Coles CIO: The Greatest Challenges Aren't Technical

CIO: How would you describe your information systems at present?

Peter Mahler:I took this role for the challenge, and was not disappointed. As (CEO) John (Fletcher) has said, the systems were a legacy of the company's growth via acquisition. Most of the technology was developed in-house too, which created a lot of problems for the business when it needed new functionality to compete successfully.

The systems today are significantly different; we don't develop in-house any more, we buy best practice and refine to suit out needs. We have a strong focus on strategic architecture, so our systems are largely integrated. Systems are modular, [which means] we are flexible in responding to market needs and we don't have to spend a month trawling through indecipherable code that was written by 50 different people over decades. Less focus on the minutiae of the code means we can focus on engagement with the business.

To what extent does IT influence Coles's business strategy? That is, to what extent is IT an enabler of change?

I believe that IT should be intimately involved in the business; we need to understand the business, otherwise how can we ensure that our work enables the business to meet its objectives? The days of getting isolated requests for programming then throwing the code back over the fence for the business to deal with are long gone.

The relationship is much more sophisticated these days, throughout the corporate world. In Coles, technology requirements are defined by the business and IT working together, based on the business's strategic objectives. On major technology changes, IT is in a unique position to use our inherent process and analysis skills to guide the business in their thinking about managing change. We can help them understand the implications of changes because our experience reaches into all parts of the business. We can see the interactions between elements of the business because we have to understand them in order to implement systems.

What information systems do you believe will have the greatest influence over retailers in the future? How do you determine that?

Probably the biggest influence will come from integration of retailing systems. This was the foundation for the technology strategy in 2002 and it's going very well. Integrate the systems along the supply chain so the business can finally see and better control what is happening in all parts of the system. This leads to better cost control and a much better ability to respond to market and business changes.

In terms of individual systems, I would say that customer information systems will make the biggest impact over the next decade. Gaining a picture of who the customers are and how they behave is critical, and not as easy as you might think. This information is key to successful forecasting and market growth.

We spend a lot of time understanding what is happening in retail on a global scale. The principles are common sense, but the execution requires keeping up with world's best practice.

How is Coles seeking to implement such systems?

We aren't seeking to do these things, we are already doing them. Suffice to say that we have found the best people who all work extremely hard to implement these systems. The planning was carefully done more than five years ago, which has enabled us to continue implementing through all the unexpected developments of recent years. It requires lots of engagement with the business, so our technology people have developed the skills and experience to implement successfully using all the tools available and adapt to a changing environment.

What are the greatest challenges in terms of building the infrastructure Coles will require in the future?

The greatest challenges are not technical. The greatest challenges are the business changes, the changes to the environment we're working in, both internal and external. We're fortunate in that IT has the support of the senior management team and the board, so we have been able to continue focusing on the big picture and moving forward. Obviously we have had to change plans to accommodate business priorities, but we have been able to do that successfully.

We don't run with the bleeding edge in technology. We are open to innovation, but we need to be sure it will work for us. We don't follow fads. So everything we have put in is solid, but also allows us plenty of room to stretch into the future.

How does a fast moving enterprise cope with the nexus that exists between developing new applications for current strategy, while maintaining sufficient agility to be able to cope with any changes that are required by rapidly shifting business conditions?

I anticipated in 2002 that things would change over the course of the five-year strategy. It would have been foolish to think otherwise. So we designed the IT strategy very consciously to cover both the long-term strategic requirements and the shorter-term operational requirements. As well as some flex for any surprises, which did come — retailing is a very dynamic environment. And we did all of this within a pressured cost environment.

It also comes down to constant engagement with the business. Being partners with the business, not just service providers. Our IT people are represented in management teams at all levels. We are there when changes are first raised and discussed, so we have input. We do have to respond to a changing environment, but we have not put ourselves in the position of being the last to know.

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That coverage [The Australian Financial Review, "Investors shudder at Coles IT bungles" June 7] was unfortunate, and disappointing for an IT team that has done a great job delivering projects to time and budget. As John [Fletcher] said ("Coles CEO Defends CIO and IT Team"), the business has made decisions along the way to amend some timelines according to business needs, but we have always been able to accommodate that. As a leader, I think the key thing to when such reports come out is to reassure your team that the business still has faith in their work and direction, and do what you can to keep everyone focused on the main game.

CEO John Fletcher's letter to the editor in response suggested a very close link between IT and the business. There appears to be no culture of blame at Coles — rather a tightly integrated team approach to developing information systems. How has this been arrived at?

I think that's been a strength of the Coles team, in that we've had a clear business strategy and everyone's worked together to deliver it. At different times, different areas of the business will be the top priority, but the key to success is that the management team all agrees on the priorities and how their area can best support them. I think the IT team we have here at Coles has been exceptional for its ability to be real business partners and to be flexible as they help deliver the strategy.

What are Coles's biggest challenges in the near to medium term future in regard to getting its IT infrastructure right?

I think a change of ownership would certainly add an interesting new element, but it's impossible to predict what might happen. However we have nearly completed 90 percent of our transformation work and improvement on operational systems is ongoing. I can't see anything changing substantially right now.

How will you know when the IT systems are "right"?

If customers walk into our stores, find what they wanted from the catalogue, buy it at a competitive price, then come back again the next day — the systems are right.

Related stories:

"Beneath the Coles Kimono: The Spotlight on IT Transformation"
"Coles CEO Defends CIO and IT Team"
"CEO Fletcher and CIO Mahler: Two Takes on Coles IT"