Phil Cutter seems to have a case of middle-age spread. That's not to say he's packing on the pounds -- the avid golfer, hockey player, motorcyclist is as trim as ever. No, Phil's expansion is of a different kind -- it's his role as CIO of Danier Leather that's beginning to fill out these days. And he thinks it's something that may be catching.
"I believe CIOs are and should be senior strategic partners that can have a positive impact on the company's Business Units, and in some cases, where appropriate, run them," he said. "While that expands the role of CIOs, it also gives them a more detailed view of the company's bottlenecks and increases their understanding of all 'customer' needs -- those of the internal user community, the store staff, and ultimately the consumers."
Cutter is a CIO that's earned his stripes in the retail sector. He began his career in the early 1980s on the floor, as a department manager for some of Food City's larger stores. From there he moved to Marks & Spencer, where he worked his way up from receiver to store manager. But computer systems were in his blood (his father was a data processing manager for University of Toronto Press), and he wrote to management, indicating he had an interest in this area. With the help of some training at Humber College, he landed a job at Marks & Spencer's head-office, writing Cobol code for store systems. A few years later, an opportunity opened up at Shoppers Drug Mart, and Cutter joined that company as Director of Systems Development and later as Director of Systems Support.
"Even at that time Shoppers was a big chain -- a $4 billion company with about 600 stores," said Cutter. "It was a great experience because it gave me an understanding of the real formal IT role, with approval processes that extended through various levels."
But eventually Cutter found that these extended approval processes slowed him down. He wanted to be able to make decisions faster. And that's what happened in late 1992, when he made the move to Danier's Toronto head office.
Here Cutter found a home that he could truly be comfortable in. Danier was only two decades old and didn't have much of an IT department, so he had a fairly clean slate to work with. And even better, he reported directly to the president, Jeffrey Wortsman, who himself was very technically savvy and remains so to this day, using a battery of electronic devices.
"Jeffrey brought me in as the CIO, and at the time there weren't a lot of people with that title. But he thought it was fitting for where he saw this role going, so he deserves all the credit for that," said Cutter. "He also had a vision that I thought was great -- a workplace enabled by easily accessible systems -- and I shared that vision. It seemed to me that Jeffrey was going to grow the company, and I could see that it was really going to go somewhere."
As things turned out, both men were right -- six years later, Danier went public.
Shuffling the management deck
A series of process-improvement initiatives at Danier paved the way for Cutter's expanded role in the organization.
In 1999/2000, after the company went public, Wortsman wanted to formalize the merchandising planning process, which includes design, manufacturing, merchandising, warehousing, distribution, logistics and sales. As the company was too small for an ERP system, Cutter's department had its hands full in helping make all this happen.
Completing this task in 2001, the company's next objective was to further define the merchandise calendar and tighten up the supply chain. Eschewing the huge consulting firms, Danier brought in retail specialists LakeWest Consulting in 2006 to help with the merchandise-calendar process improvements. Cutter worked with the LakeWest team as they undertook their process reviews and analyzed the company's distribution, imports, design department, manufacturing department, and merchandising department.
"They were going in and involving themselves in all the calendar-related functions, and I tagged along," said Cutter. "The experience gave me a better insight into these processes than I would have had in just providing those services."
With a growing understanding of its supply chain, the company now saw an opportunity to better deploy its management team, splitting some of the responsibilities at the top level. Along with the other senior positions, the Vice Presidents of Logistics (warehouse logistics, traffic and customs), and Planning & Forecasting (planning, allocation and forecasting) had both reported directly to Wortsman. Under the revised structure, they would report directly to the CIO.
"We talked about it and it made sense. We wanted to leave Planning and Forecasting separate from Merchandising because there's a kind of positive conflict between the two and we didn't want all the decision-makers to report under the same umbrella," said Cutter. "But when you do planning and allocation, you're using the warehouse and distributing to the stores, so why not have Planning & Forecasting and Logistics in the same group?"
He added that this arrangement may not work in all companies, but at Danier it makes sense.
Expanding the CIO role
With the change in management structure, the CIO's role changed as well.
"You're part of the Business Unit that has to deliver, as opposed to being the systems guy who provides the technology to the Business Unit, which in turn delivers," explained Cutter. "Logistics still has to deliver certain things, as they've always had to, but it's measured as part of my deliverable as well. So you are even more motivated to make sure that those areas are better serviced -- but not at the expense of other areas."
Cutter said that he is now more involved in the day-to-day understanding of the parts of the business that can best deliver service to the customers. As an example, he cites his dealings with Retalon, a company that makes analytical tools for the supply chain.
As a low-volume/high-ticket-item retailer, it sometimes makes sense for Danier to transfer goods from one store to another. But with millions of possible parameters to deal with, based on cost, availability of SKUs, number of stores and so on, how do you know when such transfers will be cost-effective? That's where the Retalon tool comes in, making suggestions on the movement of goods.
"The tool has improved the way we do transfers and we're looking for even more improvement," said Cutter. "Would I have been involved in that as a CIO? Sure, because it's a system purchase. But when you are part of the Business Unit that has to deliver, you come at it from a different perspective."
One of the biggest advantages of the new management structure is better alignment. Cutter speaks with Karen Marshall, Vice President of Logistics, and Bruce Aiken, Vice President of Planning & Forecasting, several times each day -- much more so than when his role did not extend beyond IT, and the two VPs were responsible for their departments.
"There wasn't necessarily a wall between IT and the Business Units, but when you're part of that Business Unit, you're involved in the day-to-day discussions at the top level -- where are we going, what tools do we need to get this done?" said Cutter. "You get to a finer level of detail. For example, you're watching daily sales down to the lowest level, you're watching the performing stores versus those that are having difficulty; you're watching the best routes and processes of logistics."
Cutter said that he now spends more time simply walking around and meeting with people.
"I'm much more involved than I was from just an IT perspective, where it was mainly about getting the systems in place for them to do their jobs," he said. "It's as if they took the CIO out of the company and said, 'You're now a consultant. We want you to go in and review every process, from the idea for the design of a coat to the point that it hits the customer's hands.' When you get into that level of detail, you learn where the pain points are and where the process improvements need to be made at the lowest levels."
What impact does expanding the role of the CIO have on the IT staff? According to Cutter, it puts more responsibility in the hands of those in the next level of command. "You need strong people at the director and middle-management level to make sure that the workload continues to be delivered and can run with less of your attention," he said. "You have to make sure that those people are up to the task of assuming a greater sense of responsibility and are able to implement the things that need to be done. My job is to provide them with whatever they need to get their job done, and I've got to meet with them regularly and make sure that those projects continue to run."
He added that you have to be careful as you add responsibilities and workload that you don't bite off more than you can chew. "Again, it comes back to that next level team -- how strong are they to do certain things -- because if you have to micromanage every one of those steps, you're not going to make it."
An important triumvirate
By earning his Masters Degree in Business Administration from the Richard Ivey School of Business at the University of Western Ontario, Cutter was able to enhance his business management skills and better position himself to take on his added responsibilities.
"Ivey was great in many ways. I think the case study method is very helpful," he said. "Some of those things that you learn over time you start to apply subconsciously. You're able to organize your thoughts better and present yourself better."
Cutter's MBA certainly stands him in good stead when it comes to his relationship with the CEO Jeffrey Wortsman and CFO Bryan Tatoff.
Cutter describes the relationship between the CEO, CFO and CIO as critical. "To me, there is an important synergy that needs to exist among these three people," he said. "They really need to be aligned because otherwise you're going to have roadblocks. If you're not following the president's strategy and direction, that's a problem. If the CFO isn't going to approve the funding or is working on a different ROI model than the CIO, that's a problem. If the CIO is just interested in implementing the latest and greatest technology, that's a problem."
At Danier, these three senior executives see eye to eye, and that has paved the way for Cutter's expanded role. And he's very interested to see how many other companies -- whether the same size, smaller, or even larger -- decide to adopt a similar model.
"I think it's already happening," he said, "and the message, I hope, is that more and more Presidents and CEOs of companies of all sizes understand that there can be much more to the CIO role than putting in a system."
Sidebar: Danier says good-bye to Mr. Big
Enhancing the role of the CIO isn't the only thing new at Danier. The company has also had an image makeover lately.
After a slump in the marketplace, Danier has taken the scissors to its former trendy, youth-oriented fashions and returned to its baby-boomer roots, providing stylish but not too edgy merchandise. The company's advertising reflects the change.
"There is no cleavage or Mr. Big from Sex and the City with a model so young that he looked like a father on his weekend visitation with his daughter," said analyst Cynthia Rose-Martel at Jennings Capital Inc. "The models are older, wearing high necklines and [they] look sophisticated."
Danier's 93 stores are devoting more space to coats and jackets, which carry higher price tags than other merchandise. And the company is offering fewer garment styles, but more sizes of each style. This has resulted in less traffic in the stores, but each customer is generally spending more money.
The makeover appears to have been a success. Despite unseasonably warm weather at the beginning of this winter, the company announced strong second-quarter results in January, with sales rising from C$61.8 million (US$54.8) to C$67.6 million.
David Carey is a veteran journalist specializing in information technology and IT management. Based in Toronto, he is editor of CIO Canada.
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