lnfernational Journal of information Management (1989), 9 (233-236)

Colin Warwick has spent most of his work- ing life in the IT industry and was among other things a former Director of Manage- ment Services for the W.H. Smith group. However, he feels that he has finally found a ‘proper job’, which he has held for four years. As a valedictory act on leaving IT as a profession he was instrumental in intro- ducing EPOS to the W.H. Smith retail main chain.

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Colin Warwick, Retail Distribution Director of W. H. Smith, talks to Dr Philip Hills about W. H. Smith and information technology.

There is an interesting technological metaphor to hand in the way W. H. Smith was instrumental in inventing the concept of the national newspap- er. What William Henry Smith did in those early days of stage coaches was to realize he could deliver London’s metropolitan Fleet Street newspapers to places like Bristol and Manchester on the day of publication, and he did it by establishing his own relays. The resultant time cycle eventually gave rise to the concept of the national daily newspaper and W. H. Smith became a very successful man.

Here we had a vision of the possi- ble, enabled by a technology, eventu- ally facilitating profound market changes. There is little new in human affairs. Today, IT initiatives, for in- stance, still require a vision and spon- sorship on the part of the business in pursuit of commercial objectives if they are to succeed.

Allow me a semantic quibble con- cerning the use of the word technol- ogy, frequently taken by IT specialists to be synonymous with information technology. I wonder sometimes whether the IT industry hasn’t lost its sense of a proper perspective. I see IT as a discipline within the broad church of technology, where that church is itself but an element in the mix that informs everyday life.

W. H. Smith is a mature consumer of information technology. Our busi- ness is essentially arranged in two groups, retailing and distribution. Re- tailing embraces the familiar High Street chain, but also includes many specialists such as Do-It-All, Our Price, Paperchase, Sherratt & Hughes and now Waterstones. Distribution covers the News Division, which wholesales the better part of the na- tion’s newspapers and magazines to

0268-4012/89/04 0233-04 $03.00 0 1989 Butterworth & Co (Publishers) Ltd

the trade on behalf of the publishers, Heathcote Books, the nation’s largest paperback book wholesaler and TV Services, with television interests in production, programming, cable and satellite broadcasting across Europe, and UK commercial TV franchises.

For many years now we have been networked both for speech and data on a corporate basis. Our News divi- sion wholesales daily between 4.0s 5.30am every morning to 26 000 news outlet customers some 3000 titles. Each agent is constantly varying his requirement as he responds to local market conditions and opportunities. Even your daily pinta has a longer shelf life than a daily newspaper. The publisher meanwhile is constantly looking to maximize his circulation and advertising revenues through the wholesalers’ channel.

The logistical imperatives in this most dynamic of business environ- ments are served by locally based but nationally networked systems, with hardly a piece of paper in sight.

As an aside here the role of in- formation technology has been thrown into sharp relief on the publishing side of newspapers where it has radically altered the economics of production, leading to a violent restructuring of the industry and the historical rela- tionships of those engaged in it. Fleet Street has all but gone, while new competing distribution channels have sprung up. IT has destabilized an established market, giving rise to new players and sharply re-positioned old players. Anyone attempting to resist the necessity to change has been swept away by events and competitive press- ure

Turning to retailing, the mounting pressure of rising occupation and staff costs has forced retailers to look

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energetically for improved perform- ance. Interest levels and a curtailed residual discretionary spend have served only to highlight this predica- ment.

W. H. Smith’s High Street chain was particularly hard pressed by this pincer movement on costs by virtue of its trading formula and retail profile We are prime pitch (for volume) - which means prime rents - and our consumer proposition calls for a wide range (for consumer appeal and ser- vice) - which in turn requires addi- tional staff to manage the range. A typical medium sized W. H. Smith store in a country town will carry three to four times the number of lines of the largest of major out-of-town food hypermarkets. Our trading formula therefore was, at its kindest, costly and administratively intense. At its worst it was costly and unenforceable, and therefore led to uneven execu- tion.

In 1984, prior to computer technol- ogy yielding a price performance that made EPOS (Electronic Point of Sale) accessible to the WHS trading format, a decision was made to commence trials on the human and systems aspects, so as to be able to intercept price performance trends when they came into reach. By 1985 a &23 million programme was committed on the evi- dence of the trials, and a deal was struck with a supplier. By 1986 we started roll out, and today nearly 300 stores are on the system representing over 86 per cent of the business.

The results have galvanized the op- eration. We now fully stock our desig- nated range, with hitherto unthink- able degrees of sophistication in stock control and marketing insight, and we have at the same time released large numbers of our staff from counting stock (in order to estimate sales as input to a manual replenishment deci- sion). Those staff are now serving customers. As a result we have in- creased sales, cleaned up stocks, im- proved margins, made more produc- tive use of staff and made better use of the capita1 lock-up in stocks.

But there is more. The sales, marketing and ordering information now available at the centre has revolu- tionized our general approach to sys-

tems. Hitherto, in the absence of time- ly data all our controls and systems were of a historical and policing na- ture - how did we do last month? Now, with timely and reliable in- formation, which includes high quality forecasts and predictions, our systems philosophy is one of anticipation and monitoring.

This ability to look forward rather than having to look back for clues in our past performance has spilled over into our managerial culture. Where once we were perforce rigid, disci- plined and rule following, we are now content to set ratio’d tolerances of performance, hand over the tools for execution to local management and then see what else we need to do at the centre to help support the operators. This is a far cry from ‘mother knows best’ - shop staff now feel they mat- ter more; the centre feels it knows what is going on. In the branch it feels like devolution: in the centre it feels like centralization.

All this would be wholly good news were it not for the fact that our mas- sive and by now elderly central sys- tems are completely outclassed by the quality and bandwidth of available information. And it took us perhaps 200 man years to develop our central systems thus far! Our buying, market- ing, accounting and distribution peo- ple are clamouring for progress, and there is no way we can satisfy them from our present embattled position.

Our response to this problem has been in effect to pull up stumps and walk away to another pitch for central systems. Rather than incrementally turn our existing systems around we are proposing to ram home a large- scale proprietary package designed for multiple retailers. We have selected one that we believe is appropriate for us, but it does mean changing our mainframe supplier; never an easy matter. Experience has taught us that even with bespoke systems one never gets it wholly right, so in adopting this package our general approach has been to change our requirement to meet the blueprint of the package. This may seem crazy to the purists, but if we get an 80 per cent fit on our first pass we will have done better than more classical methods.

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take notes. Indeed, as retailers and wholesalers, I think we should be ner- vous and uncomfortable if we stumble across co-workers in our midst whose work we do not understand, attached as it might be to such arcane matters as software internals or IT architectu- ral niceties.

These information systems ‘sub- texts’ are of course important, but few IT consumers would wish to or could indeed succeed in employing directly the full spectrum of expertise. This necessary contribution or ‘reading’ of IT is inculcated through suppliers’ gui- dance or added value contributors, for better or for worse. What is much more important is the sponsorship and harnessing of information systems at the applications level, for it is from here that IT derives its focus and relevance to everyday life.

The relevance and utility of IT flows directly from its real use in the com- mercial context of the business. Hyperbole and lionizing of this or that fashionable technique may stimulate IT practitioners into a froth of excita- bility from time to time, but this is not the stuff of success. Where IT confers competitive advantage the IT practi- tioners will be hard put to keep up with the tide of user demand. Who needs to talk about it?

The main point really is that we aim to have refreshed all our central sys- tems in under two years, when using a bespoke approach we dread to think how long it might take - or whether we’d be happy when we got there. We are presently in the process of com- pleting the implementation of a pack- aged solution to the problem of pro- viding a warehouse support system for our central channel of distribution, and this experience has given us con- siderable confidence that this approach (i.e., the humility to apply someone else’s added value product) is correct for us.

These are strategic systems deci- sions for the W. H. Smith retail chain; there are a host of more tactical initia- tives in train, addressing EFTIPOS, online customer services in store (bib- liographic support, customer order- ing, etc.), range and space block mod- els, CAD techniques for store design and layout, digitized drawing of stores, fittings, etc. We are also build- ing a catchment population model to support our development programme for the business.

Our other more specialist retailing chains each have their own stories to tell, for instance Do-It-All has its own EPOS system and central support arrangements, but space does not per- mit (nor perhaps, reader interest allow) us to explore them here.

Management and IT

How would you define information systems?

I wouldn’t. As a consumer of informa- tion technology in the pursuit of press- ing commercial objectives, which are themselves constantly on the move and incapable of being framed for reference here, I am out of sympathy with attempts at descriptions of in- formation systems. In my view it’s not the sort of discussion in which people engage in a busy commercial under- taking.

In my observation the higher up the management tree you go the more you come across worries - are we doing enough? Are we fully up to speed? Is anyone stealing a march? These are natural anxieties, but the questions are no less insistent when probing consumer propositions, market posi- tionings, operating and product costs, etc. Life is competitive, and senior management would be failing in their duties if their worries and concerns did not translate into pricks for action.

Perhaps if we were sufficiently large to employ serried ranks of experts and specialists, their way forward and sense of worth might be usefully de- lineated by such a discussion, but otherwise I’m underwhelmed by the need to pin down the butterfly and

Further down, where people are actually running chunks of the busi- ness and are closely involved in it, I don’t think you come across quite the same questioning. Nowadays the rate of change in business is so rapid and immense, driven by competitive press- ure, that information technology is

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perceived, quite rightly, as just part of the mix. Commercial life is now so competitive that the only constancy you can look forward to is the certain- ty of further rapid change: this is not a cliche, it is true. And ordinary men and women have adapted to it as part of their everyday lives.

Given this ‘battle-ground’ view of life, the first user of let us say, bubble memory in, say, a retail environment wins no medals - did it produce an advantage that was sufficiently diffe- rentiated long enough to matter? Did it pass the so what test, as measured by commercial performance? Where the answer is ‘yes’, as for instance with EPOS for certain retailers, manage- ment quickly prove themselves re- markably au fait with matters, driving impatiently on to further exploita- tions.

I wanted in what went before to issue a counter to the way the IT industry discusses itself. It is quite rare

for IT specialists to come out and talk to commercial people properly. This does a great disservice both to IT and to commercial industry. Preoccupa- tions that both have are valid and necessary, and inside every discipline or profession there is a need for expert comment, research and pushing out the boundaries of knowledge. But there is an unhealthy predisposition in IT to get carried away with enthu-

siasms which are frequently in- appropriate and irrelevant. Some- times they are even damaging.

The key question is ‘is there a con- tribution, and is it useable?’ The only possible consumption of IT must be determined on return on investment. There has to be a vision concerning how IT can be applied, and it is in- finitely preferrable if that vision re- sides in the business or service or whatever undertaking you are part of rather than with a data-processing spe- cialist.

IT must be harnessed by the busi- ness. I feel that for many of us IT has become a commodity, available to management as one of a portfolio of tools with which to gain competitive advantage. As such IT will take its place in managerial priorities in the light of contribution rather than any special pleading. I think IT should concentrate on being solution driven, with more emphasis on robustness, useability and rude utility; there should be less preoccupation with optimal elegance, which somehow al- ways seems to involve discarding all previous work.

I also feel that solutions should be IT industry proof. It is simply not acceptable to have to keep re-working old investments because the base en- vironment is fluid.

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