Inside Coles’ technology transformation

Embracing change has become a mantra for CIOs looking to take a more strategic and innovative position within their organisation today. But for Coles group manager of IT, Conrad Harvey, true business transformation comes from getting others to want it and lead the way.

“You’ve got to make someone really want the technology and see how it’s going to add value to them and to their mission, as well as deliver for the customer,” he says. “Then they will lead the change because you helped them see the opportunity.”

Harvey has had plenty of occasions to both influence and instigate innovation at the Australian supermarket giant during his 10-year tenure.

He was initially brought on as a program director for a merchandising systems refresh project, before taking the role of general manager of IT strategy, architecture and program delivery in 2004.

Following Wesfarmers’ acquisition of the Coles Group in 2007, Harvey became IT group general manager across a team of more than 700 staff. He was heavily involved in the transformation under Wesfarmers and has maintained a high-profile and impactful role during and post-acquisition.

Prior to joining Coles, Harvey worked for Accenture delivering projects across South Africa, the UK and Australia, largely in the retail sector.

One of the key drivers for the IT function is to “live and breathe the important values at Coles” – a focus Harvey readily admits wasn’t there when he joined the group. He describes his time at Coles in two chapters: The first as head of the Coles IT unit; and the second as a core business contributor.

“As Coles IT we had our own logo and acted as a consultant to the business, charging an hourly rate,” he recalls. “Since I have been able to take the team under my wing, we focus very much on being part of the business, rather than a service provider.

“As team members, it’s about how we can help innovate in areas that matter to both our customers and the wider team. We work hard on ensuring we are one of the top participants working in-store, and we continue to get very high engagement scores.”

On the list of Harvey’s biggest customer achievements in the last five years is deploying automated replenishment, which he claims materially improved the availability and efficiency of Coles’ supply chain.

“This means we’re getting products through to our store fresher and in a more timely fashion,” he says.

“We have a large number of our stores on assisted checkouts and are constantly growing new models of those checkouts, which allows us to offer new options to our customers.

“In addition, there are obvious things you can do around leveraging the loyalty and Fly Buys programs, which are both exceptionally great value for our customers. On top of that, we’ve changed the digital interactions. The online sites, social media space and mobile phones are each a different touch point where we can change the customer experience.

“But at the heart of everything Coles IT has to do is deliver ways in which the business can save money so we can reinvest that money into the price point. That’s core to our business.”

Technology transformation

There are plenty of technology changes underpinning how Coles meets this objective. Among Harvey’s list of priorities is adopting a hybrid cloud model, and he’s moved up to 40 per cent of total workloads to cloud infrastructure to date.

While there are some savings in using external cloud environments for test and training activities, Harvey admits significant cost reduction hasn’t been apparent. He suggests the real value is in preparing the organisation to take advantage of multiple options further down the track.

“On average, we would perceive that hosting most loads is still marginally cheaper internally than externally, but we expect that as the cloud fully matures that line is going to shift,” he says. “By building the right cloud technology and orchestration today, we have options for the future.

“What’s exciting for me over time is narrowing down my focus on infrastructure, and making it less of a discussion point for small and medium-sized projects and workloads. Against that I always need to balance the right levels of robustness, security and location that means I’m delivering the right outcomes for customers.”

According to Harvey, certain loads are always going to be difficult for large corporates to move into the cloud. “It will remain so until cloud [providers] understand and contemplate the same levels of redundancy we take for granted in the way we have active-active data centres, for example,” he claims.

“At the moment, the cloud isn’t really geared for that; it’s geared for quick and easy renting of capacity. And you almost wonder whether it will ever model itself on that, because it’s always going to be a relatively low use case.

“As a startup I’d love cloud, but Coles is not a startup. We run millions of transactions every day and it’s necessary for us to have the sorts of resilience that still naturally come out of two data centres hooked together by dark fibre. This may evolve as cloud models evolve, but at this stage you’ve got to trade off tomorrow against today.”

Big data to deliver business efficiencies and better customer engagement is another majority area of focus for Harvey, and he explains his team is taking a three-pronged approach to information management.

The first – and ongoing – strategy is an extensive replatforming of the group’s structured data warehouses to Oracle Exadata boxes.

“This means we can now get data out of the warehouse at a pace that was previously unthinkable,” Harvey says.

The second priority is better leveraging unstructured data to gain new insights, and Coles is trialling solutions such as Hadoop to do that, he says.

The third pillar is putting information in the hands of team members. To do this, IT has invested in application reporting capabilities to give regional store managers and leaders drillable reports and dashboards on their iPads.

“This keeps them in the conversation and in the moment, but using the report as a way of informing the conversation on the shopfloor,” Harvey explains.

“Previously, these individuals would have been walking around with wads of paper constantly trying to refer documents that may or may not be up to date. Because of the back-end technology, we’re able to deploy this information in very easy-to-use, graphically intuitive front-ends on tablets to people in our shops and at work.”

Coles has been running the insights applications for eight months across 1200 iPads in-store and the Coles Store Support Centre, and is rolling out a similar application for Coles Express. Information includes sales data, stock availability, store remuneration, markdowns and waste.

“The more exciting thing is we’re actively using Agile in this area as a way of prioritising and working with a group of stakeholders to give them the best product as we go through the project, within the scope and timeline, to give them the best possible outcomes,” Harvey adds.

“Having the stakeholders lead this means every day they are helping set and adjust the priorities based on the technical realities being encountered by my team.”

That need for real-time connectivity is apparent in the wider range of mobility projects Harvey has been working on too. Having run a corporate BYOD program for the past three years and maintained thousands of devices in its network, the latest step has been bringing BYOD to store managers.

“We are getting exceptional high take-up of that, and it’s an example of a win-win for both Coles and our store managers,” Harvey claims. “It’s also good for customers as it means our store leaders are out more on the floor.”

Other current mobility projects are trialling a tablet ordering solution for produce, and a mobile-based picking solution for online. “Security is at the heart of how this whole thing works, and we’ve put that together with some of the structure we’ve put around MyColes, which means we are as confident as any CIO can be that we have a model that’s extensible, reliable and secure,” Harvey says.

Next up: A question of ownership

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A question of ownership

Through all of his work, Harvey says innovation and ideas have come both from within IT, as well as across the organisation. What’s vital is that people receiving and implementing the technology own the project and want the outcome, he claims.

“If IT foists outcomes onto teams and business leads, inevitably you get a sub-optimal outcome,” he says. “While IT plays a pivotal role in informing people of new trends, technologies and opportunities, it’s crucial we make sure the solution, as it is formed, delivered and then run, has to be owned by the right person and right function in Coles.”

This view extends to the question of who owns digital, as well as the rise of the marketing function in technology purchasing and implementation. Harvey downplays any questions about who should be responsible for the technology or leading the way, saying the impetus should be efficiency and customer delivery.

“Like many things, it’s tempting to look for the conflict, but if you just focus on the win-win, the roles just naturally evolve themselves. My head of digital and loyalty systems gets on exceptionally well with the head of digital marketing, and the two understand how they can add value to each other. We’re not spending the time arguing who should be doing what.”

Where Harvey has placed his emphasis is on helping marketing to move from solving problems one by one, to building platforms people can use to solve problems at scale and more efficiently.

“IT should be helping marketing evolve the platforms, tools and assets it can deploy in the digital space, making it easier to exploit the opportunity to be had in digital,” he says. “Choosing and prioritising those assets is a two-way conversation.

Digital is not purely about the colour of the screen on the website, it’s what assets we as a company should be building that allow us to leverage multiple marketing initiatives and across multiple touch points.

“To do this, we always try to tie up our messages across all customer platforms, so that whenever an opportunity arises – for example the One Direction competition – we are building a reusable asset for when those opportunities arise in future, and so we have the capability to do another competition.”

Being a CIO

While he’s comfortable on the strategic high ground and being a business-led executive, Harvey doesn’t believe this should take away from the day-to-day operational role CIOs need to continue playing in their organisation. In fact, he believes anyone who says CIO shouldn’t have a focus on the day-to-day operations of IT are actually diminishing the role’s importance.

“The reality is the most important noise in my working life is the beep made every time someone scans a product at our checkout,” he says.

“One of the most enjoyable things about being a CIO is that you have to balance real day-operational decisions and trade-offs against thinking about what system and platform I am going to need in three or five years’ time. I wouldn’t trade that for anything because it helps keep the role real.

“There aren’t many roles that have such a diversity in focus and where you are literally down in the weeds working out how you’re going to apply the latest patch to Internet Explorer, to the next day thinking about what service-oriented architecture we should be putting in place based on the assumption that we’ll be deploying different types of sales terminals in different locations and channels long-term.”

Whatever the challenges in future, Harvey says he couldn’t imagine a job he could enjoy more than the one he’s in today.

“I’ve loved making significant changes with my team and really making a difference to the way our team members work at Coles, and the way our customers shop with us,” he says.

“You have to enjoy it to do this job and you’ve got to be constantly testing whether you’re pushing technology because it’s cool, or if you’re pushing solutions and options that will make a difference to the customer and team.”

Keeping an eye on the prize

CIOs need to ensure they are business-first and commercially focused if they wish to remain key contributors to strategy and retain a seat at the executive table, Harvey claims.

“It is very easy in IT to lose sight of the money that has to be made, the customer offers that have to be delivered and the customer propositions that have to be put together,” he comments.

“If we are focused on the business objectives and keep the long-term priorities of the company front of mind, there are such exciting things we can make happen with technology working as part of a business.

Harvey points out his own team takes a highly disciplined approach around capital and investment, knowing what “benefit levers” will be pulled and what will be delivered before they embark on any project.

“For us, the delivery of an ROI is the way into the door, not the way out,” he says. “We know upfront whether we expect a project to improve store performance, reduce effort to be allowed to be redirected to somewhere else, or to improve our decision-making in terms of margin, investments, or otherwise.”