In IT circles, the name Randy Mott calls to mind two things – beer and nappies.
In the 1990s, Mott, then CIO of retail giant Wal-Mart, pioneered the creation of a vast, near real-time data warehouse. Not only
did the system enable ultra-efficient inventory control, logistics and in-store merchandising, it also threw up some rather odd correlations.
Most famously, Mott’s system identified that young fathers, sent by their partners to buy nappies on the way home from a hard working week, would often add a six-pack to their checkout basket. By simply putting the beer next to the nappies, Wal-Mart saw its Friday evening beer sales across the US soar.
Today, Mott plays that story down. “It was an exaggerated example, but it was there to make a point,” says Mott. The point struck home: the beer and nappies anecdote became the canonical example of the data mining sector, helping to spur a decade-long data warehousing boom.
Three years ago, Mott – who had joined Wal-Mart in 1978 as a developer in the IT department – was persuaded to leave the Bentonville, Arkansas-based retailer to become CIO of Dell, the PC and server behemoth. Dell may be the textbook case for the frictionless supply chain, but its customer data management and its IT department were far from perfect.
Mott sees his role at Dell as two sided: Not only must he continue to apply IT to refine the company’s business efficiency and help it to maintain its 30% growth rate, but his IT group must become a model of best practice for Dell’s customers.
“If we are going to tell customers Dell systems will optimise their business, then we have to be a shining example of that ourselves,” says Mott. “Even though we are thought of positively in terms of our business model, the fact is that, inside the company, we know there’s not any area that we can’t get better in.”
Since arriving at Dell, Mott has championed a number of major initiatives. These include refinements to the company’s legendary supply chain systems that have helped push inventory turns down from an industry-beating five days to between three and four days.
In addition, the company has overhauled its data warehousing and data mining capabilities to give it a much better picture of what its customers really want.
Finally, and perhaps most ambitious of all, Mott has rolled out a global IT system, not only to help iron out inconsistencies in business processes and supply chain around the world, but also to wring more efficiency out of Dell’s IT department.
Both Dell and Wal-Mart share a common philosophy in the way IT systems should be structured – one underlying system implemented globally, with local IT departments contributing to the overall specification as well as customising the finished product so that it fits the specific demands of their markets.
This model is a powerful driver of efficiency, believes Mott, and helps ensure a greater degree of uniformity in business processes around the globe.
“There’s obviously a lot of work to begin with. You have to say, ‘We are not going to do this over here because it’s being done in 10 other, different places. We are going to do it once and leverage it around the world’,” says Mott.
This is a continuation of Mott’s thinking at Wal-Mart. For example, when Wal-Mart bought UK supermarket chain Asda, the company’s back office systems, dealing with functions such as supply chain management, were replaced with Wal-Mart’s tried-and-trusted systems.
These were augmented by Asda’s own IT department with modules for functions that were important in the UK – such as the supply chain for fresh fruit and vegetables – but less so to Wal-Mart in the US. In turn, such modules can be re-deployed in the other markets around the world.
At Dell, an important pre-requisite of the global system was the implementation of common project management processes. This enabled Mott to get a clearer picture of what was happening in his department in different parts of the world.
And the level of duplication it revealed was astonishing. “As soon as we created a process of having all of our projects reported in a common way, tracked in a common way and referred to in a common way, we began to realise that, in six different areas, we had these plans to do the same thing,” says Mott.
Those proposed projects could then be consolidated and implemented once, saving Dell a considerable amount of money. “Even though it may be more expensive than any of the six, it’s not more expensive than all six put together. It may cost one and a half times more or maybe two,” he adds.
Initially, admits Mott, there was resistance to the idea. Not least because there was some concern that projects would increasingly be run directly from Dell’s headquarters in Round Rock, Texas and that local development teams would, therefore, be marginalised.
This was overcome, says Mott, as the first few projects were successfully concluded and staff understood that their roles would be different, but not undermined.
The “global development process” has been in place for just over one and a half years, says Mott, and has helped reduce IT costs as a percentage of revenue at Dell.
In addition, Mott says that in the three years that he has been working at Dell he has been able to slash the number of IT staff working on systems administration and maintenance while doubling the number working on development from 32% of IT staff to 62%.
Shifting staff and resources from “keeping the lights switched on” to working on new projects is a highly prized goal in the current environment. And Mott thinks he can take that further. “We are really looking for 75%,” he says.
One of those projects has been the construction of a large data warehouse.
At Wal-Mart, Mott built a data warehouse structure where access was not exclusive to executives at head office. Rather, department managers and store managers had access to store-level data held in the data warehouse so that they could track local trends and merchandise goods accordingly.
“[At Wal-Mart] there is a lot of autonomy in terms of decision-making being put at a level that is closest to where the decision can best be made,” says Mott.
At Dell, the idea is not just that the data warehouse should be used reactively, but that it should provide information that can be fed back into the company’s systems and, therefore, be used to influence other customers’ buying decisions. “So, if someone buys a product, we know that a lot of people who bought the same product also typically bought this additional product,” he says.
The same system is also used in the Dell servicing department to help correlate incoming data about faults and other complaints. This data is then fed back to service representatives so they can better understand the nature of the problems they are dealing with.
Ultimately, that knowledge is also fed back into the manufacturing side of the business to try to make the products more reliable.
But when Michael Dell hired Mott, he made it clear that his role would be as much ambassador, mentor and consultant as CIO: The message was clear, says Mott: “Talk to customers about our best practices, [how we are] using technology to be effective and then, when we have successes, share that with our customers.”
As a result, Mott regularly plays host to Dell-admirers from around the globe who want to see how they can emulate the global systems or the just-in-time logistics pioneered at Dell, while keeping their IT spending similarly low.
“I think there’s some real key drivers that make the way we approach business very beneficial to our customers,” says Mott. “Many of our customers do look at our model in terms of supply chain and ask us how they can apply that in their industry,” he says. “Obviously, it’s not identically applicable, but they can take back some of the concepts and approaches and try and drive them into their business.”
The problem CIOs in many companies have to overcome is not technology-oriented, believes Mott. Rather, problems stem from a business leadership that is only fitfully interested in IT, and that fails to recognise IT as the enabler of all their company’s key business processes.
“A lot get caught in the trap of saying: ‘Okay, we’ve finally got management’s attention to work on this one area so we need to do everything we possibly can do here before the attention moves on to another area’,” he says.
Many CIOs end up with costly, over-ambitious projects that, once implemented, suffer because management’s interest moves elsewhere and the IT executives are, therefore, not given the resources for necessary on-going enhancement and refinement of systems. That is not a problem that Mott has to face and the results speak for themselves.
At Wal-Mart he established the company as a champion of IT best practices; now at Dell, he wants to take that philosophy to the next level.