by Meridith Levinson

Why Is Bob DeRodes Leaving Home Depot?

May 12, 20085 mins

I remain intrigued by Bob DeRodes’ decision to leave Home Depot, more than a month after the $77 billion home improvement retailer announced the news. I’m intrigued because DeRodes, who is 57, is one of the highest-paid CIOs in America and because he was a key hire in Home Depot’s ongoing turnaround effort, which began in 2000 under the previous CEO, Bob Nardelli.

I can’t help but wonder why DeRodes is leaving after what appears to be a productive tenure with the company. I’m also eager to know whom Home Depot might recruit to replace him.

DeRodes has presided over IT at Home Depot since he joined the company as its EVP and CIO six years ago. Nardelli, who was effectively ousted by shareholder activists in 2007, recruited DeRodes from Delta in 2002 to modernize the company’s aging, home-grown IT infrastructure. DeRodes’ had a number of projects on his to-do list, among them:

  • Replace point-of-sale system
  • Install self-checkout kiosks
  • Upgrade LAN
  • Deploy data warehouse
  • Install price optimization software
  • Set up new warehouse and transportation management systems
  • Implement SAP financials and PeopleSoft ERP
Home Depot’s IT department completed a number of those and other projects on DeRodes’ watch, including the point-of-sale upgrade, the self-checkout installation and the deployment of the data warehouse and warehouse and transportation management systems. Home Depot’s SAP implementation is expected to be complete in Canada this year.

DeRodes may be leaving because he’s ticked a bunch of items off of his to-do list, and as such, he feels he’s accomplished what he set out to accomplish in 2002. (I placed a call to Home Depot this afternoon to inquire about DeRodes’ reason for leaving, and I’m waiting to hear back. I’ll update this post when I get an answer. In the meantime, I’ll continue to speculate.)

The press release announcing DeRodes’ immanent departure reads as though the decision to leave the company was entirely his:

The Home Depot, the world’s largest home improvement retailer, today announced that Bob DeRodes, executive vice president and chief information officer, has decided to leave the Company at the end of the year.
Judging by the press release, DeRodes’ departure sounds like an amicable one:

“Bob has led a significant IT transformation at The Home Depot, and we thank him for his contributions to our Company. We are pleased he will remain with us through the transition to ensure that our business technology transformation initiatives continue to run smoothly,” said Frank Blake, The Home Depot’s chairman and CEO.
The press release also notes a number of DeRodes’ accomplishments, including the opening of a back up data center in Austin, Texas and the implementation of an automated back-end receiving system.

Another reason why I think DeRodes’ is leaving on good terms is because he’s being given a say in the selection of his successor:

The Company will begin an immediate search for his replacement, and DeRodes will assist with this process as well as the eventual transition of responsibilities to his successor.
I doubt Home Depot would do DeRodes the honor of letting him participate in the search process if it was unsatisfied with his performance. Then again, not having the guy stick around to train his successor would be short-sighted. After all, DeRodes has worked there for six years and has a lot of valuable institutional knowledge to share.

The cynical side of me, however, can’t help but think DeRodes’ hand may have been forced—well, if

not forced, then perhaps nudged—on this decision. After all, he was hired under the previous, Nardelli regime, and now Home Depot has a new sheriff who is taking “orange county” in a different direction. Where Nardelli focused on big spending and business expansion, Frank Blake, whom the board appointed CEO in January 2007, is focused on the basics: improving Home Depot’s core retail business, its stores, associates and customer service.

Mike Burgett, the founder, president and managing partner of CIO Partners of Atlanta, says Blake’s back-to-basics focus and DeRodes’ decision to leave the company signifies a shift in the company’s approach to IT. He expects Home Depot, which has been hammered by the real estate bust and credit crisis, to scale back its IT spending.

The shift in Home Depot’s IT spending may be dramatic. The company has “invested” over $1.8 billion in IT capital expenditures between its fiscal years 2003 and 2007, according to SEC filings. With sales and earnings down for the year in 2007 and the outlook for 2008 looking bleak, the money just isn’t going to be there for technology.

What’s more, Burgett says Blake may be questioning the value of all that money DeRodes spent on IT. He says there may be some concern that the company is not getting the return from the dollars DeRodes has spent.

It may be that, between the changing of the CEO guard and the economic downturn, DeRodes saw the writing on the wall and decided to leave on his terms.

Unfortunately, we won’t know the reason behind DeRodes’ departure until we hear from him or Home Depot.

Until then, Burgett doesn’t think this is the last of DeRodes. “DeRodes will surface somewhere else. He’s not done,” he says.

It’s unlikely that DeRodes will join another big retailer, such as Wal-Mart or Lowe’s, since his employment agreement with Home Depot prohibits him from joining those companies for three years unless he gets written consent from Home Depot’s EVP of HR.

What is likely, says Burgett, is that Home Depot will bring on board a different kind of a CIO, someone focused on cost-containment.

“I would not be surprised to see them bring in a CIO who has outsourcing experience,” he says.

If that’s the case, is it too early for Mitchell Habib to leave Nielsen?