Cost versus value
Of course any conversation about transformation inevitably involves cost. At Super Retail Group, IT spend has gone up significantly in the last few years, partly as a result of growth, and partly because the business is operating near real-time, meaning information intensity is much higher.
Hesketh doesn’t believe CIOs will ever get away from the cost discussion and says it’s even more prevalent when IT is run as a shared service. “We deliver the capability and get the cost, but the benefit is often delivered in a different part of the business and they get the value,” he admits.
“The challenge has always been to match up the value being contributed, to the additional cost we're actually bearing.”
Hesketh achieves this by focusing on the customer experience, business benefits, and supply-chain capabilities being provided by IT. As a company, Super Retail Group also employs an overriding metric called ‘return on capital’, which positions capital against the returns generated and how those relate back into the different processes.
“I'm not being told you're spending too much, what I am asked is to show that the costs are appropriate,” Hesketh comments. “How IT can alter the business’ return through changes of processes or capability improvements is an important thing to demonstrate.”
Within the IS team, there are also three key areas to juggle: Keeping the business running; omni-channel capability; and improving customer experience.
Another piece of the puzzle is developing team member capabilities to better support both the business and the end customer as their needs change. Hesketh explains one of the group’s current corporate strategies is around team member engagement and retention.
“As a retailer we have quite a high turnover, but retention today sits at about 75 per cent,” he says. “Understanding what sorts of people enjoy working here, if they want to stay, and how we make sure we're giving them what they need to deliver their job properly, is critical.”
In line with the group’s stronger customer-centricity, Hesketh stresses the importance of also improving the staff experience. One way IT is doing this is through a federated portal, which sits on top of its transaction systems and allows in-store staff to monitor tasks through customisable tabs.
Another focus is what Hesketh calls the ‘rhythm’ of the system versus staff usage. “If a staff member is at the checkout, each scan has to be under half a second for us, whereas in supermarkets performance is much more intense and probably needs to 0.10 of a second,” he explains.
“If we're looking at doing a parts search, however, response times may be up to four or five seconds depending on what a staff member is doing with a customer. So it's understanding the rhythm of the task and making sure the performance of our systems meets that.”
Having invested heavily in its architecture, Super Retail Group is looking to leverage capabilities further. “We have an awful lot of capability and the thing we're looking at doing is saying, OK, how do we really get returns from that?” Hesketh says.
Mobility is another game-changer, both for staff enablement as well as for customers. Super Retail Group is in midst of an 18-month program to roll out mobile devices and Wi-Fi capability across stores as a way of enhancing customer shopping experiences and adding to its omni-channel offering, Hesketh says.
“The idea is to be able to provide a lot more digital information to team members,” he says. Customers will also be able to connect in-store using Wi-Fi. “Consumers are doing up to 70 per cent of their research online before coming into store today, and we have to make sure our team members have access to the same information that customers do as part of that experience.”
When asked what the modern CIO looks like today, Hesketh notes the increased business contribution the role must make.
“The CIO has to deliver that crossover between technology and value,” he claims. “It comes back to trying to understand how new technologies, new opportunities, and the way technology's being used, impact the business and customer.
“If I look at the way businesses use IT, there's two major things I think about. One is how time and distance have changed as a result of technology. There has been this huge compression of business cycles and therefore our ability to respond and see what’s going on.
“The other change is the information intensity in business. The amount of data available today is one thing; being able to get it in front of people in a way that's usable and decipherable so that we can understand it and see the patterns is another.
“That has all sorts of other challenges in terms of people’s ability to use information to make good decisions. It’s a whole different approach to just saying ‘what's our sales trend over the last six months’.”
The danger for any CIO is not recognising the balance between keeping the business running, and leading change, Hesketh concludes. “The big risk is losing sight of how the organisation you're working in establishes value. If we stay focused on that contribution as CIOs, we have a chance to succeed.”
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