- 24 October, 2007 21:00
Though it became a global company long ago, Wal-Mart has historically run its operations from its Bentonville, Arkansas., headquarters. But management experts say the command-and-control approach practiced by many companies-which leaves little decision making to local store managers-won't cut it in today's partner-driven world. When you are big and global, there are "more vulnerabilities and points of disruption" to your operations, says Hau Lee, the Thoma professor of operations, information and technology at Stanford University's Graduate School of Business. Companies have to adjust by balancing local flexibility with centalisation.
If a shipment is delayed in a foreign country, for example, local managers are in a better position to respond than managers back at headquarters. Lee says: "The important task of information systems design is to allow those local actions and decision making. But the local actions and decisions that are made must come back to the centalised system." Top execs still need to know what's going on, after all.
For retailers, enabling local decision making gives store managers the ability to react to what's selling and work with its suppliers more efficiently, says Bobby Cameron, a principal analyst at Forrester Research. Store managers can "continuously shift the product mix in specific stores and in specific classes of neighborhoods to reflect each location's particular retail interests," Cameron notes.
Analysts attribute Wal-Mart's retreat from South Korea and Germany, for example, to an insistence on doing business the Wal-Mart way. Cameron says Europeans may not have wanted to adopt Wal-Mart's IT standards because they prefer industry standards and common interfaces that work for different business process models.
"It is now a global conversation," Cameron says. "And as a company like Wal-Mart becomes part of global networks-and no longer is the dominant player that tells everybody what to do-they are more brokers than in command."
Career equation: What you know + who you know = Success
The man whom former Wal-Mart CIO Randy Mott calls his mentor, Bob Martin ( Wal-Mart's CIO from 1984 to 1993), says his protégé is an "exceptionally bright" and "highly competitive" leader. But smarts and ambition aren't the only ingredients to a successful career. Who you know helps, too.
When Mott joined HP in 2005 (after a stint at Dell), he reunited with an old pal-CEO Mark Hurd. They met when Hurd was selling NCR gear to Mott at Wal-Mart. Mott, meanwhile, claims he has mentored 10 C-level executives across multiple industries within the Fortune 100, some of whom he brought to HP. Here's a sampling of the IT heavyweights who have a connection to Mott.
In 1999, Mott promoted Turner to assistant CIO-a newly created position. When Mott left for Dell, Turner got his job, and later became president of Sam's Club. In 2005 he became Microsoft's COO. While Mott received a US$2.2 million signing bonus from HP, Turner bested his old boss with a $7 million incentive.
Dalzell, who is retiring this year as CIO of Amazon.com, honed his data warehousing chops at Wal-Mart under Mott. Amazon founder Jeff Bezos plucked Dalzell out of Wal-Mart in 1997. Dalzell went on to create Amazon's legendary e-commerce engine and its CRM system for analyzing customer and sales data.
Wal-Mart retaliated by suing Amazon (among others) for allegedly stealing Wal-Mart's trade secrets by pilfering its IT workers. The suit was settled in 1999.
The CIO of Wal-Mart from 2002 to 2006 joined the retailer in 1991, when Wal-Mart acquired her company, The Wholesale Club. Mott promoted her to vice president in 1999. Dillman launched Wal-Mart's controversial RFID initiative.
She was named to Fortune's "50 Most Powerful Women in Business" list four years in a row and is now Wal-Mart's EVP of risk management, benefits and sustainability.
McMurtry spent his early career alongside Mott at Wal-Mart, working in applications development. He was instrumental in the development of Wal-Mart's first Supercenter, according to a press release announcing his promotion to vice president in 1999. McMurtry reunited with Mott at HP, where his responsibilities include supply chain and data warehouse systems, databases and product engineering.
The former "people director" for Mott's IT division at Wal-Mart, Brann followed Mott to Dell and now HP. In her current role she is head of IT planning, administration and governance.
45 years of Wal-Mart history: A technology time line
Sam Walton's self-described distrust of computers didn't keep him from building his company into a global leader of information technology innovation.
First Wal-Mart opens in Rogers, Ark.
With more than 125 stores and $340.3 million in sales, Wal-Mart leases an IBM 370/135 computer system to maintain inventory control for all merchandise in the warehouse and distribution centers and to prepare income statements for each store.
Electronic cash registers in more than 100 Wal-Mart stores record point-of-sale (POS) data to maintain inventory.
Wal-Mart builds a companywide computer network and deploys a system for ordering merchandise from suppliers.
Wal-Mart sales top $1.2 billion, making it the first company to reach more than $1 billion in sales in a mere 17 years. The company builds a computer center and installs the first terminal in a store: an IBM 3774.
The company begins to use bar codes for scanning POS data.
Store associates start using Texlon handheld terminals when reordering merchandise. Upon scanning a shelf label, the unit provides a description of the merchandise, information on prior quantities ordered and other data.
Bob Martin is named CIO.
Wal-Mart has 882 stores and sales of $8.4 billion.
Wal-Mart completes what is at the time the largest private satellite communication system in the United States. It links all operating units of company and headquarters with two-way voice, data and one-way video communication.
A check-in system designed to take full advantage of container bar-code labeling is in the back room of every Wal-Mart store.
A data warehouse prototype is created to store historical sales data.
Wal-Mart deploys the Retail Link system to strengthen supplier partnerships. The system provides vendors information on sale trends and inventory levels.
Randy Mott becomes CIO.
Wal-Mart has stores in 50 states, for a total of 1,995 Wal-Mart stores, 239 Supercenters, 433 Sam's Clubs and 276 international stores. Sales top $93.6 billion.
Wal-Mart makes Retail Link and EDI available via the Internet and begins using the Internet as an application platform.
Wal-Mart and Sam's Club launch online stores.
Kevin Turner becomes CIO.
Wal-Mart chooses the Internet for data exchange with thousands of its global suppliers.
Linda Dillman becomes CIO.
Wal-Mart has its biggest single-day sales in history: $1.43 billion on the day after Thanksgiving.
Wal-Mart announces it will deploy radio frequency identification (RFID) technology on Jan. 1, 2005.
Rollin Ford is named CIO.
Wal-Mart redesigns Walmart.com, starts experimenting with Web 2.0 and social networking tools, and contracts with Oracle and Hewlett-Packard to use their price-optimization and BI retail applications.
The company ends the year with $349 billion in sales, nearly 2 million employees and 6,775 stores worldwide.
Wal-Mart launches Site to Store service, enabling online customers to pick up merchandise in stores.