Petco Reorganization Sign of Where IT Is Headed

Ann All
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A new report predicts dramatic changes to the face of enterprise computing.

In reading colleague Susan Hall's post about Petco's reorganization of its IT function, one thing struck me: The retailer shrank its IT staff from 150 two years ago to about 50 today. This reduction is right on target with last summer's prediction from the Corporate Executive Board's Information Technology Practice that IT headcount will drop by 75 percent or more, thanks to cloud computing and other emerging technologies. Some traditional IT roles will simply vanish, the CEB said, while others will be taken over by external service providers and still others will become embedded in the broader business.


I realize this is just one company and its reorganization may have been influenced by all kinds of factors not relevant to other companies. Still, I can't help but think it's a clear indicator of where IT is headed.


Petco opted to outsource its IT infrastructure, call center and most software development, embed some of its pros on management teams, and allow IT staffers to experiment with job rotation. I wrote about the job rotation idea last September, mentioning Johnson & Johnson, General Mills and other companies that recruit professionals interested in moving from IT roles to business roles and back. At General Mills, more than 15 percent of IT staff hold MBAs. A recent survey pointed to the growing desire for a blend of business/IT skills, with global CIOs citing business analysis and business-facing architecture as the most-desired skill sets for internal teams.


Petco's CIO Herman Nell seems to have followed much of the advice dispensed by Forrester Research VP and principal analyst James Staten in his keynote address at last September's itSMF Fusion conference. Staten's three key suggestions:

  • Employ "strategic rightsourcing" strategies.
  • "Industrialize IT" by automating as many IT services as possible.
  • Use agile methods borrowed from application developers to create a more flexible infrastructure.


While these strategies might result in cuts like those seen at Petco, Staten said staff reduction isn't the primary objective. Rather, he said, it's about "freeing the bodies, the time and the mental capacity to figure out what the business wants and how IT can help them achieve it."


Both Staten and Nell are espousing the creation of an IT organization flexible enough to respond to rapidly changing business needs. Susan shared a quote from Nell:

[It's not] how good you are at executing at any one time, but how good you are at maintaining the customer experience under continuously changing demands. It's not even as simple as managing multiple channels, but multiple changing touchpoints. It's not only about aligning with the business, but about building capacity to keep up with continuously changing business opportunities.

The role of the CIO may hang in balance during this transition. The Corporate Executive Board's prediction is CIOs "will [either] expand to lead this broader group or shrink to manage technology procurement and integration."


CIOs may have some work to do to convince some C-level colleagues of their value, judging by the results of a recent Gartner survey that found only about a quarter of CFOs said their IT department "has the organizational and technical flexibility to respond to changing business priorities," or "is able to deliver against the enterprise/business unit strategy." Just 18 percent of CFOs said IT service levels at their companies met or exceeded business expectations. CFOs also expressed doubts that IT organizations had the "right mix of skilled people to meet business needs."


As I wrote a few months ago, work force development may be the CIO's most important role. I shared some thoughts from Charles Feld, former CIO for Frito-Lay, founder of the Feld Group consultancy and author of "Blind Spot: A Leader's Guide to IT-Enabled Business Transformation." Feld said CIOs must help develop "versatile, multidisciplinary, multicultural leaders who can think strategically about systems and patterns and who can take leadership of an organization and drive execution."

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