For some, a new CEO preaching the gospel of growth means the opportunity for an IT overhaul.
Two years ago, when Herbert Zarkin returned as CEO for Natick, Mass.-based BJ's Wholesale Club Inc., he returned urging growth for the business.
"His message was very much around moving the business forward," said John Polizzi, senior vice president and CIO with BJ's. "The IT leadership looked at it as an opportunity to sell the executive team on the first long-term investment strategy for IT."
Polizzi's plan was not an investment in a master data management (MDM) system, or an ERP implementation, or a point of sale (POS), but rather all of them -- and more. BJ's is embarking on a five-year transformation of its IT infrastructure and systems.
BJ's, a wholesale shopping club with more than 175 member locations across the eastern United States, was running many of its internal systems on mainframe computers, some more than 20 years old. The wholesaler's IT transformation required a comprehensive planning process. Most experts and analysts agree that initiatives like these demand that organizations plan ahead, involve business and IT, bring in help where it's needed, and launch projects in stages in order to avoid taking on too much at once. So far, BJ's seems to be making all the right moves.
The company brought in Deloitte Consulting to help establish a retail-oriented strategy. Deloitte and a team from BJ's developed the multi-year IT strategy over six months, with an additional two months to prioritize and get approval for the projects. The board of directors gave it full approval last December.
Preparing for growth
First, BJ's established the business drivers -- and facilitating the company's growth is clearly at the core of the project, according to Polizzi.
"BJ's is talking about getting back on a growth path that would be 5% to 7% in square footage -- meaning sales floor -- which equates to seven to eight new clubs [per year]," he said. "To support the growth needs and potentially new markets, we have got to have systems that have the flexibility to deal with whatever we're going to deal with, plus allow us to get economies and efficiencies from our team members outside of IT in using these systems."
The first two years focus heavily on the most critical operating systems, Polizzi said.
- Point of sale
- Gas (BJ's sells gas at some of its clubs)
- Warehouse management
"We took an initial approach that the important thing is to build out the operational systems," Polizzi said.
BJ's will be through the pilot phase with its new POS system within a year and a half, and 180 clubs will be on the new system within five years.
"The selection of the product, design and testing is pretty rigorous, because in retail your point of sale is a revenue system," Polizzi said.
Ultimately, he said, the operational system will serve as the runway for the ERP implementation.
By year three, BJ's will have selected an ERP system and will have finished requirements and design by year five or six.
"You have to build that straw man strategic model and work through it organically," Polizzi said. "There is no one right answer."
Building a team
Establishing the plan was obviously a critical step in the process, and BJ's took care to include interested people from around the company.
"This isn't an IT initiative, it's a BJ's initiative," Polizzi said. "We identified key senior people in our divisions -- merchandising, logistics, finance and HR, marketing and sales operations [the clubs]. We're building an understanding and gathering a broad base of input to refine our approach."
BJ's is also bringing in help where needed. Staff can't devote every hour of the day to long-range planning.
"The reality is you have to also run the day-to-day business," Polizzi said.
IBM is playing a big role in the POS system. Likewise, Deloitte is playing a big part in systems integration with the HR/payroll systems.
Much of the work is now under way. IBM is helping with the requisition and design of the POS system, the gas system is in the vendor selection mode, the warehouse management system's second implementation was completed in July, and the PeopleSoft payroll system implementation is under way.
Read part 2 of this story as BJ's CIO John Polizzi describes how MDM and BI fit into the puzzle.