November 30, 2004

The Secret IT Weapon: People

By Evan Schuman, eWEEK

Opinion: While IT managers are constantly chasing greater efficiencies, Evan Schuman wonders, are they ignoring the most powerful and adaptable brains in the world?

For years, line-of-business managers have told IT executives that their goal is to improve efficiency. Their mission is to leverage hardware and software to do in a nanosecond what it takes human employees minutes, lunch breaks and vacations to do.

Today's IT exec is quietly learning a different lesson: Efficiency is pleasant enough, but it's almost as weak a business value-add as low price. Being the low-price leader is a good way to get near the top, but it is so easy and inevitable that someone else will beat your price and you're toast.

Besides, being the low-price leader is ultimately unsustainable because, if it works, the company will grow and develop overhead, which will pave the way for some smaller company to come in and knock that low-price crown off your head like a 9-year-old's hat in a snowstorm.

People often point to Wal-Mart as an example of how low price can indeed support the leader. But they forget that Wal-Mart didn't start life with a low-price differentiator. It started as a retailer willing to go into small communities that no other chain wanted.

Since then, it's pushed the envelope on technology deployment so that it can remain cutting edge. It's not low-priced because just because it chooses to. It's low-priced because it can bring in goods cheaply and push them through its supply chain in lightspeed.

Outsourcing customer support and tech support is very efficient. But customers hate it, and that's a bad indicator. A recent consumer survey reported that customer service is a critical concern and it is costing some e-commerce players business.

The smartest retail IT execs are using technology to work with people and to not replace them. Consider Best Buy. Like every other e-commerce vendor on the planet, Best Buy has been offering shop-online-pick-up-in-the-store programs for its site. The difference? When a pickup request is placed, the customer is told electronically to not pick it up until the store confirms that it's actually available.

In the middle of this very high-tech process, an employee is dispatched to run to the aisle, find the product and bring it up to the counter. Like everybody else's, Best Buy's system can certainly access inventory and look up what's available. But Best Buy's IT execs knew that such a system was fallible, such as if another customer picked up the item—but had yet to purchase it—after the availability had been confirmed.

Best Buy uses technology brilliantly because it is willing to insert some human intervention.

Self-checkout systems are another classic example. If they were being used to solely replace cashiers, it wouldn't be much of a long-term strategy. But many grocery chains argue that they want to use it to redeploy those people to bakery units, to help customers with their bags and to doing deliveries. In other words, they are using technology to do what it does best, leaving humans to add value.

Another holiday example comes to us from home entertainment chain Tweeter, which wants to push itself in areas where more technologically oriented chains cannot: in-home customer installations and consulting. But Tweeter is pushing CRM limits to understand those customers' networks in a way that goes beyond what those customers themselves have.

Although the owner of an aggressive Web site, clothing chain Casual Male also uses CRM aggressively to identify its customers so that floor salespeople can help close deals. But does its site use fancy virtual fitting rooms? Nope. Casual Male believes that a tailor works best feeling material and chalking up pants, which it believes is what customers want. Technology has a place in Casual Male's more than 533 stores, but not at the end of a tape measure.

With the season's wave of shoplifters and related fraudsters, many retailers are launching sophisticated anti-fraud measures, both on their sites and in their physical stores. The Chase-Pitkin chain of home/garden supplies is certainly no exception.

But after Chase-Pitkin deployed an elaborate software system to reduce thefts, CIO Chris Dorsey discovered that identifying the problems only got him one-third of the way to solving the crimes. For that, he used the software's data to reposition cameras and to tell undercover security agents what to look for. It worked.

But neither would have worked alone. Without the new integrated software system, the security guards and the cameras were looking for the proverbial needle thief in the retail haystack. The technology only worked when it was integrated with humans.

It's certainly not a radically new thought, but it's one that bears repeating. When you're salivating over the latest piece of hardware, it's sometimes worth noting that the fastest and most adaptable CPUs in the world are already on the payroll.