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With the retirement of Wal-Mart president and CEO David Glass, we’ve lost a figure who may have quietly done more than anyone else to make the term “business-driven IT” more than an oxymoron. At the same time, with the appointment of his successor, Wal-Mart may have gained a new chief executive with ideal credentials to steer the company toward Internet commerce dominance.
In a move that was smoothly executed according to a long-standing plan that was known well in advance by insiders as well as analysts, Glass stepped down in January in favor of COO and vice chairman Lee Scott. Glass will serve as chairman of Wal-Mart’s executive committee for the foreseeable future, while Scott, a logistics and merchandising expert, takes the reins of day-to-day operations.
Founder Sam Walton was responsible for the down-home attitude that gave Wal-Mart its reputation for warmth, customer service, and salesmanship. But Glass, whom Walton appointed CEO in 1988, literally delivered the goods: the legendary information and distribution infrastructure that has elevated the company to retail-industry greatness, culminating in 1999 annual revenues in the neighborhood of $165 billion. (Wal-Mart may soon surpass General Motors as the largest U.S.-based company.)
Glass is largely responsible for the fact that CIO Randy Mott — once a humble Wal-Mart developer and now something of a legend himself — is sitting on a 100TB data warehouse that gives far-flung store employees and suppliers access to real-time sales and inventory information of incomparable detail. Thus, it wasn’t simply visionary and unique information systems (most of Wal-Mart’s IT infrastructure is, fittingly, home-grown) that helped Wal-Mart take a hammer to rivals. Rather, its brilliance derives from the careful application of such systems in support of specific business processes and the people working hard in the store aisles.
Prime Mover
When Glass was hired on in 1976 as executive VP for finance, Wal-Mart was a regional retailer without much interest in IT or reason to expect inordinate success. (Glass has reported that “Sam thought ‘damn computer’ was one word.”) But he and other executives convinced the chairman that Wal-Mart’s information systems trailed far behind those of potential competitors, and that significant investments in distribution and merchandise-tracking infrastructure would be required.
Under this mandate, Glass supervised the development of an innovative infrastructure — one that has incorporated pioneering applications of satellite-based networking, market-basket and supply-chain analysis, and mobile business intelligence at various times — that is now the envy of retailers and e-tailers worldwide. (Indeed, Glass may be personally responsible for initiating a revolution in the application of IT to retailing challenges.) Just ask the e-commerce sophisticates at Amazon.com, who have hired away several eminently offline Wal-Mart IT executives (at the price of several subsequent lawsuits; now settled), and who Mott claims have cloned Wal-Mart secrets.
Thanks to 25 years of development initiated largely by Glass, every Wal-Mart department manager with a bar-code scanner can access product-level information of such detail that an empty shelf is as rare as snow in summertime and can close the loop by unilaterally modifying prices based on demand. Furthermore, pioneering efforts in Internet-based collaborative forecasting and replenishment have store buyers and suppliers working together to make each store meet the unique needs of its community.
Next Challenge
The ascent of Lee Scott — who was hired into Wal-Mart’s logistics department, helped build its distribution network, and also has merchandising acumen — indicates that Wal-Mart is preparing for an end-game battle with Amazon by focusing on the complex fulfillment challenges of Internet commerce.
The company recently re-launched Wal-Mart.com and spun it off as a separate company, with Scott serving on the board and surely a heavy influence. If he is half as successful in online commerce as his mentor Glass was offline, he’ll make Sam Walton proud.
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