The role of technology is changing at Marks & Spencer (M&S) – and changing the company itself as a result.
As high street retailers move to a multi-channel world, IT director Darrell Stein (pictured) and his team are delivering projects focused on driving innovation and profitability that have moved IT out of the back office.
As well as rolling out systems that will support the operations of M&S’s new central warehouse, the IT team is busy on projects such as creating a big data strategy and improving customer self-service.
On top of that, a major insourcing exercise is underway, with the move of the retailer’s e-commerce systems from Amazon Web Services (AWS) back in-house.
Stein, who only a couple of years ago marketed himself as the “back-office guy” and claimed to steer clear from new technology, has morphed into a different breed of CIO.
Not only can he be seen on Twitter on a regular basis and travelling to investigate technologies such as in-memory computing, but he also acknowledges that the internal view of the contribution and criticality of IT to business success is now different.
“The business has moved on – it is as simple as that. Operating in a multi-channel world without a very strong IT function is impossible, and that realisation has changed M&S fundamentally,” Stein told Computer Weekly.
Driving customer innovation
Evidence of the fact that M&S is upping its game in IT-driven innovation is the stream of projects that have been developed by the internal team of software engineers – a growing group, with Stein partway through recruiting 60 staff to join the firm this year.
Examples of projects delivered by the retailer’s IT staff include 156 screens dubbed “Browse & Order” – in-store terminals where customers can buy M&S’s entire online range across 63 stores. The team also delivered 191 large digital “inspiration screens” that carry editorial-style content about products and trends across 110 locations.
M&S also has equipped 1,500 of its customer assistants with iPads to enable staff to demonstrate the retailer’s full range of products to customers, as well as checking size and availability.
The platform move is a very big transition as we are moving a multimillion-pound business and we have to do that in the public eye
Darrell Stein, M&S
Other examples of client-facing technology include virtual makeover counters, which allow customers to see how they would look with certain beauty products applied, and a screen that helps customers choose their duvet and pillow choice according to their preferences.
“All this in-store technology to encourage customers to use tech to spend money with us has been developed by our in-house engineering team, typically with more agile methodologies – and we will be doing a lot more of that,” says Stein.
He also hinted that his team is looking at taking the bring your own device (BYOD) concept to a whole new level, but his vision is not limited to M&S’s own staff.
“We are looking at how to allow appropriate access [to information] to all our customers, employees and in-store. It is not quite the traditional BYOD definition, and it does mean taking a hard look at our infrastructure and how we can simplify things, knocking down some of the walls that have been put in place in the past,” says Stein.
“If you take our sandwich business as an example, it would be great if we could allow customers to check out without using the till. There is an opportunity to make some processes a lot simpler,” he adds.
“What we are trying to do is strike the balance between having proper governance in place and making it easy for people to bring their own device. This is quite a cultural change for the IT department and a big change, but also an area where we see a great opportunity.”
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Focus on big data
A key area of attention for Stein is what can be done with the vast amounts of information that M&S gathers about customer buying behaviour. The idea is to drive profitability and improve marketing and promotions by using data insights smartly.
M&S’s technology team is creating a big data strategy in partnership with other business divisions to work out what areas the retailer will focus on first.
“Instead of sending block emails out with offers such as 10% off to all customers all day, the ideal would be to send an email saying, ‘We know you bought two of these a couple of months ago, so here is a discount if you buy a third product now, because you tend to get two every couple of months’,” says Stein.
“This is what we call decision marketing – the closer you get to that, the more value you get out of your promotional spend. It is a case of doing what we are doing already, but even better.”
To achieve that goal, there was a need to consolidate expertise. Previously, employees focused on big data across the various IT teams, such as business IT and e-commerce, worked separately. But they have been recently pooled together into one team. There is now a group of UK experts and offshore resources involved in the various components of the firm’s big data projects, such as data clean-up.
Decisions around additional big data toolsets still have to be made. M&S currently runs a Business Objects suite coupled with an enterprise data warehouse powered by IBM. There are also several prototypes being done with a number of front-end tools – “all the usual suspects for big data,” according to Stein.
In early March, Stein went to San Francisco to meet a number of retail firms that he considers to be ahead of UK businesses in the application of big data technologies, such as eBay, Sears, William Sonoma and Safeway. He also visited suppliers that could be helpful in “delivering better big data and quicker to business teams”, such as Horton Works.
“We have learned how organisations are employing collaboration tools to encourage data use. Most businesses are combining information management activities into a centralised team, which we have already done,” says Stein.
“We have also seen a range of technologies – there is no one size fits all. And other businesses have the same issues as M&S, such as data quality.”
Does the fact that Stein had to seek these insights in San Francisco indicate that the big data offering in the UK is not good enough to meet Marks & Spencer’s needs?
“I think there are two things you can get from the US. Some companies are much further ahead of us, such as eBay, for example. It is also where technology such as Hadoop is at present – no one in the UK is doing anything with that kind of technology,” he says.
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Other important back-end projects that have a direct impact on M&S’s bottom line include moving the retailer’s multi-channel systems, currently hosted by AWS, to a new platform.
This project is being delivered in two big chunks. The foundations of the in-house system, such as product information management, data around images and order management processes, are going live in 2013. In the first half of next year, the new front-end will be up and running.
“It is a very big transition, as we are moving a multimillion-pound business and we will have to do that in the public eye. We can’t afford to have our website down for two weeks, two days, or even two hours – it has to appear effortless in terms of the impact on customers,” says Stein.
While the move is underway, M&S also has to develop skills in the IT department to carry out tasks that were previously done by Amazon, such as security and IT operations. The new hires will provide a lot of that additional expertise.
The much-publicised decision to insource was not only down to Amazon being an M&S competitor, but the fact AWS wanted to standardise its cloud offering and package it out to other retailers. In hindsight, was outsourcing the multi-channel platform back in 2004 a bad decision?
“At the time we signed up with Amazon, we didn’t have much capital or e-commerce experience. So AWS enabled us to scale our business securely and sensibly – and that business has grown enormously since then, about tenfold,” says Stein.
“I think it was a decent deal at the time, and now it is right for us to do it ourselves. The contract expires in 2014, and that’s when we will come out of it, so there hasn’t been a broken contract or anything like that,” he says.
Another key deliverable of the IT team is the roll-out of a new warehouse management system from Red Prairie. The platform will support a significant milestone for M&S’s logistics - its warehouse set-up, currently spread across the north of the UK, will be consolidated in one 900,000ft2 central distribution centre in Castle Donington from next quarter.
“The new system will improve service in terms of what slots we can offer next-day delivery to customers. With one big warehouse in the centre of the country, we can offer later cut-off times,” says Stein.
“It will also bring improvements in terms of availability, given that our stock is spread across different warehouses at present and we have to consider the product transfer between those sites. The new system will help in added automation and efficiency, as well as cost.”
Fast approaching seven years of service at Marks & Spencer, Stein is busier than ever, but satisfied with the current position of IT as a key part of the business strategy – as opposed to the back-office function it was in the past.
“IT is very much at the heart of the M&S business plan and, because of this, working in the IT team at the moment is an exciting place to be as we enter new international territories, push the boundaries of multi-channel retail and deliver big projects such as the new website platform.”