Wal-Mart's IT Group Has Come a Long Way: Is India Next?

Wal-Mart, famous for its high-flying IT group that until recent years refused to use packaged applications instead of home-grown apps, is now reportedly evaluating a business process outsourcing (BPO) contract in India. Outsourcing tasks such as procurement, merchandising and payroll would be a stunning new chapter in Wal-Mart's IT story.

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"India is one of several countries that the company is targeting as part of its remote sourcing model for IT activities," states the fact sheet. "The global expansion will encompass projects that range from the tactical to the strategic in order to provide necessary support for the company's growing business around the globe."

Did IT Play Role in Good Q4 Results?

In February 2008, when Wal-Mart released upbeat fourth-quarter results, then President and CEO Lee Scott attributed Wal-Mart's recent successes to "pricing strategies" and "improved customer service," citing cleaner stores, fewer out-of-stock products and faster checkout lanes.

But did IT play a part also? Given Wal-Mart's recent about-face in its technology decisions, an article on CIO.com asked just how much did IT and CIO Rollin Ford help Wal-Mart's quarterly profits? The vexing question—just how much does IT matter to executives, shareholders and Wall Street?—typically offers few concrete answers.

Wal-Mart HQ
The ISD group likely deserves a modicum of credit for taking advantage of robust packaged applications now available as well as the possible move toward outsourcing to India.

The consensus from retail and IT analysts: Directly attributing Wal-Mart's quarterly success to IT's efforts and Wal-Mart's newly installed retail applications wasn't easy to determine. Although one analyst noted that the massive SAP implementation had "deleveraged" the retailer's earnings.

Now, a year later and amid a deepening recession, Wal-Mart reported the strongest fourth-quarter results in its history, at nearly $108 billion in sales, which was an increase of 1.7 percent compared with $106.2 billion for the same quarter last year. Of course, much of that fiscal success can be attributed to the down economy and desperate consumers lured to Wal-Mart's "everyday low prices."

But still, the ISD group likely deserves a modicum of credit for taking advantage of robust packaged applications now available as well as the possible move toward outsourcing to India.

Will ISD get back some of that swagger that helped shape the department in its heyday? That's yet to be determined.

Copyright © 2009 IDG Communications, Inc.

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