February 1, 2002

ROI: Return on Information

Q&A with Gap Inc. CIO Ken Harris

By Justin Kestelyn

"Do more with less" has become a trite dictum across the business and IT press recently, but if you're an IT executive in an information-rich organization, the words truly to live by are, "Do more with more." Such organizations are awash in information assets, and they have but to unleash their value through carefully planned, efficiently executed IT investments — which may run the gamut of complexity from company email to strategic business applications.

Gap Inc. CIO Ken Harris, who has also served in that capacity at PepsiCo and Nike, intimately understands that for companies that have met this goal — intelligent enterprises by definition — the fulfillment of IT's business value relies almost entirely on the implementation of a long-term vision that is commonly agreed upon by IT and business decision makers, as well as technology partners.

In this Q&A with Intelligent Enterprise, Harris provides practical advice about how to create your vision, make it a reality, and then ensure that technology partners make useful contributions. He also touches on some most important topics in retail IT today, many of which are directly relevant to other industries.

IE: What is your view of the role of the CIO at Gap Inc.? And how did your previous experiences shape that view?

Ken Harris: My role as the CIO is to enable the business to leverage information and technology to provide better products and service to its customers. Inevitably, that means bringing change to the organization. In my experience, even the simplest technology, when well delivered, leads to dramatic change. As a CIO, you have to be concerned with the information, the technology, and the change.

For example, at Gap Inc., we brought email and intranet access to all stores. We wanted to provide greater support for store personnel by enhancing communication, knowledge sharing, and customer service capabilities. We had to overcome a concern that the technology might distract store personnel from customers.

The implementation was a success, the technology very well received. But we also noticed that we began to change the way in which the organization operates: Stores feel more connected, more supported, and more empowered to provide great customer service.

As CIO, you could look at the project in two ways. On one hand, you could think, "Great, we've brought new technology and capability to stores." On the other hand, you could think, "Great, we've improved the way we do business and the service we provide for customers." When you look at it in the latter way, you realize that simply deploying the technology is only the beginning. In fact, I'm not even sure it's the beginning. It's probably somewhere in the middle, because long before you deploy, you need to have created a vision in line with business objectives and convinced people of the value of the technology change. Then post-deployment, you've got to support people through the change so they'll use the technology to achieve the benefit for the business and the customer.

IE: What about measuring the effectiveness of such deployments after the fact? ROI is an especially big topic across industries right now, not just in retail.

Harris: Measuring and capturing benefits is critical to success. Within IT there are two different situations. For processing activities — such as payroll or payables — it's relatively easy to track IT investments by looking at such objective and quantifiable measures as improvement in costs, response times, and system availability. But tracking benefits in the development or "change agent" situation is trickier; often, the benefits appear intangible or harder to quantify. You have to start with an organizational frame of reference: a long-term technology and business picture of where you're going and why. The picture must be stated in business terms so it's easy for everyone to understand. From there, you often can quantify and compare your progress against the target.

IE: How does that process work at Gap Inc.?

Harris: Some time ago, we created a technology map, articulated in very simple business terms, of where we were and where we wanted to go. Gap Inc. is a very artistic, creative organization, so the map was expressed as a one-page "palette." The palette showed key business functions and their component activities. For example, the supply chain function includes activities such as inventory and purchase order management. We then color-coded each activity to reflect the state of the technology supporting that activity. It was a very simple way to communicate the "as-is" condition.

Partly based on the learning from building the palette, we adopted a different technology strategy. Instead of traditional self-development, we're now partnering with a few strategic technology suppliers to fill in the colors on the "to-be" palette. This palette serves as the blueprint for how Gap Inc. will leverage technology, and everyone in the organization can see and understand it. From that reference point, we prioritize our activities and measure our progress. In truth, it has focused our technology efforts on higher value activity and eliminated a lot of other work.

IE: That explains your rising interest in packaged applications. What steps do you go through to confirm that a potential technology partner can meet these goals?

Harris: We perform a standard review of potential technology partners including their current products, cost, and customer references. We also require their commitment to achieve the business benefit from the effort, not just the technology implementation.

Before we move forward with a project, we develop a business case including the benefits that will provide the necessary return on investment for the effort. We plan to capture those benefits in future budgets. We also connect our technology partners to the achievement of those benefits.

IE: What if there is no obvious, clear-cut way to track ROI? For example, customer relationship management (CRM) is widely believed to have no objectively measurable benefits.

Harris: Every project has objectives; the challenge is to find ways to quantify and get commitment to the benefits that flow from achieving the objectives.

IE: That's an interesting point, let's discuss CRM a bit more. Do you think it deserves the backlash it's been getting recently?

Harris: Not fully. It's a matter of finding where the benefits of CRM come from. Would you say that because a lot of B2C Web sites have gone under that the Internet is a failure? Obviously not.

I think people went in a lot of different directions with CRM. Some were successful, some not. Through the success stories the ways in which CRM technology adds value are starting to become clear. For example, the ability to get customers who are in our stores to visit our Web site, and vice-versa, is a big win.

IE: You've probably noted that many of the enterprise applications vendors, such as Siebel, Oracle, and PeopleSoft, are integrating analytics into their packages. Will you take advantage of them?

Harris: Let me first say that I believe a changing relationship is forming between technology developers and technology users. It's becoming more important than ever for technology developers and users to collaborate, with the key measure of success being positive result for customers. This collaboration will include strategy, development, implementation, and leverage or use.

That being said, we believe there is great value in application analytics. Connecting data warehouse information to analytical engines will provide even greater benefit. We think that this is a significant area of competitive advantage in the future, especially with some of our key software partners such as Retek, Oracle, Microsoft, E.piphany, and NCR Teradata.

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