Steinhoff UK CIO Chily Fachler interview – Board representation and customer experience innovation

Steinhoff UK CIO Chily Fachler believes the furniture retailer behind brands Bensons and Harveys is pursuing the business transformation initiatives necessary which are helping it to succeed in a challenging retail environment.

Recognised in the 2018 CIO 100 for developing and implementing a digital transformation strategy that would enable the UK arm of the South Africa-based multinational to thrive, Fachler told CIO UK that Steinhoff UK was in a strong position, having secured funding and being run independently from the parent company which is currently the subject of a lawsuit in Johannesburg.

“We have two very well-known retail brands in Harvey’s and Bensons for Beds, and my main focus has been around retail,” he said.

“All retail I think is challenging at the moment. There is a lot of uncertainty in the world as there is Brexit. There’s currency uncertainty. There are all kinds of things happening in all areas of the world that is making people feel nervous and the first place that people show nerves is on the retail high street. And I think for us in the furniture sector, that’s even more challenging.

“However, we are standing up to the challenge and running at 100 miles per hour, but thankfully, doing very well.”

On the board

Fachler joined Steinhoff in November 2015, reporting to the CEO and sitting on the organisation’s board of directors.

The CIO described the company as having “a fabulous leadership team with a real sense of purpose and unity” which was taking the organisation in the right direction. Board level representation is also crucial for CIOs, Fachler said, in a modern business.

“It’s a huge benefit, but it’s more than that – I think it’s actually vital,” he said. “Companies that aren’t doing this are missing a trick.

“When I joined the company I was lucky because I was brought in at board level, so it wasn’t about having to prove to the company that this is important. There was a recognition within Steinhoff that this was an area that needed investment, an area that needed focus.

“Some of the leadership team needed to be taken on a journey; there isn’t anyone on the senior leadership team today that doesn’t appreciate how important technology is and how it is intertwined with all the areas in the business.

“I think that’s appreciated now. A lot of IT projects had struggled because there was no voice around the table before I joined. To have that voice is vital.”

Strategy and technology delivery

Fachler said that before joining the retailer, four different IT departments operated independently and that the new CIO was given the role to bring the technology and processes together, and implement a strategy for the whole company.

The real value from the CIO seat comes from the bigger thinking around strategy rather than IT delivery, according to Fachler.

“As a CIO, I think beyond the traditional technology,” he said. “We’ve done all the technical stuff and that’s bread and butter. You have to be on top of all that, but beyond of all that. My responsibility is to drive strategy, to enable strategy, to work with my colleagues in the senior leadership team and the board to actually get to that place.

“For me, that’s the exciting bit.”

However, Fachler is overseeing a period of significant technology investment and delivery. With Tableau and Alteryx, the CIO and his team are trying to deliver a ‘single version of the truth’ to put the right data and dashboards in the hands of Steinhoff employees. The company has a new warehouse management system using Snapfufil to improve stock control, warehouse productivity and operations, and reduce logistics costs significantly.

Rolling out in 2018 is a new point-of-sale system and the introduction of iPads in stores, which Fachler described as “the most exciting project” the company has on at the moment. Beyond upgrading a legacy POS system, the CIO said that this also represented a fundamental change in the way the organisation sells its products.

“At the same time, we’re also working on an initiative where we are taking all our legacy systems and we’re combining into one ERP,” Fachler said of a major consolidation. With three head offices and 450 stores, Fachler said that as much as a technical project the full ERP migration represented a significant business change by helping move the organisation to one way of working.

Steinhoff UK has moved over to Office 365 and Sharepoint, and the organisation has embraced Skype, videoconferencing and social tool Yammer. Fachler said that the company was saving thousands of pounds a month on travel costs through Skype and the Polycom videoconference suite, while Yammer had an “80% take-up in the first week” thanks to some early championing by the CEO.

Digital transformation

Fachler has online pureplay experience, and said that he was working on a broader digital transformation of the company with the marketing director and head of eCommerce. The end goal was that the concept of digital was not even considered a different entity.

“That really is about getting to a point where digital almost becomes irrelevant because it’s so entrenched in everything that we do that it’s not a separate thing,” he said.

Fachler’s background was predominantly in bricks and mortar retailers, having worked at John Lewis, Waitrose, Lillywhites, River Island and Black’s in senior IT roles.

“I made a conscious decision to move away from that,” he said. “When I left Black’s, I really thought to myself I needed to get some time with pureplay retail; I needed to understand why it was pureplay retailers were stealing a march. Are they that much better than the traditional retailers?

“What I found was that, actually, within pureplay there are a lot of the same kinds of issues. A lot of them around legacy because pureplay is no longer a new thing, it’s now 20 years old. A lot of it is around growing too fast in many organisations, but the one thing that they do have is a single-minded focus on the digital channel. Everyone knows, at the end of the day, your channel is digital.

“Traditional retailers have struggled because they have seen the digital channels as a separate thing.”

As such, Fachler is trying to achieve the position where “digital is ubiquitous, because everything we’re doing is around engaging the customer, helping the customer, selling to the customer, and giving them a great service after that”.

Customer experience innovation

Some of the emerging technologies Fachler and his team are experimenting with are artificial intelligence and augmented reality. The organisation has developed an AR application which has been trialled in a number stores, and allows a user to take a select a product – whether that is a bed or a chest of drawers – and move around the room to see how it might look in different positions.

The VR element allows customers to enter the dimensions of a room, place furniture around and enter the virtual space and navigate around the furniture to try and get a feel for how it looks.

Fachler quipped that, aware that a certain Swedish rival was developing something similar, “we couldn’t let Ikea get away with doing it without us doing it” and noting that it is fundamentally helpful for the customer.

Bensons for Beds’ Comfort Station Adaptive is a mattress filled with pressure points which lets customers know which type of mattress they need, which Fachler described as “probably the best example of AI” in our stores – a unique technology developed for use in hospitals, but which has been an incredibly successful device in facilitating purchases.

“In terms of trials, VR has been a big win for us with customers coming in and we can lay out what their room likes like,” Fachler said.

“What we’ve done with this technology is really prove that we can help the customer make a decision,” adding that it would reach its full potential when fully integrated with the new mobile POS capabilities.

But Fachler is wary however not to get caught up in faddish technology trends.

“The technology is there and it’s fabulous – but if you’re chasing the technology for the technology’s sake, you’re not going to get much benefit out of it,” he said.

“If you’re chasing technology because it’s answering a problem and it’s giving you a solution for an issue that you have, then that’s when technology is at its finest.

“I think you have to experiment a little bit, but you can’t go and spend hundreds and thousands on technology that isn’t answering your question.”

Security and GDPR

Like many CIOs, a significant focus in 2018 for Fachler has been around security and getting to grips with GDPR legislation. He said that Steinhoff UK had had to take “some difficult decisions about some of our data” and that the company had been through a significant training and education programme.

“The world will change with GDPR because the stringency of the rules, and the fact that you have to be really focused about what you are taking that data to do,” he said.

“GDPR will change the way retailers engage with customers. I’ve never been that convinced that datasets of customers are as useful as some people think. But I think GDPR is a good thing. It protects our rights as consumers and it makes us as companies be much more focused about what we need that data for.”

No matter the steps CIOs and their organisations take to ensure robust security, Fachler takes the position that there is no way of knowing you are completely secure to outside, and inside, threats.

The CIO and his team engaged a group of ethical hackers to compromise the business, to come to Steinhoff UK’s head offices and try to get into its network. Not wanting to divulge too much information, Fachler noted that “suffice to say we used the information to run quite a serious campaign around security”.

“I never say that we’re on top of it because you’re never on top of security, but we spend a lot of time and focus on it,” he said. “We have taken an interesting approach; you have to tick all the boxes, whether that’s PCI or data protection.

“But we’ve decided, that because you can tick the box, it doesn’t mean you’re secure.”

CIO role

Speaking to Computerworld UK Editor, and CIO UK contributor, Scott Carey, at the 2018 CIO 100 celebration reception in April, Fachler said that it was a great time to be a CIO now that the role had more recognition and was linked closer to business strategy.

“A number of years ago the role of CIO was all about the technology and all about service delivery and enablement,” he said. “I think now you’ve got a seat around the table. Today’s CIO has to be a business expert, has to be commercially astute.

“More and more people are coming through within IT departments and technology departments that are not technologists – they are business people, they are commercial people. They are the people who understand that the way we get things done is through the enablement of technology.

“It’s exciting times for a CIO.”