Leadership Insight > Jeffrey Neville

Eastern Mountain Sports CIO Talks About the Convergence of IT and Business Across the Enterprise

By Elizabeth M. Ferrarini

Many CIOs find themselves stuck in an IT alignment trap. They constantly have to demonstrate the value their role serves and to make sure technology works well within their businesses. They have a hard time measuring and quantifying the value of IT and how it affects the entire business.

Jeffrey Neville, CIO of Eastern Mountain Sports (EMS), a $200 million manufacturer and retailer of sports clothing and equipment, has moved IT beyond alignment to convergence with the business strategy. He says, "The business strategy is what counts. It links directly to IT." In fact, information, not information technology, drives every aspect of the business -- including what happens at EMS's 75 retail stores in 11 East Coast states. Neville says, "Information matters to all of our constituents. We rely on it for making well-informed decisions."

The move to convergence, along with outsourcing, has also made it possible for Neville to expand his role beyond IT. He has profit and loss responsibility for EMS.com, and a business-to-business unit, called Group Outfitters. He also oversees the catalog and the call center. He says, " I enjoy being my own customer at times." Because of his 12 years of experience with IBM's Business Consulting Services division, Neville plays a key role in developing the business strategy.

The BTM Institute recently sat down with Jeff Neville, CIO of Eastern Mountain Sports, to ask him about instilling convergence in every aspect of the enterprise. Here is what he had to say:

We frequently go through the organization systematically through a number of process improvement opportunities. We might use the organizational upheaval created by an application change to modify behaviors, to alter the culture, and to redefine processes. We might also go in the other direction, and do bottom-up requirements and then deliver on those requirements. We try to use both techniques wherever possible.

For example, we changed the way we delivered products and our Eastern Mountain Sports brand to customers by addressing our product lifecycle management processes (PLM). These changes meant looking at the culture and the behaviors of the cross-functional organization required to bring, say, a Teckwik shirt from design to store delivery or placement on our Web site. We chose to use a systems implementation project to put in a PLM system. We used that as a tool to drive those changes around the processes that we wanted to achieve.

Q. What are some of the cultural changes that you needed to make in order to make convergence happen?

As for cultural changes, we needed to first make sure the organization understood the importance of critical gates and dates in this overall merchandise calendar. Next, we had to make sure that everybody works towards the delivery of the product to the customer. Employees have to understand how the inability to meet commitments far up stream can ripple through the quality, accuracy, and timeliness of a product on the shelf.

Q. What are you doing to facilitate collaboration among your suppliers, customers, and employees?

We're leveraging the customer review capabilities we recently added to our Web site. If you buy something from our site, a couple of weeks later you get an email invitation to tell us about your experience using that product. You can rate the service or write a comment. Of course, we use this information as a service to help customers decide what products or brands to select.

Moreover, this information serves as business intelligence for our merchants and designers. It allows them to learn about new features and new functions our customers might want in specific products. For example, if we start to see a trend in new features for a certain product, we can have a substantive, fact-based discussion with our suppliers and our designers about why we should be making certain changes to a product. This process is a great way to channel direct customer feedback all the way through the design, sourcing, and manufacturing of the business.

We have call center people who respond to every single review we get. Our customers love to talk to us. When we first introduced this feature, we decided not to mask the poor reviews. We show the good, the bad, and the ugly. Besides showing a bad review, we let the disgruntled customer know about our return policy and our dedication to making sure the customer is happy. We'll work with the customer to try to solve the problem.

On the PLM side, we're also looking at ways to communicate with our overseas factories by giving them access to the same information used by our sourcing managers, designers, and merchants. This move will create a better working relationship.

Q. How are you using metrics or analytics to help store managers, for example, make better management decisions?

We have a couple of different dashboards for running the business. The merchandizing dashboard provides key metrics of the business by channel. You can drill up and drill down. You can dive into details. At the highest level, you see red, yellow, or green on the key metrics.

Our store organization dashboard looks at the overall effectiveness of the selling organization. At the detail level, store managers can see key metrics overlaid by hour for every day, and how those metrics relate to each other. For example, if a store manager sees a decline in traffic volume during a normally busy period, he or she can look at employees' salaries, schedules, and the hours applied to the selling floor at that time. Perhaps, the store manager didn't staff properly for the lunchtime crowd. The visual representation of those metrics has improved collaboration among our store managers, the district managers, and the team at base camp (what we call corporate office).

Q. How does the metrics you get from the various dashboards factor into your business strategy and decisions about investments in business technology?

This is where we get into the convergence between IT and the business. We start every year with what we call a strat plan refresh. It's not an IT strategy plan. It's a business strategy plan. I go through this with our CEO and CFO. That refresh then translates into an IT strategy. All along, it's very metric driven. If the strat plan says, we're going to improve a certain key metric, and then the tactics at the business level get driven out to that key metric. Next, we translate the tactics into a series of solutions based on people, processes, and technologies. The technology piece becomes an IT strategy, which articulates how we'll deliver on those required projects and solutions. The process flows from the beginning with the business strategy.

Q. What type of an IT dashboard do you have?

My IT dashboard provides two views of the world: project and portfolio management, and service level-based management. The first view provides the typical red, yellow, and green signals for project management. Every week we review what we see. The second view looks at the operational side of service levels for the infrastructure. This view enables us to make sure that we have reliable, cost-effective systems.

Q. A recent article in CIO Quarterly mentioned that you could use your metrics to determine if an employee has gone beyond the call of duty. Can you explain this?

We can drill through key metrics into different behaviors, and causes and effects within each store. The entire organization has access to that. The article talked about using fact-based decision-making versus analysis to support a hypothesis. Many organizations resolve issues by developing a hypothesis, and then looking for pieces of information that justify their hypothesis. In contrast, we try to enforce the opposite approach by doing the analysis at the key metric level. This way you can understanding what is happening and then draw conclusions from that.

Q. What indicators do you that your organization is fast approaching the converged state?

It depends on how you define convergence. If you say that convergence is having a business lead technology strategy, technology decision making, and technology governance, then we're mature in this area. Our management team wears several different hats. By default, we're also converged. We have a partially automated governance process with tools that capture demand. Once a month, we have an IT governance board meeting

Q. What outcome has IT convergence had on your bottom line?

It has helped us to prioritize our IT investments appropriately. It also has helped us to decide how we allocate resources throughout the company or when we should go outside for those resources. For example, real estate consumes a big chunk of our capital. Our business development director who is responsible for real estate planning relies on demographic information provided by a third party.

Q. How do you determine what processes to keep in house and what processes to outsource?

We reply on the Geoffrey Moore core versus non-core discussion. Core things include managing a production environment, developing a portfolio management strategy or an infrastructure strategy, and managing relationships with our suppliers. Because all of these things provide the business with a competitive advantage, I want to leverage leading practices.

At the other end, things that make the business run, such as the network, are non-core. I don't care who does these things as along as they can provide an expected level of service. If someone else can do it better than we can, then why not let them do it? For example, we decided not to build a team to manage and to monitor our network infrastructure. We have more than 75 stores, several different hosting facilities, and two buildings. That's a lot of network infrastructure. We found someone that could deliver our expected level of competency.

We decided we could manage our server infrastructure as good as anyone else. This move helps us build a career path for our team, and it helps to do it cost effectively.

When it comes to managing our network security, we collaborated with another company that specializes in this capability. Hiring someone with this skill would be difficult in our geographical location.

Q. Since you are in a limited number of states, how has the Web changed your customer base?

It has resulted in a channel convergence. We have many customers caught in between channels. We are a multi-channel retailer. We have much interaction among our channels. Some customers begin by patronizing our retail stores, then go online for a while, and then go back to retail or ordering from our 800-telephone number. These customers understand true convergence. Our customers don't care about that we offer these different channels from our own purposes, such as to understand how to we ship stuff. Our customers want to research products and then decide what to buy. We have a growing base of customers from other parts of the country where we don't have stores.

Elizabeth M. Ferrarini is a writer from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.