CXO Challenge

CXO Challenge is a landmark study into the strategies and tools Australian organisations are employing to meet the needs of the digital consumer.

Below we profile the country's most influential technology and business executives and discuss disruptive innovation across key sectors of the Australian economy.

Jumping off a cliff for your customers

Paul Keen - Dick Smith

Beverley Head   |   February 26, 2015

Paul Keen

Dick Smith IT chief's biggest threat is customers who know more than staff.

Paul Keen is clear-eyed about the threat of digital disruption.

“If digital really has disrupted you, you've been sleeping.”

The general manager for IT at Dick Smith Electronics says that since he first started work - as a developer in an ecommerce business in the late 1990s - it has been clear that nothing would stay the same again.

“It's not like this is a new concept that has just come along…digital disruption has been gradually expanding its reach for the past 15 years, online, creeping up on us, and then in 2014 it became a big thing."

The real shake-up, he says, comes from the people walking in through the front door.

“What is disruptive is more of an evolutionary thing - customers are expecting more.”

Keen says his role begins before the customers get to the front door - pointing out that in the electronics industry, 80-90 percent of customers have already done their homework online before they reach the shop counter.

The typical Dick Smith customer “knows as much about a product as our employees do and knows the competitive pricing better than our employees do,” he said.

The ability to compare global pricing, reviews and recommendations at the click of a mouse have upped the ante for in-store sales staff, a trend that is not lost on Keen and his team.

He says the solution is to implement information systems that allow employees to add value to the conversation with the customer by providing them with additional insights about a particular product or practical advice to help them seal the deal.

For example, a customer data profile could alert a sales assistant that last time the customer bought a product from Dick Smith the delivery was late – and that they should offer a discount this time around by way of apology.

Transformation underway

At the same time as strategising for an increasingly savvy customer, Keen has managed the IT operations of Dick Smith through a blisteringly-paced corporate transformation.

Dick Smith was sold to Anchorage Capital Partners for $20 million in 2012. In November 2013 the company was floated for $520 million.

The company’s 18-month old growth strategy has seen stores multiply – in the last six months it has added 65 new outlets and is on track to hit 400 this financial year – and it has also opened the Move electronics outlet at Sydney Airport. It currently employs 3500 people.

Online sales continue to rise – from five percent to seven percent of all retail sales during the past half year – while the business has kept overheads in check; in the most recent half year, the cost of doing business dropped 41 basis points.

This sort of growth coupled with cost control demands a special approach from IT, according to Keen.

“It’s more of a philosophical approach. We try and think about the customer even when we do internal work, even when we do internal planning. We always ask how the customer will benefit from this work. If the customer can't benefit we challenge ourselves - are we just navel gazing, does it really need to be done?”

This is probably why there has been no real rush to retire legacy platforms such as Dick Smith’s AS400 platform – but there has been an architectural rethink.

“We could spend the next three or five years putting in a large ERP system and get fired along the way for overspending. We are in turnaround phase so we needed to grow very quickly and needed the agility for a turnaround – we need to try everything and see what sticks,” Keen says.

To support that approach, the company last year constructed a data warehouse using Amazon’s Redshift. 

“We think the data should be closer to the customer - then we can provide interfaces, an API layer.”

Redshift allows Dick Smith to create an information lake filled with data from its own ERP and financial systems while also adding in product ratings and reviews that can be served up easily to customers and employees. In the future Keen envisages adding warranty and receipt information to the warehouse.

It’s an approach that allows IT to turn on a dime when there is clearly identified benefit for the customer.

Which is lucky because Dick Smith’s marketing department signed a deal with CatchOfTheDay recently – and gave Keen a grand total of ten days build the back-end to support it.

“We try to pre-think what the departments are going to need – it’s bimodal or two speed IT," he said.

“Our marketing departments want to know catalogue information, inventory information, pricing, information about orders and the customer.

"We try to have a series of APIs available for different tools and services so when they want to consume them we can control it and put some governance around it,” he says, adding that this approach still leaves some headroom for tackling bigger ticket transformation projects.

Keen sees this bimodal approach as critical to turning IT’s frame of mind towards a “yes culture,” a pre-requisite for an agile enterprise where a uncooperative tech team can be easily bypassed.

“The idea of guarding everything is pretty much outdated – especially now any department can get a corporate credit card and sign up for an  enterprise grade service like Salesforce."

Instead of putting up barriers around his territory, Keen encourages business users to come to the team with their requests.

Continue to find out why Paul Keen is underwhelmed by some retail innovations...

Future retail

While the entire retail sector is being assaulted by technology, Keen isn’t convinced every innovation will enhance customer experience.

“I still struggle with the beacon thing," he said.

“If someone has gone to the effort to download the Dick Smith app … then they walk round the store and we push them offers, I suspect the first thing they will do is delete the app because they know they are being tracked and they don't want that.”

A more valuable approach might be to use beacons to alert Dick Smith staff to a customer entering a store so that they can have a click-and-collect parcel ready at the counter.

“That's a better customer experience rather than just using data for re-marketing efforts,” Keen says.

While he and his team of 32 form the beating heart of technology in the enterprise, Keen firmly believes the digital strategy should come from the CEO.

“The digital strategy should always align to what the business strategy is. The digital strategy should come from the CEO. The CIO is the enabler of that - but the driver of it is the CEO.”

CIOs however do need to speak the language of the C-suite, and Keen says to that end his MBA has proved invaluable, even though it was completed while he was living in the Southern Highlands, struggling with a five-hour daily commute and a newborn.

Without a Bachelor’s degree (he dropped out of a course to start work as a developer in an ecommerce company in the 1990s) Keen realised he needed to jumpstart his skills in order to progress his career.

“I can speak the language now. When [the other executives] talk about net present value I know why it's important and how that is derived. Same with the HR department or the marketing department.

"Where MBAs get a bad name is when someone has done a three month legal course and they say ‘I can do contract law’ - no you can't - you don’t know enough to have a decent conversationn," Keen said.

Equally important to communicating up through the echelons of the business is staying in touch with the coal face.

“I spend a lot of time going to things like meet-ups - things that aren't necessarily on my peer level, but are still important because I'm trying to find the trends going on out there.”

He also scours the horizon – to see what upstart innovations are gaining traction.

“If you see something growing very fast - Uber would be a very good example, their market share is tiny, the growth model is scary for taxis - that's what I'd be looking for. The new models growing so fast it looks like an epidemic.”

And taking advantage of the “epidemic” before it takes advantage of you? That’s when the pre-thinking really pays off.

Multi page

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