Long-time Coles Group chief information officer Peter Mahler has resigned as Wesfarmers moves to break up the Coles IT operation into smaller parts following its $18 billion takeover of the retailer. Mr Mahler had held the role, one of Australia's highest profile corporate technology positions, for the past six years, joining the retail giant from Brussels-based Belgacom Telecommunications.
But under Wesfarmers' rule, he was facing the break-up of his information technology support division, which he had helped to build over the past five years.
Due to its conglomerate business structure, where it operates in markets as diverse as retailing, insurance and coal mining, Wesfarmers favours an IT support model in which each of its business units is supported by its own small IT team.
In line with this strategy, Wesfarmers is breaking up Coles's extensive IT operation into smaller sections that will individually service various divisions, such as Target, Kmart and Officeworks.
A larger chunk will remain to service the Coles chain of supermarkets and liquor stores, run by Mr Mahler's successor, general manager of IT Conrad Harvey. Mr Harvey previously was Coles's head of technology architecture.
A Wesfarmers spokesman confirmed Mr Mahler's departure on Friday, saying he would leave the company by the end of March.
Mr Mahler's exit marks the end of a decade-long technology arms race between Coles and arch-rival Woolworths that has led to Coles playing catch-up in the battle to modernise ageing back-office technology systems, particularly relating to its extensive supply chain.
Since 1999, Woolworths chief executive Roger Corbett has been using innovative supply chain technology to tie the company closer to its suppliers as one component of Woolworths' Project Refresh initiative. The project took billions out of the company's costs and is widely cited as one of the main factors behind its success over the past decade.
In comparison, Coles has struggled to keep up with Woolworths in the technology arena. In June last year, The Australian Financial Review reported the company had no automated stock ordering and replenishment systems, leading to frequent instances of stores being out of products.
There were also allegations that Mr Mahler's job had been complicated by internecine power struggles between his unit and other divisions. The report prompted a fiery response from the-then Coles chief executive, John Fletcher, who claimed it was without merit.
Despite the public problems, there are signs that Mr Mahler achieved a substantial amount of positive change at Coles. Last November, in an interview with MIS Magazine, the executive said he had inherited a "maze of disparate systems" mostly a legacy of the company's growth through mergers and acquisitions.
The group had developed a substantial amount of its own software, but Mr Mahler initiated a five-year strategy to standardise its back office on widely available software, in addition to working more closely with the non-IT portions of the business.
One major project was integrating the merchandising systems of Coles different brands, although there were hundreds of small initiatives under the overarching strategy.
Following the Wesfarmers acquisition, much of Mr Mahler's forward plans, amounting to hundreds of millions of dollars worth of developments, are likely to be scrapped, although some aspects are likely to remain as individual projects.
Wesfarmers is conducting a review of the IT support portions of Coles. The group's business integration manager Keith Gordon told analysts at its half-yearly results session last week the IT portion was "complex".
Mr Mahler was not available to discuss his future plans.
His future has been a matter of public speculation since Wesfarmers finalised the Coles purchase, although conjecture that he would take another high-profile role at Telstra or the Department of Defence so far has proved unfounded.
·Wesfarmers is restructuring Coles's information technology division.
· A repercussion is the resignation of Coles's chief information officer.
· Peter Mahler will leave in March.
© Fairfax Business Media
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