consumer electronics is headed toward becoming "a service and solutions provider" for its customers, said Willett, a keynote speaker at last week's Forrester Research IT Forum. Best Buy's "Blue Shirts" are the "secret sauce," he said. IT is the engine.

Yours to lose

Willett's brand of IT is what Cambridge, Mass.-based Forrester calls business technology (BT), a term that recognizes IT's integral role in most businesses today -- as well as the new reality that information technology is increasingly driven by demands and adoption outside the IT organization. BT is what IT shops should be striving for, or they risk becoming irrelevant, said Bobby Cameron, a Forrester vice president and principal.

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"IT can lubricate the evolution to business technology, but it is ours to lose," said Cameron, who focuses on CIO issues such as best practices for IT organizations, metrics and governance.

In order to ride the paradigm change, CIOs should begin by defining, as Willett has, what constitutes IT excellence for them. Then put that definition up against how the business measures IT and how the business measures itself, Cameron said.

Three measurements

One measure that has defined success for many IT shops is delivering operational quality at ever-decreasing cost. Aluminum producer Alcoa Inc. in Pittsburgh, for example, brags that it has the lowest ratio of IT spend to revenue in its industry. Cameron puts this in a category he dubs, "efficient, low-impact technology." IT makes things "a whole lot easier" but does not drive business results.

How to be more BT than IT focused
1. Adopt business-focused metrics: 80% of what IT spends is on operations, yet most IT shops do not connect the spend to the business. "If you can't measure the business impact of any part of that 80% nut, don't do it," recommends Forrester analyst Bobby Cameron.

2. Leverage yourself as a "change-enabler" for divisions across your company and promote cross-unit solutions that will help the whole business. (A four-year effort at GM now has every one of its employees using the same software.)

3. Tailor your IT messages to the particular business person or unit the technology affects. Intel's IT department uses public relations people to tailor its messages.

4. Expand process automation and business results optimization.
Another driver is IT/business alignment -- the top agenda item on a CIO's short list since forever. But alignment is looking more like IT appropriation by business, Cameron said, citing a recent study showing that 73% of technical decisions at very large corporations are being led by business executives.

For example, hedge fund managers use technology developed outside of IT. In other words, the hedge fund business is highly technical, but IT is not in the game. The technology is both inefficient and expensive but is driving so much revenue that it won't be abandoned. This is the dreaded "inefficient, high-impact technology" category.

IT excellence that is driving the business, or "efficient, high-impact technology," is where "most of us want to be," Cameron said. Think Wal-Mart Stores Inc. sucking out "incredible amounts of extra cost" from its supply chain. Or FedEx Corp., period.

BT is going to occur with or without IT, Cameron said. "Our role is to get ahead of the curve." IT shops that stay in the game, like Best Buy's, will not only run IT like a business but also excel at innovating their businesses.

Eliminating the checkout

Case in point: Best Buy, with 1,178 stores in the U.S., Canada, Europe and now China, is 18 months into a three-year IT overhaul. The work ranges from totally remodeling the company's supply chain to using wikis to train its 160,000 employees.

The IT overhaul reaches beyond internal operations. The supply chain project began "through the eyes of the customer," Willett said. IT is improving Best Buy's customer service by making shoppers' visits to stores more efficient. Radio frequency identification is core to that effort, boosting the stores' in-stock numbers from 70% and 80% to 95%. A big drag on a customer's time in the store is standing in the checkout line, so the IT team is working on how to reduce that time -- and eventually to eliminate the checkout altogether.

"Whoever figures out how to get rid of the checkout, will be the champion of retail," Willett said.

Let us know what you think about the story; email: Linda Tucci, Senior News Writer


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